SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Amendment No.22)
AMP INCORPORATED
(Name of Subject Company)
AMP INCORPORATED
(Name of Person(s) Filing Statement)
Common Stock, no par value
(including Associated Common Stock Purchase Rights)
(Title of Class of Securities)
031897-10-1
(CUSIP Number of Class of Securities)
David F. Henschel
Corporate Secretary
AMP Incorporated
P.O. Box 3608
Harrisburg, Pennsylvania 17105-3608
(717) 564-0100
(Name, Address and Telephone Number of Person Authorized to Receive
Notice and Communications on Behalf of the Person(s) Filing Statement)
With a Copy to:
Peter Allan Atkins
David J. Friedman
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022-3897
(212) 735-3000
This Amendment No.22 amends and supplements the
Solicitation/Recommendation Statement on Schedule 14D-9 dated August 21,
1998, as amended (the "Schedule 14D-9"), filed by AMP Incorporated, a
Pennsylvania corporation ("AMP"), in connection with the tender offer by
PMA Acquisition Corporation, a Delaware corporation (the "Purchaser") and
wholly owned subsidiary of AlliedSignal Inc., a Delaware corporation
("AlliedSignal"), to purchase shares of common stock, no par value, of AMP
(the "Common Stock"), including the associated Common Stock Purchase Rights
(the "Rights" and, together with the Common Stock, the "Shares") issued
pursuant to the Rights Agreement, dated as of October 25, 1989, and as
amended on September 4, 1992, August 12, 1998, August 20, 1998 and
September 17, 1998 (the "Rights Agreement"), between AMP and ChaseMellon
Shareholder Services L.L.C., as Rights Agent, at a price of $44.50 per
Share, net to the seller in cash, as disclosed in its Tender Offer
Statement on Schedule 14D-1, dated August 10, 1998, as amended, upon the
terms and subject to the conditions set forth in the Offer to Purchase,
dated August 10, 1998, and as amended on September 14, 1998 and September
21, 1998, and the related Letter of Transmittal.
Unless otherwise indicated, all defined terms used herein shall have
the same meaning as those set forth in the Schedule 14D-9.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
Subsection (f) of Item 8 is hereby amended by adding the following
paragraph at the end thereof:
On September 28, 1998, the shareholder plaintiffs filed their
First Consolidated Amended Complaint. The consolidated amended complaint
names as defendants AMP, the individual members of AMP's Board of Directors
and eighteen of AMP's executive officers. The complaint alleges (i)
violations of the Securities Exchange Act of 1934, as amended, for failure
to set forth an adequate explanation of the reasons for recommending
rejection of the AlliedSignal tender offer in AMP's Schedule 14D-9 filings
and for failing to disclose material information regarding the reasons for
rejection; (ii) that Amendments Nos. 3 and 4 to the Shareholder Rights Plan
adopted by the Board are illegal under the Pennsylvania Business
Corporation Law; and (iii) that if Amendments Nos. 3 and 4 to the
Shareholder Rights Plan is not illegal under the Pennsylvania Business
Corporation Law, then that statute violates the Commerce, Supremacy and Due
Process clauses of the United States Constitution. The plaintiffs seek,
among other things, a declaratory judgment that certain provisions of the
Pennsylvania Business Corporation Law are unconstitutional; that Amendments
Nos. 3 and 4 to the Shareholder Rights Plan violate the Pennsylvania
Business Corporation Law and should be enjoined; that the individual
defendants have infringed the voting rights of AMP shareholders; and that
the individual defendants have violated their fiduciary duties to AMP.
They also seek to enjoin the defendants from entrenching themselves in
office and from impairing the shareholders' rights to vote on certain
matters, and ask the Court to order defendants to disclose all material
facts relating to AMP's and AlliedSignal's solicitations. A copy of the
First Consolidated Amended Complaint is filed herewith as Exhibit 79 and is
incorporated herein by reference, and the foregoing is qualified in its
entirety by reference to such exhibit.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
The following exhibits are filed herewith:
Exhibit
No. Description
------- -----------
78 Letter sent by AMP to its shareholders on September 30,
1998.
79 First Consolidated Amended Complaint, filed on September 28,
1998 in the United States District Court for the Eastern
District of Pennsylvania in In re. AMP Shareholders
Litigation, (Civil Action No. 98-CV-4109).
o o o
This document and the exhibits attached hereto contain certain
"forward-looking" statements which AMP believes are within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. The safe harbors intended to be created thereby are
not available to statements made in connection with a tender offer and AMP
is not aware of any judicial determination as to the applicability of such
safe harbor to forward-looking statements made in proxy solicitation
materials when there is a simultaneous tender offer. However, shareholders
should be aware that any such forward-looking statements should be
considered as subject to the risks and uncertainties that exist in AMP's
operations and business environment which could render actual outcomes and
results materially different than predicted. For a description of some of
the factors or uncertainties which could cause actual results to differ,
reference is made to the section entitled "Cautionary Statements for
Purposes of the 'Safe Harbor'" in AMP's Annual Report on Form 10-K for the
year ended December 31, 1997, a copy of which was also filed as Exhibit 19
to the Schedule 14D-9 filed with the Securities and Exchange Commission.
In addition, the realization of the benefits anticipated from the strategic
initiatives will be dependent, in part, on management's ability to execute
its business plans and to motivate properly the AMP employees, whose
attention may have been distracted by AlliedSignal's tender offers and
whose numbers will have been reduced as a result of these initiatives.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete
and correct.
Dated: September 30, 1998 AMP Incorporated
By: /s/ Robert Ripp
_________________________
Name: Robert Ripp
Title: Chairman and Chief
Executive Officer
EXHIBIT INDEX
The following exhibits are filed herewith:
Exhibit
No. Description
-------- -----------
78 Letter sent by AMP to its shareholders on September 30,
1998.
79 First Consolidated Amended Complaint, filed on September 28,
1998 in the United States District Court for the Eastern
District of Pennsylvania in In re. AMP Shareholders
Litigation, (Civil Action No. 98-CV-4109).
Exhibit 78
[AMP Letterhead]
September 30, 1998
Dear Fellow Shareholder:
We are pleased to report that AMP has announced a SELF-TENDER OFFER FOR
30 MILLION SHARES of its common stock at a price of $55.00 PER SHARE IN
CASH. This will provide you with an opportunity to sell a portion of your
AMP shares at a price far in excess of AlliedSignal's offer for 20 million
shares at only $44.50 per share. Our offer is expected to commence early
next week.
When AlliedSignal made its opportunistic, low-ball offer back in
August, we promised you that we would INCREASE VALUE IN THE NEAR TERM
and that is exactly what we are doing. Our Profit Improvement Plan is
working and our confidence in AMP's future is so strong that the Board of
Directors is making a $1.65 BILLION ''DOWN PAYMENT'' TO SHAREHOLDERS
through this stock repurchase. The self-tender offer gives AMP the ability
to deliver value to shareholders today, while taking the necessary steps to
deliver value for tomorrow. We are confident there is more value to come.
AlliedSignal says its 20 million share, $44.50 per share, tender offer
will expire on October 2. We urge you NOT to tender any of your shares to
AlliedSignal and to withdraw your shares promptly if you previously
tendered to them. This is ESPECIALLY IMPORTANT because AlliedSignal intends
to vote the shares it buys in its tender offer and it will vote them to
advance ALLIEDSIGNAL'S OWN INTERESTS in their solicitation of consents.
AlliedSignal's consent solicitation is part of its continuing effort to
buy AMP on the cheap. They want you to consent to their long list of
takeover-related proposals including proposals that would give
AlliedSignal control of your Board by packing it with a majority of 17
people who are directors and executive officers of AlliedSignal. Each of
these persons we believe would have IRRECONCILABLE CONFLICTS OF INTEREST if
they were to serve on and control AMP's Board of Directors.
You can expect that on or about October 15, AlliedSignal will start
sending you written solicitation materials asking you to ''consent'' to the
proposals that AlliedSignal wants to impose on your Company. AMP strongly
believes that AlliedSignal's proposals are NOT in your interests as a
shareholder of AMP, and urges you NOT to sign AlliedSignal's ''consent''
form.
You can act now to PROTECT YOUR INTERESTS:
o DON'T TENDER your shares into AlliedSignal's 20 million share,
$44.50 per share offer.
o If you previously tendered to AlliedSignal, YOU CAN WITHDRAW YOUR
SHARES IF YOU ACT PROMPTLY.
o DON'T SIGN AlliedSignal's blue consent form.
Events have been moving rapidly, and likely will continue to do so in
the coming weeks and months. As always, we will keep you fully informed.
Sincerely,
/s/ Robert Ripp
Robert Ripp
Chairman and
Chief Executive Officer
IF YOU HAVE ANY QUESTIONS OR REQUIRE ANY ASSISTANCE
IN WITHDRAWING ANY SHARES YOU MAY HAVE TENDERED
TO ALLIEDSIGNAL, PLEASE CALL:
INNISFREE M&A INCORPORATED
CALL TOLL FREE: (888) 750-5834
BANKS AND BROKERS CALL COLLECT: (212) 750-5833
PARTICIPANT INFORMATION AND FORWARD-LOOKING STATEMENTS
AMP and certain other persons named below may be deemed to be participants
in the solicitation of revocations of consents in response to
AlliedSignal's consent solicitation. The participants in this solicitation
may include the directors of AMP (Ralph D. DeNunzio, Barbara H. Franklin,
Joseph M. Hixon III, William J. Hudson, Jr., Joseph M. Magliochetti, Harold
A. McInnes, Jerome J. Meyer, John C. Morley, Robert Ripp, Paul G. Schloemer
and Takeo Shiina); the following executive officers of AMP: Robert Ripp
(Chairman and Chief Executive Officer), William J. Hudson (Vice Chairman),
James E. Marley (former Chairman), William S. Urkiel (Corporate Vice
President and Chief Financial Officer), Herbert M. Cole (Senior Vice
President for Operations), Juergen W. Gromer (Senior Vice President, Global
Industry Businesses), Richard P. Clark (Divisional Vice President, Global
Wireless Products Group), Thomas DiClemente (Corporate Vice President and
President, Europe, Middle East, Africa), Rudolf Gassner (Corporate Vice
President and President, Global Personal Computer Division), Charles W.
Goonrey (Corporate Vice President and General Legal Counsel), John E.
Gurski (Corporate Vice President and President, Global Value-Added
Operations and President, Global Operations Division), David F. Henschel
(Corporate Secretary), John H. Kegel (Corporate Vice President,
Asia/Pacific), Mark E. Lang (Corporate Controller), Philippe Lemaitre
(Corporate Vice President and Chief Technology Officer), Joseph C.
Overbaugh (Corporate Treasurer), Nazario Proietto (Corporate Vice President
and President, Global Consumer, Industrial and Power Technology Division);
and the following other members of management and employees of AMP: Merrill
A. Yohe, Jr. (Vice President, Public Affairs), Richard Skaare (Director,
Corporate Communication), Douglas Wilburne (Director, Investor Relations),
Suzanne Yenchko (Director, State Government Relations), Mary Rakoczy
(Manager, Shareholder Services), Dorothy J. Hiller (Assistant Manager,
Shareholder Services), Melissa E. Witsil (Communications Assistant) and
Janine M. Porr (Executive Secretary). As of the date of this communication,
none of the foregoing participants individually beneficially own in excess
of 1% of AMP's common stock or in the aggregate in excess of 2% of AMP's
common stock.
AMP has retained Credit Suisse First Boston Corporation ("CSFB") and
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") to act as its
financial advisors in connection with the AlliedSignal Offer, for which
CSFB and DLJ will receive customary fees, as well as reimbursement of
reasonable out-of-pocket expenses. In addition, AMP has agreed to indemnify
CSFB, DLJ and certain related persons against certain liabilities,
including certain liabilities under the federal securities laws, arising
out of their engagement. CSFB and DLJ are investment banking firms that
provide a full range of financial services for institutional and individual
clients. Neither CSFB nor DLJ admits that it or any of its directors,
officers or employees is a "participant" as defined in Schedule 14A
promulgated under the Securities Exchange Act of 1934, as amended, in the
solicitation, or that Schedule 14A requires the disclosure of certain
information concerning either CSFB or DLJ. In connection with CSFB's role
as financial advisor to AMP, CSFB and the following investment banking
employees of CSFB may communicate in person, by telephone or otherwise with
a limited number of institutions, brokers or other persons who are
stockholders of AMP: Alan Howard, Steven Koch, Scott Lindsay, and Lawrence
Hamdan. In connection with DLJ's role as financial advisor to AMP, DLJ and
the following investment banking employees of DLJ may communicate in
person, by telephone or otherwise with a limited number of institutions,
brokers or other persons who are stockholders of AMP: Douglas V. Brown and
Herald L. Ritch. In the normal course of its business, each of CSFB and DLJ
regularly buys and sells securities issued by AMP for its own account and
for the accounts of its customers, which transactions may result in CSFB,
DLJ or the associates of either of them having a net "long" or net
"short" position in AMP securities, or option contracts or other
derivatives in or relating to such securities. As of September 25, 1998,
DLJ held no shares of AMP common stock for its own account and CSFB had a
net long position of 132,266 shares of AMP common stock.
The accompanying letter contains certain "forward-looking" statements
which AMP believes are within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The
safe harbors intended to be created thereby are not available to statements
made in connection with a tender offer and AMP is not aware of any judicial
determination as to the applicability of such safe harbor to
forward-looking statements made in proxy solicitation materials when there
is a simultaneous tender offer. However, shareholders should be aware that
any such forward-looking statements should be considered as subject to the
risks and uncertainties that exist in AMP's operations and business
environment which could render actual outcomes and results materially
different than predicted. For a description of some of the factors or
uncertainties which could cause actual results to differ, reference is made
to the section entitled "Cautionary Statements for Purposes of the 'Safe
Harbor"' in AMP's Annual Report on Form 10-K for the year ended December
31, 1997. In addition, the realization of the benefits anticipated from the
strategic initiatives will be dependent, in part, on management's ability
to execute its business plans and to motivate properly the AMP employees,
whose attention has been distracted by the AlliedSignal's tender offer and
whose numbers will have been reduced as a result of these initiatives.
Exhibit 79
UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
-----------------------------------: MASTER FILE NO. 98-CV-4109
IN RE AMP SHAREHOLDERS LITIGATION :
-----------------------------------: FIRST CONSOLIDATED
: CLASS ACTION COMPLAINT
THIS DOCUMENT RELATES TO: :
ALL ACTIONS :
-----------------------------------: JURY TRIAL DEMANDED
Plaintiffs, by their attorneys, for their complaint against
defendants, allege upon personal knowledge with respect to paragraph 9, and
upon information and belief based, inter alia, upon the investigation of
counsel including a review of public filings of defendant AMP, Inc. ("AMP"
or the "Company"), reports, press releases and articles pertaining to the
Company:
NATURE OF THE ACTION
1. Plaintiffs bring this action as a class action on behalf of
themselves and all other stockholders of AMP who are similarly situated,
against the directors and/or senior officers of AMP to enjoin certain
actions which are intended to effectively eliminate the AMP shareholders'
statutory and common law rights to vote on issues of corporate governance
as more fully described below.
2. In particular, the defendants have attempted to extinguish
the AMP shareholders' fundamental voting rights, abusing their fiduciary
positions of control over AMP to defeat AlliedSignal, Inc. ("Allied") and
any other entity in any legitimate attempt to acquire the Company.
3. (a) In addition, defendants, to foreclose any unsolicited
bids, have implemented or are using several anti-takeover devices,
including, but not limited to, a "Poison Pill" i.e. a shareholders's rights
plan described below in detail. The Poison Pill has been amended several
times since Allied commenced efforts to acquire AMP. The Poison Pill
amendments prohibit any acquisition of AMP unless the defendants or their
hand-picked successors support the offeror's plan. The most recent such
amendment would make the Poison Pill non-redeemable and incapable of being
further amended by anyone if the AMP shareholders adopt a bylaw limiting
AMP board's powers regarding the Poison Pill. Defendants have illegally
vitiated the shareholder's right to elect directors who will have full and
complete authority to direct AMP's business.
(b) The Pennsylvania Anti-Takeover Statute, as alleged
below, unlawfully invalidates any offer from any potential acquirer, in
violation of the Commerce Clause, the Supremacy Clause, and the Due Process
Clause of the United States Constitution.
4. Regardless of the directors' authority to direct the
Company's response to takeover bids, AMP's shareholders retain the right,
inherent in their share ownership, to select directors who will have full
authority to manage AMP.
5. The Individual Defendants are abusing their fiduciary
positions of control over AMP to stop legitimate attempts at acquiring the
Company and are seeking to entrench themselves in the management of the
Company, The actions of the Individual Defendants constitute a breach of
their fiduciary duties to AMP in failing to respond reasonably and on an
informed basis to bona fide offers for the Company. These actions are
contrary to federal and state law.
JURISDICTION AND VENUE
6. This action is brought pursuant to the Supremacy Clause
(art. VI, cl. 2), the Commerce Clause (art. 1. section 8, cl. 3), the Due
Process Clause (amends. V and XIV) of the United States Constitution and
the Williams Act; principles of common law; and the federal Declaratory
Judgments Act, 28 U.S.C. section 2201. In accordance with Federal Rule of
Civil Procedure 24(c), plaintiffs direct Court to 28 U.S.C. section 2403,
pursuant to which the Court shall notify the state attorney general of any
action in which the constitutionality of any statute of a state is drawn
into question.
7. This Court has subject-matter jurisdiction of this action
pursuant to 28 U.S.C. sections 1331 and 1367(a).
8. Venue is proper in this District pursuant to 28 U.S.C.
sections1391(b) and (c).
THE PARTIES
9. Plaintiffs, are and at all relevant times hereto have been
the owners of shares of AMP.
10. Defendant AMP is a Pennsylvania corporation with its
principal executive offices located in Harrisburg, Pennsylvania. AMP
designs, engineers, develops, integrates, installs and operates aerospace
and automotive products.
11. The Individual Defendants, and their positions, are as
follows:
Ralph D. DeNunzio Director of the Company and President of Harbor
Point Associates, Inc., New York, New York, a
private investment consulting firm.
Barbara H. Franklin Director of the Company, President and Chief
Executive Officer of Barbara Franklin Enterprises,
Washington, D.C., a private, international
consulting and investment firm, since 1995.
Joseph M. Hixon, III Director of the Company and Retired Chairman of the
Board of Hixon Properties Incorporated, San Antonio
Texas.
William J. Hudson, Jr.,Director of the Company and Former Chief Executive
Officer and President of the Company.
James E. Marley Former Chairman of the Board of Directors of the
Company.
Harold A. McInnes Director of the Company, Retired Chairman of the
Board of Directors and Chief Executive Officer of
the Company.
Jerome J. Meyer Director of the Company and Chairman of the Board
and Chief Executive Officer of Tektronix, Inc.,
Wilsonville, Oregon.
John C. Morley Director of the Company and President of Evergreen
Ventures, Ltd., Cleveland, Ohio.
Robert Ripp Chairman and CEO.
William S. Urkiel Vice President and Chief Financial Officer of the
Company since 1998.
Paul G. Schloemer Director of the Company, Retired President and
Chief Executive Officer of Parker Hannifin
Corporation, Cleveland, Ohio.
Takeo Shiina Director of the Company and Chairman of the
Advisory Council of IBM Japan, Ltd.
Richard P. Clark Divisional Vice President of the Company, Global
Wireless Products Group since 1995.
Herbert M. Cole Vice President and President of the Company, Global
Terminal and Connector Operations and President,
the Americas Region (acting) since 1998.
Thomas J. DiClemente President of the Company, EMA (Europe, Middle East,
Africa) and Vice President since 1997.
Rudolf Gassner President of the Company, Global Personal Computer
Division and Vice President since 1997.
Charles W. Goonrey Vice President and General Legal Counsel of the
Company since 1992.
Juergen W. Gromer President of the Company, Global Automotive
Division and Vice President since 1997.
John E. Gurski President of the Company, Global Operations and
Vice President since 1996 and President, Global
Value-Added Operations since 1998.
Javad K. Hassan Vice President of the Company, Global Strategy and
Development since 1998.
David F. Henschel Corporate Secretary and Associate General Legal
Counsel of the Company since 1993.
John H. Kegel Vice President of the Company, Asia/Pacific since
1998.
Mark E. Lang Controller of the Company since 1998.
Philippe Lemaitre Vice President and Chief Technology Officer of the
Company since he joined the Company in 1997.
Joseph C. Overbaugh Treasurer of the Company since 1993.
Nazario Proietto President, Global Consumer, Industrial and Power
Technology Division of the Company since 1998 and
Vice President since 1997.
12. By virtue of their positions as directors and/or senior
officers of AMP and their exercise of control over the business and
corporate affairs of AMP, the AMP officers and directors named as
defendants herein (the "Individual Defendants") have and at all relevant
times had the power to control and influence, and did control and
influence, and cause AMP to engage in the illegal practices complained of
herein. All Individual Defendants owed and owe AMP fiduciary obligations
and were and are required: (a) to use their ability to control and manage
AMP in a fair, just and equitable manner; (b) to act in furtherance of the
best interests of AMP; (c) not to interfere with the shareholder's right to
vote; (d) refrain from abusing their positions of control; (e) not to favor
their own interests at the expense of AMP and its stockholders; and (f) not
to cause AMP to breach the contract right of its shareholders to
effectively vote their shares on issues of corporate governance. The
Individual Defendants owed and owe plaintiffs and other members of the
Class the highest obligations of good faith, fair dealing, loyalty and due
care.
13. By virtue of the acts and conduct alleged herein, the
Individual Defendants, who control the actions of AMP, are breaching their
fiduciary duties to AMP and their duty not to interfere with (a) the
shareholder's right to vote, and (b) a duly elected director's right to
manage the Company.
14. Each defendant herein is sued individually as a conspirator
and/or aider and abettor, or, as appropriate, in his or her capacity as a
director and/or senior officer of the Company, and the liability of each
arises from the fact that he, she or it has engaged in all or part of the
unlawful acts, plans, schemes or transactions complained of herein.
CLASS ACTION ALLEGATIONS
15. Plaintiffs bring this action as a class action pursuant to
Rule 23 of the Federal Rules of Civil Procedure on behalf of themselves and
all other shareholders of AMP (except defendants herein and any person,
firm, trust, corporation or other entity related to, controlled by or
affiliated with any of the defendants) and their successors in Interest
(the "Class").
16. This action is properly maintainable as a class action for
the following reasons:
(a) The Class is so numerous and geographically dispersed
that joinder of all members is impracticable. As of September, 1998, AMP
reported that there were more than 214 million shares of common stock
outstanding. It is unknown prior to discovery how many shareholders are in
the Class, but such information is known by or available to defendants, and
it is believed that the number of shareholders comprising the Class is over
15,000.
(b) There are questions of law and fact common to members
of the Class which predominate over any questions affecting only individual
members. The common questions include, inter alia:
(1) whether the anti-takeover protections of sections
2551 through 2556 of the Pennsylvania Business Corporation Law ("PBCL") are
unconstitutional on their face or as applied;
(2) whether the Individual Defendants (a) have
breached their fiduciary duties owed to AMP, and (b) have breached the
common law and statutory rights of the Class;
(3) whether the Individual Defendants have engaged and
are continuing to engage in an unlawful plan or scheme which is violative
of the rights of the Class as shareholders to elect directors who will have
full authority to manage AMP;
(4) whether the Individual defendants omitted material
information from its proxy solicitation materials in violation of Section
14(d) of the Exchange Act; and
(5) whether AMP, plaintiffs and other members of the
Class are being and will continue to be irreparably injured by the wrongful
conduct alleged herein; and (b) what is the proper remedy and/or measure of
damages?
(c) The claims of plaintiffs are typical of the claims of
other members of the Class and plaintiffs have no interests that are
adverse or antagonistic to the interests of the Class.
(d) Plaintiffs are committed to the vigorous prosecution of
this action and have retained competent counsel experienced in litigation
of this nature. Accordingly, plaintiffs are adequate representatives of
the Class and will fairly and adequately protect the interests of the
Class.
17. Plaintiffs anticipate that there will not be any difficulty
in the management of this litigation as a class action.
18. Defendants are acting in a manner which affects all AMP
shareholders in the same or similar fashion and would be subjected to
potentially differing legal requirements or standards of conduct if this
litigation were not certified to proceed as a class action.
19. For the reasons stated herein, a class action is superior to
other available methods for the fair and efficient adjudication of this
action and the claims asserted herein. Because of the size of the
Individual Class members' claims, few, if any, Class members could afford
to seek legal redress individually for the wrongs complained of herein.
Absent a class action, the Class members will continue to suffer damage and
defendants' violations of law will proceed without remedy.
SUBSTANTIVE ALLEGATIONS
20. Defendant AMP designs, manufactures and markets a broad
range of electronic, electrical and electro-optic connection devices and
certain in connection systems. AMP is a publicly traded company,
incorporated under Pennsylvania law and maintains its principal executive
offices in Harrisburg, Pennsylvania.
21. Allied is a Delaware corporation with its principal
executive offices in Morristown, New Jersey. Allied employs over 70,000
people and is an industry leader in the manufacturing of aerospace,
automotive and engineered materials. Allied is a component of the Dow
Jones Industrial Average, Standard & Poor's 500 Index.
A. AMP'S ANTI-TAKEOVER DEVICES PRIOR TO ALLIED'S TENDER OFFER
22. AMP has had numerous deterrents in place to thwart a
takeover since as early as 1989.
i. THE POISON PILL
23. Foremost, AMP has a shareholder rights plan commonly known
as a "Poison Pill" which was adopted by the AMP Board of Directors in 1989
(the "Original Poison Pill").
24. Under the Original Poison Pill, should the Company be
confronted with a hostile suitor, the AMP board could authorize and declare
a dividend of one common share purchase right (a "Right") per outstanding
share of AMP, payable to shareholders of record as of the close of business
on November 6, 1989.
25. The Original Poison Pill provides that the Rights do not
become exercisable until ten business days following the first public
announcement that a person (an "Acquiring Person") has acquired beneficial
ownership of 20% or more of the outstanding shares of AMP common stock (the
"Stock Acquisition Date"), at which time each holder of a Right, other than
an Acquiring Person, is entitled, upon exercise of the Right, to receive
common stock having a market value equal to two times the Purchase price.
The effect of this provision (the "Flip-In Provision") thus would be a
massive dilution of the value of the holding of an unwanted acquiror like
Allied.
26. The Dead Hand Restriction. The Original Poison Pill could
have been redeemed by the AMP Board until 10 business days after a person
becomes an Acquiring Person. The Board's ability to redeem the Rights,
however, was restricted by a provision of the Poison Pill that served no
purpose other than to restrict shareholders' voting rights and entrench the
Board (the "Dead Hand Restriction").
27. Under the Dead Hand Restriction, redemption of the Poison
Pill required the approval of a majority of Continuing Directors.
Continuing Directors were members of the Board who were not Acquiring
Persons or representatives of an Acquiring Person, and either (a) were
directors prior to the institution of the Poison Pill, or (b) are nominated
by a majority of "Continuing Directors." The Poison Pill could be redeemed
by a majority of Continuing Directors only (i) after a person becomes an
Acquiring Person but prior to the expiration of a ten business day period,
or (ii) after a change (resulting from a proxy or consent solicitation) in
a majority of the directors in office at the time of the commencement of a
proxy or consent solicitation. Furthermore, the Dead Hand Restriction
provided that the Poison Pill could be amended only by Continuing
Directors.
ii. THE PENNSYLVANIA ANTI-TAKEOVER STATUTE
28. AMP had also adopted, among other provisions, the anti-
takeover protections of PBCL sections 2551-2556 (the "Business Combination
Statute").
29. Under the Business Combination Statute, an interested
shareholder cannot engage in a business combination with AMP for five years
unless the acquisition of the shares or the business combination is
approved by the AMP Board before an "Interested Shareholder" becomes the
beneficial owner, directly or indirectly, of at least 20% of AMP's shares.
30. The effect of the Business Combination Statute is to
substantially delay or make impossible acquisitions or changes of control
of AMP, thus preventing changes in the management of AMP, and not allowing
transactions which AMP shareholders may otherwise deem to be in their best
interests.
B. PRELIMINARY OVERTURES
31. On July 29, 1998, Allied Chairman and Chief Executive
Officer, Larry Bossidy, telephoned AMP's former CEO and President,
Individual Defendant William J. Hudson, to inquire whether AMP would be
interested in pursuing a negotiated business combination with Allied.
Defendant Hudson and Bossidy did not speak at that time as Defendant Hudson
was purportedly unavailable.
32. On July 30, 1998, Bossidy sent a letter to Defendant Hudson
that proposed a combination of Allied and AMP and that Allied was prepared
to offer $43.50 per share in cash for all of AMP's outstanding shares. The
$43.50 per share offer represented a 50% premium over AMP's recent market
trading price. AMP did not respond.
C. THE TENDER OFFER & CONSENT SOLICITATION
33. Following AMP's failures to respond to Allied's offer, on
August 4, 1998, Allied announced that it would commence both a Tender Offer
(the "Original Tender Offer") for all of AMP's outstanding shares at $44.50
per share and a consent solicitation ("Consent Solicitation") to gain
majority representation on the AMP Board.
34. Specifically, the Consent Solicitation would request AMP's
shareholders to (1) approve an amendment to AMP's Bylaws that would allow
an increase in AMP's Board of Directors from 11 to 28 members; (2) elect
Allied's 17 nominees to the newly created Board seats, thereby giving
Allied control over AMP.
35. The Original Tender Offer was fixed to expire at midnight on
September 11, 1998. As discussed below, this expiration has been modified
and extended.
36. The Original Tender Offer also contained a provision
providing for a second-step merger where remaining, untendered shares would
also receive $44.50 per share when AMP was finally merged into Allied.
D. ALLIED REQUESTS AMP TO SET A CONSENT SOLICITATION RECORD DATE
37. On August 11, 1998, Allied requested in writing that AMP fix
August 31, 1998 as the record date for the Consent Solicitation. On August
21, 1998, the AMP Board fixed October 15, 1998 as the record date, not the
requested August 31, 1998 date.
38. The purported grounds for the Board's fixing the October 15
Record Date, as publicly stated by the AMP Board, were (a) to ensure that
"adequate information is available" to AMP's shareholders and (b) to give
AMP "sufficient time to comply with the broker search card requirements of
Rule 14a-13 under the Securities Exchange Act of 1934, as amended" (the
"Search Provision"). Neither of those purported justifications warranted
putting off the record date beyond August 31, let alone delaying it until
October 15.
39. There was no basis for the AMP Board's stated concerns
because the requested August 31 record date was suitable to provide
adequate information to AMP's shareholders. Moreover, the SEC proxy rules
that govern the Consent Solicitations are designed to ensure that AMP's
shareholders would have all material information to make an informed
decision before they gave their written consents.
40. In fact, on August 13, even before the AMP Board fixed the
record date, AMP filed with the SEC preliminary Consent Revocation
Statement, pursuant to Section 14(a) of the Exchange Act, and the
information was publicized and made available to AMP shareholders. That
filing, which was amended on August 26, 1998 (as amended, "the preliminary
Schedule 14A"), was made for the purpose of commencing a solicitation
campaign to obtain consent revocations from AMP shareholders and thereby
seek to block Allied's Consent Solicitation.
41. Similarly, the notice period contemplated by the Search
Provision was effectively satisfied by Allied's request for the fixing of
an August 31, record date, since the request was made and widely publicized
on August 11, twenty days in advance of Allied's requested record date.
42. AMP's fixing of the October 15 Record Date was arbitrary and
unnecessary for the orderly functioning of the consent process.
43. Nevertheless, Allied agreed not to contest the October 15
Record Date.
E. THE NON-REDEMPTION AMENDMENT OF AMP'S POISON PILL
44. As stated above, AMP prior to Allied's efforts, employed a
strict Poison Pill to thwart hostile offers. However, AMP did not believe
these defensive measures sufficient enough so, on August 20, 1998, it
amended the original Poison Pill (the "First Amended Poison Pill").
45. The First Amended Poison Pill includes more onerous and
unconscionable provisions. While the First Amended Poison Pill no longer
contains a "Dead Hand" provision, it was strengthened with a non-redemption
provision (the "Non-Redemption Provision").
46. The Non-Redemption Provision prevents any directors
including continuing directors from redeeming the Poison Pill upon the
election of a new majority to the Board. Once triggered, the Non-
Redemption Provision prevents the consummation of tender offers or mergers
until the expiration of the Non-Redemption Provision on November 6, 1999.
47. The AMP Board also changed the Poison Pill to make it non-
amendable as soon as it becomes non-redeemable, which makes the Non-
Redemption Provision, once triggered, irreversible.
48. Moreover, the AMP Board amended the definition of a
"qualifying offer." A qualifying offer had been defined as an offer that
was viewed favorably by the Board of Directors and would not trigger the
Poison Pill's defensive mechanisms. Now, once the Poison Pill is triggered
and subject to the new Non-Redemption Provision, no offer may be considered
a Qualifying Offer which a Board could approve. In short, the Poison Pill
is now non-redeemable and bars the acceptance of a qualifying offer until
at least November 6, 1999.
49. The Non-Redemption Provision also removes from a newly
constituted AMP Board any ability to approve extraordinary transactions
such as a merger or sale of assets until the Poison Pill expires on
November 6, 1999, no matter how beneficial this transaction may be to AMP.
Unilateral removal of this authority, responsibility and discretion is an
illegal encroachment on the power of the board of directors as set forth
under PBCL Sections 1502(18), 1525, 1712, 1715, and 1721, as well as an
illegal encroachment on the voting rights of the AMP shareholders.
50. Since Allied's Tender Offer would be of no effect without
support of the holders of a majority of AMP's shares, the AMP board could
have had no motive to take these actions other than to strip the AMP
shareholders of their right to elect new directors who would act in the
shareholders' interests, and who, subject to their fiduciary duties, would
be empowered to support Allied's or any other tender offer.
F. AMP'S SCHEDULE 14D-9 PUBLIC STATEMENTS
51. On August 21, 1998, AMP announced that it opposed the
Original Tender Offer, and filed with the SEC a schedule 14D-9, which has
been amended (the "Schedule 14D-9"), describing the AMP Board's opposition.
52. AMP's Schedule 14D-9 states, in part, that:
"The AMP Board of Directors has determined, by the unanimous
vote of those present, that the AlliedSignal Offer is
inadequate, does not reflect the value or prospects of AMP
and is not in the best interests of AMP and its relevant
constituencies, including its shareholders, as described in
more detail below. Accordingly, the Board by such unanimous
vote recommends that AMP's shareholders reject the
AlliedSignal Offer and not tender their shares pursuant to
the AlliedSignal Offer."
53. AMP stated its reasons for rejecting Allied's offer and
cited its "restructuring, new initiatives and business plans" to justify
AMP shareholders' rejection of the Tender Offer.
54. Specifically, AMP stated, in part, the Tender Offer should
be rejected because of the AMP Board's belief that:
". . . based on the factors described below, that the
AlliedSignal Offer is inadequate and does not reflect the
inherent value of AMP as the world's largest supplier of
electrical and electronic connectors;
(ii) the Board's familiarity with, and management's review
of, AMP's business, financial condition, results of
operations, business strategy and future prospects, as well
as the steps being taken to improve the profitability of
AMP, including:
- reshaping AMP's manufacturing into a "global manufacturing
company", including the consolidation and redeployment of
manufacturing operations"
* * *
"(iv) the Board's belief that the new management team is
well suited to implement the profit improvement program"
* * *
"(viii) the written opinion, dated August 20, 1998, of [CS
First Boson] that, as of such date, the AlliedSignal Offer
was inadequate, from a financial point of view, to the
holders of shares (other than AlliedSignal and its
affiliates); the full text of the opinion of [CS First
Boston], setting forth the assumptions made, matters
considered and limitations on the reviews undertaken, is
included as Exhibit 10 hereto and should be read in its
entirety;"
* * *
"(x) the apparent lack of overlap and potential synergies
between the respective businesses of AMP and AlliedSignal,
evidenced in the Board's view, by AlliedSignal's disposition
of Amphenol, a competitor of AMP, in 1987, as well as the
market's reaction to the Offer as reflect in the significant
decline in the trading value of AlliedSignal's shares
following its announcement of the AlliedSignal Offer,"
55. Moreover, AMP has stated that it intends to engage in a
"profit improvement program" with a "new management team" to increase
shareholder value.
56. In a letter to AMP's shareholders dated September 5, 1998
and attached as an Exhibit to a September 8, 1998 Amendment to AMP's
Schedule 14D-9, Defendant Ripp, AMP's Chairman, stated, in part, that:
"You will be asked to make some important decisions
concerning your investment in AMP. In making those
decisions, we urge you to keep in mind the following:
-- Implementation of AMP's Profit Improvement Plan is now
being accelerated.
-- Positive results of the Plan are expected to be reflected
in the fourth quarter of this year.
-- The Plan is expected to generate an operating margin of
13.5% in 1999 with an EPS of at least $2.30, and an
operating margin of 16.5% in 2000 with an EPS of at least
$3.00.
-- We are actively pursuing ways to accelerate the benefits
of this Plan and exploring options to INCREASE VALUE FURTHER
IN THE NEARER TERM.
THE PROFIT IMPROVEMENT PLAN IS DESIGNED TO BENEFIT YOU.
DON'T LET ALLIEDSIGNAL CAPTURE OUR FUTURE FOR THE BENEFIT OF
ITS OWN SHAREHOLDERS!
You can best protect your interests by NOT tendering any of
your shares to AlliedSignal and NOT signing any consent that
will be solicited by AlliedSignal.
(Emphasis in original).
57. AMP further stated in its Schedule 14D-9 that "[AMP's] new
management team is well suited to implement the profit improvement plan."
58. AMP apparently had no intention of ceasing its campaign to
keep control of AMP in the hands of current management despite the will of
AMP's shareholders. Ripp was reported in a Wall Street Journal aritcle,
dated September 11, 1998, as stating that, even if 75% of AMP's shares are
tendered, he still plans to fight Allied's Offer until AMP's Poison Pill
expires in November 1999.
59. The statements in the Schedule 14D-9 and made in connection
with the Tender Offer violate section 14 of the Exchange Act because the
Individual Defendants were in no way neutral and had decided as early as
Allied's initial overture to reject, without a thorough and objective
review, the Original Tender Offer as well as any other.
60. Moreover, AMP's statements in its schedule 14D-9 that, inter
alia, it was undertaking a "profit improvement plan" that would maximize
shareholder value, improve AMP's operating margins, revenues, earnings and
stock price violate section 14 because AMP had experienced several quarters
of material losses and internally knew that future quarters were shaping up
to be poor and because they fail to disclose all material facts necessary
for AMP's shareholders to make an informed decision regarding the voting or
disposition of their shares.
61. AMP also stated in its Schedule 14D-9, without a reasonable
basis, that it expected 1999 earnings to exceed $2.33 per share. However,
as undisclosed by AMP in its Schedule 14D-9, analysts polled by First Call
expected AMP's actual 1999 earnings per share not to exceed $1.96.
62. AMP stated in its Schedule 14D-9 that the "profit
improvement plan" would promptly improve AMP's financial health despite the
fact the Company was suffering from tremendous losses in Asian markets and
AMP, as stated in its July 31, 1998 Form 10Q for the period ending June 30,
998 (released just days prior to Allied's initial overture) that:
"Asia/Pacific sales, approximately 18% of total sales, were
down 7.1% in local currencies and 17.3% in U.S. dollars for
the quarter ended June 30, 1998 as compared to the
corresponding prior year quarter. For the six months ending
June 30, 1998, net sales were down 2.7% in local currencies
and 11.5% in U.S. dollars from the comparable prior year
period. Sales in Japan were down 9.8% in local currency and
20.7% in U.S. dollars from the comparable prior year quarter
and 7.3% in local currency and 14.9% in U.S. dollars from
the six months ended June 30, 1997. Weakening sales
throughout the Asia/Pacific region, primarily caused by the
economic slowdown in Japan and throughout the Asia/Pacific
region, has had a negative impact on the Communications,
Motor Vehicles, and the Consumer, Industrial, and Power
industries, while sales in the Personal Computer Industry
were up slightly."
63. Accordingly, Asian markets accounted for nearly 18% of AMP's
total sales and these markets continued to produce dismal results and AMP
knew that the problems could not be remedied in the immediate future.
AMP's Schedule 14D-9 did not fully and fairly disclose the severity of the
Asian market crisis and that it would continue to plague AMP's revenues
going forward.
64. Further, despite AMP's statements in the Schedule 14D-9
concerning the viability of the "profit improvement plan," AMP had engaged
in numerous restructuring programs over the previous five years that were
unsuccessful and AMP failed to disclose the severity of these failures in
the Schedule 14D-9.
65. Despite AMP's representation in the Schedule 14D-9, AMP has
not provided shareholders with a detailed report by CS First Boston or any
other investment bank that justified AMP's conclusion that Allied's bid was
inadequate.
66. AMP's schedule 14D-9 stated that AMP had engaged a new
management team to improve AMP's value. In fact, AMP has merely shuffled
several key employees and elevated Ripp to serve as Chief Executive
Officer.
G. THE ORIGINAL TENDER OFFER'S FIRST EXPIRATION DATE
67. The Original Tender Offer was fixed to expire on September
11, 1998. As of September 11, 1998, AMP shareholders owning 157 million
shares or approximately 72% of AMP's total outstanding shares tendered to
Allied. This is an extraordinary high percentage of tendered stock,
especially given AMP's open hostility towards Allied, the series of
misstatements issued by AMP and AMP's statement that it considered the
Allied offer inadequate.
H. ALLIED AMENDS THE TENDER OFFER AND CONSENT SOLICITATION
68. Premised on the fact that AMP had previously amended its
Poison Pill on August 20, 1998 so that it would be triggered if Allied
acquired 20% or more of AMP's outstanding stock, on September 14, 1998,
Allied amended its Original Tender Offer (the "Amended Offer") and amended
its consent solicitation (the "Amended Consent Solicitation").
69. Thus, the Amended Offer provided that Allied would only
acquire 40 million shares of AMP at $44.50 - less than 20% of AMP's
outstanding stock and accordingly not trigger the First Amended Poison
Pill.
70. The Amended Consent Solicitation included a proposal
pursuant to PBCL Section 1721 and Article VII of AMP's Articles (the
"Shareholder Rights Proposal") which, if approved by AMP's shareholders,
would remove from AMP's Board all powers with respect to AMP's Rights
Agreement, and would vest those powers in a group of agents (the "Rights
Agreement Managing Agents").
71. The Rights Agreement Managing Agents would cause the Rights
Agreement to be amended to make the Poison Pill inapplicable to (i) any
tender or exchange offer (including Allied's Tender Offer), if as a result
of completion of the offer, the offeror would own a majority of outstanding
shares of AMP common stock, and (ii) any merger that either does not
require shareholder approval or is approved by the requisite vote of AMP
shareholders.
72. The shareholder rights proposal would afford AMP
shareholders the opportunity to exercise their voting rights so as to
control AMP's Poison Pill in accordance with their own determination of
what is in the best interests of AMP.
I. AMP RESPONDS WITH A DRACONIAN AMENDMENT
TO THE FIRST AMENDED POISON PILL
73. On September 18, 1998, realizing that Allied's efforts could
be successful in that nearly 3/4 of AMP's shareholders had tendered, AMP's
Board again amended the First Amended Poison Pill (the "Nullification
Poison Pill").
74. Under the Nullification Poison Pill, if holders of a
majority of AMP's shares adopt a Bylaw limiting the AMP's board's powers
regarding the Poison Pill, the Poison Pill would become non-redeemable and
non-amendable.
75. The Nullification Poison Pill is clearly ultra vires as its
effect is to attempt to repeal Article VII of AMP's Articles by AMP board
fiat without a shareholder vote as required under the Articles.
76. Moreover, the Nullification Poison Pill also attempts to
replace section 1721 of the PBCL by AMP Board Fiat without a vote of the
Pennsylvania legislature.
77. PBCL section 1721, which codifies the age old maxim that
directors shall serve and execute powers pursuant to the will of the
shareholders, provided, however, that "a by law adopted by the
shareholders" can modify, limit, or even eliminate the authority of a board
of directors to exercise corporate power.
78. Article VII of AMP's Articles explicitly provides that
"except as otherwise provided . . . by By-laws . . ., all corporate powers
may be exercised by the Board of Directors. . . ."
79. AMP's Nullification Poison Pill flies in the face of both
the PBCL and Article VII of AMP's Articles by unlawfully operating to
restrict the authority of future boards without approval of the
shareholders.
J. ALLIED CONTINUES TO PRESS FORWARD
80. In response to AMP's September 18, 1998 announcement that it
had adopted the Nullification Poison Pill, Allied, later that same day,
announced that it would still go forward with amended $44.50 cash offer for
20 million shares of AMP. 20 million shares only represents approximately
9% of AMP's outstanding common stock and acquiring only 9% will not trigger
the Nullification Poison Pill (the "September 18 Amended Offer").
81. Also, Allied announced on September 18, 1998 that the
September 18 Amended Offer would expire on October 2, 1998.
K. AMP'S CONTINUED EFFORTS TO STOP ALLIED AND
DEPRIVE AMP SHAREHOLDERS OF THEIR RIGHTS
82. On September 23, 1998, it was reported over numerous news
wires that AMP's Chairman Ripp met with Pennsylvania state legislators in
an effort to lobby them to change Pennsylvania law. Ripp's proposed
amendment, reportedly drafted by AMP's counsel, would effectively eliminate
the Consent Solicitation mechanism from Pennsylvania corporate law. As
proposed, stockholders in Pennsylvania companies could take action only at
scheduled meetings and not by written consent for 18 months after a hostile
bid. If this amendment were passed, shareholders in Pennsylvania companies
will be disenfranchised of any meaningful voting ability during a hostile
tender.
L. AMP, AGAIN, ENDEAVORS TO STOP THE CONSENT SOLICITATION PROCESS
83. On September 23, 1998, AMP again interfered with AMP's
shareholders' rights to choose their own corporate destiny.
84. As stated above, the Consent Solicitation initially had a
record date set for October 15, 1998. However, on September 23, 1998, AMP
changed the rules again and delayed the October 15 date to November 16,
1998. There was no justifiable reason to alter these dates other than to,
again, interfere with AMP's shareholders' rights to choose the Company's
directors and amend its bylaws and/or articles of incorporation.
COUNT I
(For Violation of Section 14(d) of the Exchange Act
and Rule 14d-9 Promulgated Thereunder)
85. Plaintiffs repeat and reallege the allegations above as if
set forth herein.
86. Rule 14d-9, 17 C.F.R. section240.14d-9, promulgated by the
SEC pursuant to Section 14(d) of the Exchange Act, prohibits the target
company and its employees from making any recommendation concerning a
tender offer to the target company stockholders unless, as soon as
practicable on the date any such solicitation or recommendation is made, a
Schedule 14D-9 is filed with the SEC and a copy is delivered to the
offeror. The Schedule 14D-9 must contain the information set forth in Rule
14d-9, including, among other things, the nature of the solicitation or
recommendation and particularized reasons for the solicitation or
recommendation.
87. Section 14(e) and Rule 14e-2(a) provide that the target
company must publish or give shareholders a measured statement to the
effect that it either recommends, accepts, rejects or takes no position
with regard to the offer.
88. Rule 14d-9(b) explicitly states that if any material change
occurs in the information set forth in the Schedule 14D-9, said change must
be immediately disclosed by way of an amendment to Schedule 14-9.
89. In violation of Section 14(d) and Rule 14D-9, the Schedule
14D-9 filed by AMP with the SEC, omits material information regarding the
reasons why AMP stated Allied's Tender Offer was inadequate and fails to
disclose all material facts necessary to allow the shareholders to make a
fully informed decision.
90. By reason of the foregoing, Plaintiffs were harmed in that
they were deprived of material information required to be publicly,
accurately, and fully disclosed by Defendants under applicable law.
91. Plaintiffs and the Class have no adequate remedy at law.
COUNT II
(For Violation of Section 14(e) of the Exchange Act)
92. Plaintiffs repeat and reallege the allegations above as if
set forth herein.
93. In violation of Section 14(e) of the Exchange Act, the
Revised Schedule 14D-9 omits material information concerning AMP's
purported reasons for stating Allied's Tender Offer was insufficient and is
materially misleading as set forth herein.
94. By reason of the foregoing, Plaintiffs have been and are
being harmed in that they are being deprived of material information
required to be publicly, accurately, and fully disclosed by Defendants
under applicable law, which information is essential to a full and fair
consideration of the solicitation materials.
95. Plaintiffs and the Class have no adequate remedy at law.
COUNT III
FOR INJUNCTIVE AND DECLARATORY RELIEF -- ILLEGALITY
OF THE NON-REDEMPTION AND NULLIFICATION PROVISIONS OF AMP'S POISON PILL
96. Plaintiff repeats and realleges the allegations above as if
fully set forth herein.
97. The Non-Redemption Provision -- which effectively strips
duly elected directors of the ability to redeem the Poison Pill
undermines the mandate embedded in Pennsylvania law, including PBCL Section
1725, that (a) only those directors validly elected by shareholders are
entitled to manage the corporation; and (b) once directors are elected,
they cannot be prevented from acting to manage the corporation.
98. By denying the Board any ability, "following a majority
change of disinterested directors," to redeem the Poison Pill, the Non-
redemption Provision also violates Section 1.11 of AMP's Bylaws, which
provides for the election of AMP directors by AMP's shareholders, and
Section 2.1 of AMP's Bylaws, which provides that directors duly elected by
the shareholders have the authority to manage AMP's business and affairs.
99. The Non-Redemption Provision also violates PBCL Section
1721, which requires that, unless otherwise provided by statute or in a
bylaw adopted by the shareholders all powers vested in a corporation "shall
be exercised" by, or at the direction of, a corporation's directors. One
such power expressly vested in the corporation under PBCL section 1502(18),
is the power to "accept, reject, respond to, or take no action in respect
of an actual or potential . . . tender offer." Since the shareholders of
AMP have not (as yet) adopted a bylaw restricting their directors' ability
to exercise this power, AMP's Board cannot by itself so limit the
discretion of future directors through adoption of the Non- Redemption
Provision.
100. The Non-Redemption Provision is illegal under PBCL Sections
1525, 1712 and 1715, because it restricts the Board from redeeming the
Poison Pill even if that is required by the Board members' fiduciary
duties.
101. Shareholders have fundamental voting rights that cannot be
contravened by a corporation's board of directors. In an election contest,
the adoption of a non-redeemable poison pill like AMP's is fundamentally
unfair because it is designed to eradicate the AMP shareholders' rights to
receive tender offers and wage proxy contests and consent solicitations to
replace the AMP Board. And, because the Non-redemption Provision is
specifically intended to take effect when shareholders have voted or
consented to a change in control of the Board, it is inherently suspect as
an entrenchment mechanism of the current AMP Board and AMP Management.
102. The Non-Redemption Provision thus purposefully interferes
with the shareholder voting franchise without any reasonable justification.
103. In violating the PBCL and AMP's Bylaws, the adoption of the
Non-Redemption Provision exceeds the powers granted to the corporation and
its directors under PBCL Section 1502. This act is, therefore, ultra vires
and of no effect.
104. AMP's adoption of the Non-Redemption Provision also
constitutes fraud and/or fundamental unfairness on the part of AMP,
entitling the plaintiff shareholders to declaratory relief, and to
injunctive relief invalidating the Non-Redemption Provision under PBCL
Section 1105.
105. Plaintiffs and the Class have no adequate remedy at law.
COUNT IV
FOR INJUNCTIVE AND DECLARATORY RELIEF
UNCONSTITUTIONALITY OF THE BUSINESS COMBINATION STATUTE
106. Plaintiffs repeat and realleges its allegations above as if
fully set forth herein.
107. This claim arises under the Commerce, Supremacy, and Due
Process Clauses of the United States Constitution.
108. The Tender Offer constitutes a substantial securities
transaction in interstate commerce, employing interstate instrumentalities
and facilities in the communication of the Offer, and in transactions for
the purchase and sale of AMP securities occurring across state lines.
109. The Business Combination Statute ("Statute") violates the
Commerce Clause because it imposes direct, substantial and adverse burdens
on interstate commerce that are excessive in relation to the local
interests purportedly served by the Statute. Among other things, the
Statute may make it more difficult, if not impossible, to accomplish
transactions which AMP shareholders may otherwise deem to be in their best
interest, because the Statute vests the boards of Pennsylvania companies
with ultimate power to stop potential business combinations.
110. The Business Combination Statute is unconstitutional and null
and void on its face under the Commerce Clause. In addition, the Statute
is unconstitutional and null and void under the Commerce Clause in its
application under the circumstances of this case. AMP's shareholders may
be prevented from accepting the Tender Offer or any other offer to the
extent the Board of AMP exercises its rights under the Statute in
furtherance of its course of entrenchment. Accordingly, the undue burden
on interstate commerce that is created by these statutes has a direct and
substantial impact in this case.
111. The Business Combination Statute also violates the Supremacy
Clause of the United States Constitution. The Tender Offer is subject to,
among other things, the federal laws and regulations governing tender
offers, including the Williams Act amendments to the Securities Exchange
Act, 15 U.S.C. sections 78m and 78n, and the rules and regulations of the
Securities and Exchange Commission ("SEC") promulgated thereunder. The
Williams Act is intended to establish even-handed regulation of tender
offers which favors neither the offeror nor incumbent management of the
target, ensure disclosure of all material facts to shareholders, and
preserves the decision concerning the merits of the offer to the target's
stockholders.
112. By establishing policies, standards and procedures that
conflict with and are obstacles to the policies implemented by Congress
through the Williams Act and the rules and regulations of the SEC
promulgated thereunder, the Statute is invalid and unconstitutional as
applied to the Tender Offer and consent solicitation under the Supremacy
Clause of the United States Constitution, art. VI, cl. 2, which accords
supremacy to federal law over conflicting state law, and violates and is
preempted by Section 28(a) of Exchange Act, 15 U.S.C. section 78bb, which
prohibits and preempts state regulation that conflicts with the provisions
of the Exchange Act and the rules and regulations thereunder.
113. The Statute also violates the Due Process Clause of the United
States Constitution. The statute prevents the Class from exercising their
voting rights as shareholders. Thus, those persons, acting under color of
state law, are diminishing the property interest of all class members. The
class members are thus being deprived of fundamental freedoms and property
interests guaranteed by the Due Process Clause of the United States
Constitution.
114. Plaintiffs seek declaratory relief with respect to the
unconstitutionality of the Statute pursuant to the Federal Declaratory
Judgments Act, 28 U.S.C. section 2201, and injunctive relief against the
application and enforcement of this unconstitutional Statute. Plaintiffs
and the Class members are or will be irreparably and imminently injured by
the wrongs alleged herein.
115. Plaintiffs and the Class have no adequate remedy at law.
PRAYER FOR RELIEF
WHEREFORE, plaintiff demands judgment as follows:
A. Declaring this to be a proper class action and certifying
plaintiffs as class representatives;
B. Declaring that the Business Combination Statute on its face or
as applied herein is unconstitutional;
C. Declaring that the non-redemption and nullification provisions
violate the PBCL, and enjoining their enforcement;
D. Declaring that the Individual Defendants have unlawfully
infringed the voting rights of AMP shareholders;
E. Declaring that the Individual Defendants have violated their
fiduciary duties to AMP;
F. Enjoining defendants from abusing the corporate machinery of
the Company for the purpose of entrenching themselves in office and
impairing the Company's stockholders' existing rights to vote, amend the
bylaws, call a special stockholders' meeting, engage in a consent
solicitation and elect directors who will have the authority to manage the
corporation;
G. Ordering defendants to disclose all material facts relating to
their and Allied's solicitations;
H. Ordering the Individual Defendants, jointly and severally, to
account to AMP, plaintiffs and the Class for all damages suffered and to be
suffered by them as a result of the acts and transactions alleged herein;
I. Awarding plaintiffs the costs and disbursements of this
action, including a reasonable allowance for plaintiffs' attorneys' and
experts' fees; and
J. Granting such other and further relief as may be just and
proper.
JURY DEMAND
Pursuant to Federal Rule of Civil Procedure, plaintiff demands a
trial by jury of all issues so triable.
SAVETT FRUTKIN PODELL & RYAN, P.C.
By: /s/ S. H. Savett
--------------------------------
Stuart H. Savett (I.D. No. 03669)
325 Chestnut Street, Suite 700
Philadelphia, PA 19106
(215) 923-5400
BERGER & MONTAGUE, P.C.
Stephen Ramos (I.D. No. 35010)
1622 Locust Street
Philadelphia, Pennsylvania 19103
(215) 875-3000
WOLF HALDENSTEIN ADLER FREEMAN & HERZ LLP
Fred T. Isquith
Jeffrey G. Smith
Gregory Nespole
270 Madison Avenue
New York, NY 10016
(212) 545-4600
WECHSLER HARWOOD HALEBIAN & FEFFER
Robert Harwood
488 Madison Avenue
New York, NY 10022
(212) 935-7400
LAW OFFICE BERNARD M. GROSS, P.C.
Deborah R. Gross (I.D. No. 44542)
Christopher T. Reyna (I.D. No. 46488)
1500 Walnut Street, Sixth Floor
Philadelphia, PA 19102
(215) 561-3600
