<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------
SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(PURSUANT TO SECTION 13(e)(1) OF THE SECURITIES EXCHANGE ACT OF 1934)
(AMENDMENT NO. 3)
----------------------------
AMP INCORPORATED
(NAME OF ISSUER)
AMP INCORPORATED
(NAME OF PERSON(S) FILING STATEMENT)
----------------------------
COMMON STOCK, WITHOUT PAR VALUE
(INCLUDING THE 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 NOTICES AND COMMUNICATIONS
ON BEHALF OF THE PERSON(S) FILING STATEMENT)
----------------------------
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
----------------------------
OCTOBER 9, 1998
(DATE TENDER OFFER FIRST PUBLISHED, SENT OR GIVEN TO SECURITY HOLDERS)
----------------------------
<PAGE>
This Amendment No. 3 amends and supplements the Issuer Tender Offer Statement
on Schedule 13E-4 dated October 9, 1998, as amended (the ''Schedule 13E-4"),
filed by AMP Incorporated, a Pennsylvania corporation (the ''Company''), in
connection with AMP's offer to purchase up to 30,000,000 shares of its common
stock, without par value (the ''Shares''), including the associated common stock
purchase rights (the ''Rights''), at a price of $55 per Share, net to the seller
in cash, upon the terms and subject to the conditions set forth in the Offer to
Purchase, dated October 9, 1998 (the ''Offer to Purchase'') and the related
Letter of Transmittal (which, as amended from time to time, together constitute
the ''Offer''). Copies of the Offer to Purchase and the Letter of Transmittal
are filed with the Securities and Exchange Commission as Exhibits (a)(1) and
(a)(2), respectively, to the Schedule 13E-4.
Unless otherwise indicated, all defined terms used herein shall have the same
meaning as those set forth in the Offer to Purchase.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
On October 29, 1998, the Company executed a new commitment letter which
supersedes and replaces the commitment letters previously executed by the
Company. A copy of the new commitment letter is filed as Exhibit (b)(5) hereto
and is incorporated herein by reference.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
Item Description
- -------- ---------------------------------------------------------------------
(b)(5) AMP Incorporated Senior Secured Facilities Commitment Letter, dated
October 29, 1998, by and between Credit Suisse First Boston, DLJ
Capital Funding, Inc., The Chase Manhattan Bank and Chase Securities
Inc.
<PAGE>
SIGNATURE
After due 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.
AMP Incorporated
By: /s/ Robert Ripp
-----------------------------------
Name: Robert Ripp
Title: Chairman and
Chief Executive Officer
Dated: November 10, 1998
<PAGE>
INDEX TO EXHIBITS
Item Description
- -------- -------------------------------------------------------------------
(b)(5) AMP Incorporated Senior Secured Facilities Commitment Letter, dated
October 29, 1998, by and between Credit Suisse First Boston, DLJ
Capital Funding, Inc., The Chase Manhattan Bank and Chase Securities
Inc.
<PAGE>
EXHIBIT (b)(5)
CREDIT SUISSE FIRST BOSTON
Eleven Madison Avenue
New York, NY 10010
DLJ CAPITAL FUNDING, INC.
277 Park Avenue
New York, NY 10172
THE CHASE MANHATTAN BANK
CHASE SECURITIES INC.
270 Park Avenue
New York, NY 10017
AMP Incorporated
470 Friendship Road
Mail Stop 176-40
P.O. Box 3608
Harrisburg, PA 17105-3608
Attention: Mr. Robert Ripp
October 29, 1998
AMP Incorporated
----------------
Senior Secured Credit Facilities
--------------------------------
Commitment Letter
-----------------
Ladies and Gentlemen:
AMP Incorporated ("you" or the "Company") has advised Credit Suisse First
--- -------
Boston ("CSFB"), DLJ Capital Funding, Inc. ("DLJC"), The Chase Manhattan Bank
---- ----
("Chase") and Chase Securities Inc. ("CSI" and, together with CSFB, DLJC and
------- ---
Chase, "we" or "us") that you intend to acquire up to 30 million shares of
-- --
Common Stock, without par value (the "Common Stock"), of the Company pursuant to
------------
a tender offer (the "Tender Offer"). We understand that the cash price of
------------
Common Stock to be paid in the Tender Offer will be $55.00 per share, and that,
in connection with the Tender Offer, the Company or its affiliate AMP Finance
Limited (each a "Borrower") may refinance some or all of their or their
--------
subsidiaries' outstanding debt. You have further advised us that concurrently
with the consummation of the Tender Offer, you will obtain senior secured credit
facilities (the "Facilities") described in the Summary of Principal Terms and
----------
Conditions attached hereto as Exhibit A (the "Term Sheet") in an aggregate
----------
principal amount of
<PAGE>
2
$2,600.0 million (consisting of $1,400.0 million of term facilities and $1,200.0
million of revolving credit facilities) (the Tender Offer, the obtaining of the
Facilities and the borrowings thereunder and the other transactions contemplated
hereby are collectively referred to herein as the "Transactions"). The
------------
approximate sources and uses of the funds necessary to consummate the
Transactions are set forth on Annex I to the Term Sheet. You have requested that
(i) we agree to structure, arrange and syndicate the Facilities, (ii) we commit
to provide the Facilities and (iii) CSFB serve as administrative agent therefor.
In connection with the foregoing, (i) CSFB is pleased to advise you of its
commitment (the "CSFB Commitment") to provide 33-1/3% of the aggregate principal
---------------
amount of the Facilities, (ii) DLJC is pleased to advise you of its commitment
(the "DLJC Commitment") to provide 33-1/3% of the aggregate principal amount of
---------------
the Facilities and (iii) Chase is pleased to advise you of its commitment (the
"Chase Commitment") to provide 33-1/3% of the aggregate principal amount of the
- -----------------
Facilities, in each case upon the terms and subject to the conditions set forth
or referred to in this commitment letter (the "Commitment Letter") and in the
-----------------
Term Sheet and in Exhibit B hereto (the "Conditions"). The CSFB Commitment, the
----------
DLJC Commitment and the Chase Commitment will be allocated pro rata among the
Facilities.
We intend to syndicate the Facilities to a group of financial institutions
(together with us, the "Lenders") identified by us in consultation with you, and
-------
with your consent (such consent not to be unreasonably withheld). We intend to
commence syndication efforts promptly upon the execution of this Commitment
Letter. We will manage all aspects of the syndication, including decisions as
to the selection of institutions to be approached (subject to consultation with
you and your acceptance, such acceptance not to be unreasonably withheld) and
when they will be approached, when their commitments will be accepted, which
institutions will participate, what titles (if any) they will be awarded, the
allocations of the commitments among the Lenders and the amount and distribution
of fees among the Lenders. It is agreed that CSFB will act as the sole and
exclusive administrative agent, that DLJC will act as the sole and exclusive
syndication agent, that Chase will act as documentation agent, that CSFB, DLJC
and CSI will act as co-lead arrangers and as the sole and exclusive advisors for
the Facilities, and that CSFB, DLJC and CSI will, in such capacities, perform
the duties and exercise the authority customarily performed and exercised by
them in such roles. It is also agreed that CSFB, in its discretion,
<PAGE>
3
may appoint one or more collateral agents for the Facilities (which may include
CSFB and its affiliates). You agree that no other agents, advisors, co-agents
or arrangers will be appointed, no other titles will be awarded and no
compensation (other than that expressly contemplated by the Term Sheet and the
Fee Letter referred to below and fees accrued prior to the date hereof in
respect of commitments and agreements of CSFB and DLJC superseded by the
commitments and agreements hereunder) will be paid in connection with the
Facilities unless you and we shall so agree.
You agree to assist CSFB, DLJC and CSI in completing a syndication
satisfactory to us. Such assistance shall include (a) your using your reasonable
best efforts to ensure that the syndication efforts benefit materially from your
existing lending relationships, (b) direct contact between your senior
management and advisors and the proposed Lenders, (c) your assistance in the
preparation of a Confidential Information Memorandum and other marketing
materials to be used in connection with the syndication and (d) the hosting,
with us, of one or more meetings with prospective Lenders.
You shall have delivered no later than October 29, 1998, to CSFB, DLJC and
CSI a completed Confidential Information Memorandum, in form and substance
reasonably satisfactory to CSFB, DLJC and CSI that would be suitable in
connection with the syndication of the Facilities.
It is understood and agreed that we shall be entitled, prior to the
effectiveness of the Facilities, (i) to change the allocation of commitments
between the Tranche A Facility, the Tranche B Facility, the 364-Day Facility and
the Five-Year Facility (as such terms are defined in the Term Sheet) and (ii) to
add additional tranches in order to facilitate the successful syndication of the
Facilities (provided that the aggregate principal amount of the Facilities
remains the same).
CSFB, DLJC, Chase and CSI shall be entitled, after consultation with you,
to change the structure, terms or pricing of the Facilities if the syndication
has not been completed and if CSFB, DLJC, Chase and CSI determine that such
changes are advisable in order to insure a successful syndication of the
Facilities; provided, however, that the total amount of the Facilities shall
-------- -------
remain unchanged. CSFB's, DLJC's and Chase's commitments are subject to the
agreements in this paragraph.
<PAGE>
4
You further agree to prepare and provide promptly to us all information
with respect to each Borrower and the Transactions and the other transactions
contemplated hereby, including all financial information and projections (the
"Projections"), as we may reasonably request in connection with the arrangement
- ------------
and syndication of the Facilities. You hereby represent and covenant that (a)
all written information other than the Projections (the "Information") that has
-----------
been or will be made available to us by you or any of your representatives in
connection with the Transactions is or will be, as of the date thereof, complete
and correct in all material respects and does not or will not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements contained therein not misleading in light of the
circumstances under which such statements are made and (b) all Projections that
have been or will be made available to us by you or any of your representatives
in connection with the Transactions have been or will be prepared in good faith
based upon what you believe to be reasonable assumptions (it being understood
that such Projections are subject to significant uncertainties and
contingencies, many of which are beyond the Borrowers' control, and that no
assurance can be given that the Projections will be realized). You agree to
supplement the Information and the Projections from time to time until the
completion of the syndication so that the representation and covenant in the
preceding sentence remain correct without regard to when such Information and
Projections were made available. You understand that in arranging and
syndicating the Facilities, we may use and rely on the Information and the
Projections without responsibility for independent verification thereof.
As consideration for our commitments hereunder and agreements to perform
the services described herein, you agree to pay to CSFB, DLJC and Chase the
nonrefundable fees set forth in the Term Sheet and in the Senior Secured Credit
Facilities Fee Letter dated the date hereof and delivered herewith (the "Fee
---
Letter").
- ------
You agree to reimburse CSFB, DLJC, Chase, CSI and their respective
affiliates, upon request made from time to time, for their reasonable out-of-
pocket fees and expenses incurred in connection with Facilities and the
preparation, execution and delivery of any related documentation and the
activities thereunder or contemplated thereby, including without limitation due
diligence expenses, syndication expenses, consultants' fees and expenses and the
reasonable fees and expenses of counsel to CSFB, DLJC, Chase, CSI and their
respective affiliates, whether incurred before or after the execution of this
letter.
<PAGE>
5
You hereby agree to indemnify and hold harmless CSFB, DLJC, Chase, CSI and
their respective affiliates and their respective officers, directors, employees,
agents, advisors and controlling persons (each, an "Indemnified Person") from
------------------
and against any and all losses, claims, damages, liabilities and expenses, joint
or several, to which any such Indemnified Person may become subject arising out
of or in connection with this Commitment Letter, the Facilities, the use of the
proceeds thereof, the Transactions or any related transaction or any claim,
litigation, investigation or proceeding relating to any of the foregoing,
regardless of whether any Indemnified Person is a party thereto, and to
reimburse each such Indemnified Person for any reasonable legal or other
expenses as they are incurred in connection with investigating or defending any
of the foregoing; provided, however, that the foregoing indemnification will
-------- -------
not, as to any Indemnified Person, apply to losses, claims, damages, liabilities
or expenses to the extent that they are finally judicially determined by a court
of competent jurisdiction not subject to further appeal to have resulted from
the gross negligence or willful misconduct of such Indemnified Person. No
Indemnified Person shall be liable for any indirect or consequential damages in
connection with its obligations hereunder or its activities related to the
Facilities.
This Commitment Letter is delivered to you on the understanding that
neither this Commitment Letter nor any other agreement between us related to
this Commitment Letter or the Transactions, including the Term Sheet, the
Conditions and the Fee Letter, nor any of their terms or substance shall be
disclosed, directly or indirectly, to any other person except (a) to your
officers, employees, agents and legal advisors who are directly involved in the
consideration of this matter (and then only on a confidential basis) or (b) as
may be required by law or compulsory legal process (in which case you agree to
inform us promptly thereof prior to any such disclosure); provided, however,
-------- -------
that after your acceptance of this Commitment Letter and the Fee Letter, you may
disclose the material terms of this Commitment Letter, the Term Sheet and the
Conditions and the Fee Letter (i) in any filing or disclosure required in
connection with the Transactions under federal securities laws or (ii) in any
other manner otherwise required by applicable law (in each of clauses (i) and
(ii) above, you agree to inform us promptly thereof prior to any such
disclosure).
The reimbursement, indemnification and confidentiality provisions contained
herein and in the Fee
<PAGE>
6
Letter shall remain in full force and effect regardless of whether definitive
financing documentation shall be executed and delivered and notwithstanding the
termination of this Commitment Letter or CSFB's, DLJC's or Chase's commitment
hereunder.
If the foregoing correctly sets forth our agreement, please indicate your
acceptance of the terms hereof and of the Term Sheet, the Conditions and the Fee
Letter by returning to us executed counterparts hereof and of the Fee Letter,
not later than 5:00 p.m., New York City time, on October 29, 1998, failing which
the commitments and agreements contained herein will expire at such time. If
the initial borrowing in respect of the Facilities does not occur on or before
December 18, 1998, then this Commitment Letter and the commitments and
undertakings of CSFB, DLJC, Chase or CSI hereunder shall automatically terminate
unless each of CSFB, DLJC, Chase or CSI shall, in their discretion, agree to an
extension.
This Commitment Letter is intended to be solely for the benefit of the
parties hereto and is not intended to confer any benefits upon, or create any
rights in favor of, any person other than the parties hereto. This Commitment
Letter and CSFB's, DLJC's and Chase's commitments hereunder shall not be
assignable by you without the prior written consent of CSFB, DLJC and Chase (and
any purported assignment without such consent shall be null and void). CSFB's
commitment hereunder may be assigned by CSFB to any of its affiliates or any
Lender, and DLJC's commitment hereunder may be assigned by DLJC to any of its
affiliates or any Lender, and Chase's commitment hereunder may be assigned by
Chase to any of its affiliates or any Lender. Any such assignment to an
affiliate shall not relieve CSFB, DLJC or Chase, as the case may be, from any of
its obligations hereunder unless and until the Facilities shall have been funded
on the Closing Date (as defined in the Term Sheet). Except as provided in the
immediately preceding sentence, any assignment to a Lender shall be by novation
and shall release CSFB, DLJC or Chase, as the case may be, from its commitment
hereunder pro tanto. This agreement contains the entire agreement between the
--- -----
parties relating to the subject matter hereof and supersedes all oral statements
and prior writings with respect thereto. This Commitment Letter may not be
amended or waived except by an instrument in writing signed by you, CSFB, DLJC,
Chase and CSI. This Commitment Letter may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original and all of which together shall constitute one and the same instrument.
Delivery of an executed counterpart of a signature page of this Commitment
Letter by facsimile transmission shall be as effective as delivery of a manually
executed counterpart hereof. This
<PAGE>
7
Commitment Letter shall be governed by, and construed in accordance with, the
internal laws of the State of New York.
We are pleased to have been given the opportunity to assist you in
connection with this important financing.
Very truly yours,
CREDIT SUISSE FIRST BOSTON,
By: _________________________
Name:
Title:
By: _________________________
Name:
Title:
DLJ CAPITAL FUNDING, INC.,
By: _________________________
Name:
Title:
THE CHASE MANHATTAN BANK,
By: _________________________
Name:
Title:
CHASE SECURITIES INC.,
By: _________________________
Name:
Title:
<PAGE>
8
Accepted and agreed to as of
the date first written above,
AMP INCORPORATED,
By: _________________________
Name:
Title:
<PAGE>
CONFIDENTIAL EXHIBIT A
October 29, 1998
AMP Incorporated
----------------
Senior Secured Credit Facilities
--------------------------------
Summary of Principal Terms and Conditions
-----------------------------------------
Borrowers: AMP Incorporated (the "Company") and, in respect of the
- ---------
Revolving Facilities only, AMP Finance Limited (each a
"Borrower").
--------
Tender Offer: The Company will acquire up to 30 million shares of its
- ------------
Common Stock without par value (the "Common Stock"),
------------
pursuant to a tender offer (the "Tender Offer"). We
------------
understand that the cash price of Common Stock to be
paid in the Tender Offer will be $55.00 per share, and
that, in connection with the Tender Offer, The
Borrowers may refinance some or all of their or their
subsidiaries' outstanding debt. In connection with the
Tender Offer the Borrowers will obtain the Facilities
described below (the Tender Offer, the obtaining of the
Facilities and the borrowings thereunder and the other
transactions contemplated hereby being collectively
referred to herein as the "Transactions").
------------
Sources and Uses: The approximate sources and uses of funds necessary to
- ----------------
consummate the Transactions are set forth on Annex I
attached hereto.
Facilities: (A) Two Senior Secured Term Loan Facilities in an
- ----------
aggregate principal amount of up to $1,400.0
million (the "Term Loan Facilities"), such
--------------------
aggregate principal amount to be allocated between
(a) a Tranche A Term Loan Facility in an aggregate
principal amount of up to $1,000.0 million (the
"Tranche A Facility") and (b) a Tranche B Term
------------------
Loan Facility in an aggregate principal amount of
$400.0 million (the "Tranche B Facility").
------------------
(B) Two Senior Secured Revolving Credit Facilities
(the "Revolving
---------
<PAGE>
2
Facilities" and, together with the Term Loan
----------
Facilities, the "Facilities") in an aggregate
----------
principal amount of $1,200.0 million, such
aggregate principal amount to be allocated between
(a) a five-year facility (the "Five-Year
---------
Facility") in an aggregate amount of
--------
$800.0 million and (b) a 364-day facility (the
"364-Day Facility") in an aggregate amount of
----------------
$400.0 million. Up to $200.0 million of the Five-
Year Facility will be available in the form of
letters of credit.
Agents: CSFB will act as the sole and exclusive administrative
- ------
agent (the "Administrative Agent") for (and may appoint
---------------------
a collateral agent for) and DLJC will act as the sole
and exclusive syndication agent (the "Syndication
-----------
Agent"), for and Chase will act as documentation
------
agent (a "Documentation Agent" and, together with
-------------------
the Administrative Agent and the Syndication Agent,
the "Agents") for a syndicate of financial institutions
------
identified in consultation with and with the consent of
the Company (such consent not to be unreasonably
withheld) (the "Lenders"), and each will perform the
-------
duties customarily associated with such role.
Arrangers: CSFB, DLJC and CSI will act as sole advisors and co-
- ---------
lead arrangers for the Facilities (the "Co-Lead
-------
Arrangers") and will perform the duties customarily
----------
associated with such roles.
Purpose: (A) The proceeds of the Term Loan Facilities and a
- -------
portion of the Revolving Facilities will be used
on the date of the initial funding under the
Facilities (the "Closing Date"), solely (i) to
------------
finance the Tender Offer, (ii) at the Company's
election, to repay certain existing indebtedness
and
<PAGE>
3
(iii) to pay related fees and expenses.
(B) Thereafter, the proceeds of loans under the
Revolving Facilities and the letters of credit
will be used for general corporate purposes.
Availability: (A) The full amount of the Term Loan Facilities must
- ------------
be drawn in a single drawing on the Closing Date.
Amounts repaid under the Term Loan Facilities may
not be reborrowed. The Term Loan Facilities will
not be available to AMP Finance Limited.
(B) Loans under the Revolving Facilities will be
available at any time prior to the final
maturities of the Revolving Facilities. Amounts
repaid under the Revolving Facilities may be
reborrowed prior to the final maturity provided
applicable borrowing conditions are met. Letters
of credit will be available at any time before the
fifth business day prior to the final maturity of
the Five-Year Facility.
The availability of the Revolving Facilities will
be reduced to the extent that certain specified
indebtedness of the Borrowers or their
subsidiaries, the maximum amount of which shall be
agreed upon in the final documentation, remains
committed or is incurred.
Final Maturity (A) Loans made under the Tranche A
- --------------
and Amortization: Facility will mature on the fifth anniversary of
- ----------------
the Closing Date.
(B) Loans made under the Tranche B Facility will
mature on the seventh anniversary of the Closing
Date.
<PAGE>
4
(C) The amortization schedules of the Tranche A
Facility and the Tranche B Facility are set forth
on Annex IV hereto.
(D) The Five-Year Facility will mature on the fifth
anniversary of the Closing Date. Unless extended
as described below, Lenders' commitments under the
364-Day Facility will terminate on the 364th day
(the "Termination Date") following the Closing
-----------------
Date.
At the request of the Borrowers made at least 45
days prior to the then-scheduled Termination Date,
the Termination Date may be extended for an
additional 364 days; provided, however, that, in
-------- -------
each case no such extension results in a maturity
date therefor later than the maturity date of the
Five-Year Facility. Each Lender under the 364-Day
Facility shall have the option to participate in
such extension and shall notify the Borrowers of
its election not less than 29 days prior to the
then-scheduled Termination Date. If a Lender
under the 364-Day Facility elects to participate
in such extension, the commitment of such Lender
under the 364-Day Facility shall be extended to
the date that is 364 days following the then-
scheduled Termination Date. If a Lender under the
364-Day Facility elects not to participate in such
extension, such Lender's commitment under the 364-
Day Facility shall not be extended and shall
expire on the then-scheduled Termination Date and
the outstanding loans made by such Lender shall
convert to bullet term loans maturing on the fifth
anniversary of the Closing Date with terms to be
mutually agreed upon in the final documentation,
<PAGE>
5
or with an amortization schedule to be mutually
agreed upon in the final documentation, provided
--------
that, in each case no such conversion results in a
maturity date therefor later than the maturity
date of the Five-Year Facility.
Guarantees: All obligations of the Borrowers under the Facilities
- ----------
will be unconditionally guaranteed by each existing and
each subsequently acquired or organized domestic
subsidiary of the Company as fully as is permitted by
applicable law. All obligations of AMP Finance Limited
under the Revolving Facilities will be unconditionally
guaranteed by the Company.
Security: The Facilities and the related subsidiary guarantees
- --------
will be secured as fully as is permitted by applicable
law by substantially all the assets of the Company and
each existing and each subsequently acquired or
organized domestic subsidiary of the Company
(collectively, the "Collateral"), including but not
----------
limited to (a) a first priority pledge of (i) all the
capital stock of each existing and each subsequently
acquired or organized subsidiary of the Company (which
pledge, in the case of any foreign subsidiary, shall be
limited to the percentage of the capital stock of such
foreign subsidiary that is necessary to avoid adverse
tax consequences to the Company) and (ii) the
promissory note issued in connection with the
Flexitrust and (b) perfected first priority security
interests in, and mortgages on, substantially all
tangible and intangible assets of the Company and each
existing and each subsequently acquired or organized
domestic subsidiary of the Company (including but not
limited to accounts receivable, inventory, general
intangibles, intellectual property, real property,
equipment, cash and
<PAGE>
6
proceeds of the foregoing). By mutual agreement items
may be excluded from the Collateral where the expense
is not reasonably justified by the benefit to the
Lenders. In addition, the Facilities and the related
subsidiary guarantees will be supported by negative
pledges on the assets of each existing and each
subsequently acquired foreign subsidiary of the
Company, including but not limited to AMP Finance
Limited, subject to certain exceptions to be agreed
upon.
All the above-described pledges, security interests and
mortgages shall be created on terms, and pursuant to
documentation, reasonably satisfactory to the Company
and the Lenders, and, subject to limited exceptions to
be agreed upon, none of the Collateral shall be subject
to any other pledges, security interests or mortgages
(except that security interests in Collateral will be
shared equally and ratably with the lenders under
certain existing indebtedness of the Company and its
domestic subsidiaries to the extent required by the
terms of such facilities).
Collateral (other than Collateral referred to in clause
(a) of the next preceding paragraph) shall be released
from the liens and security interests under the
security documents if and only if (a) Moody's Investors
Service ("Moody's") and Standard & Poor's Corporation
-------
("S&P") assign ratings of Baa1 and BBB+, respectively,
---
or better, to the Company's long term unsecured senior
indebtedness ("Designated Indebtedness") for a period
---------- ------------
of 30 consecutive days and (b) at the end of such 30
day period, no Default or Event of Default has occurred
and is continuing. Any such release shall not require
the consent of any Lender and shall be at the
Borrowers' expense.
Interest Rates As set forth in Annex II hereto.
- --------------
<PAGE>
7
and Fees:
- --------
Mandatory Prepayment: Loans under the Term Loan Facilities shall be prepaid
- --------------------
with (a) a percentage of the net cash proceeds of all
non-ordinary-course asset sales or other dispositions
of property by the Company and its subsidiaries
(including insurance and condemnation proceeds),
subject to exceptions to be agreed upon, (b) a
percentage of the net cash proceeds of issuances of
debt obligations of the Company and its subsidiaries,
subject to exceptions to be agreed upon, and (c) 100%
of the net cash proceeds of issuances of equity
securities of the Company and its subsidiaries, subject
to exceptions to be agreed upon.
The above-described mandatory prepayments shall be
allocated between the Term Loan Facilities pro rata,
subject to the provisions set forth below under the
caption "Special Application Provisions". Within each
Term Loan Facility, mandatory prepayments shall be
applied pro rata to reduce the remaining amortization
payments under such Facility.
Special Application Holders of loans under the Tranche B Facility may, so
- -------------------
Provisions: long as loans are outstanding under the Tranche A
- -----------
Facility, decline to accept any mandatory prepayment
described above and, under such circumstances, all
amounts that would otherwise be used to prepay loans
under the Tranche B Facility shall be used to prepay
loans under the Tranche A Facility.
Voluntary Voluntary prepayments will be permitted in whole or in
- ---------
Prepayments: part, at the option of the Borrowers, in minimum
- -----------
principal amounts to be agreed upon, without premium or
penalty, subject to reimbursement of the Lenders'
redeployment costs in the case of prepayment of
Adjusted LIBOR borrowings other than on the last day
<PAGE>
8
of the relevant Interest Period. All voluntary
prepayments of the Term Loan Facilities will be
applied pro rata to the remaining amortization
payments under the Term Loan Facilities.
Representations and Customary for facilities and transactions of this
- -------------------
Warranties: type, including but not limited to: accuracy of
- ----------
financial statements; no material adverse change;
absence of material litigation; no violation of
agreements or instruments; compliance with
Regulations T, U and X of the Board of Governors of
the Federal Reserve System of the United States;
compliance with laws (including employee benefits
and environmental laws); payment of taxes; ownership
of properties; solvency; effectiveness of regulatory
approvals; labor matters; environmental matters;
accuracy of information; validity, priority and
perfection of security interests in the Collateral;
and Year 2000 matters.
Conditions Precedent Customary for facilities and transactions of this
- ---------------------
to Initial Borrowing: type, including but not limited to the satisfaction
- --------------------
or waiver of the conditions set forth on Exhibit B
hereto.
Affirmative Customary for facilities and transactions of this
- -----------
Covenants: type, including but not limited to: use of
- ---------
proceeds; maintenance of corporate existence and
rights; compliance with laws; performance of
obligations; maintenance of properties in good
repair; maintenance of appropriate and adequate
insurance; inspection of books and properties;
payment of taxes and other liabilities; notice of
defaults, litigation and other adverse action;
delivery of financial statements, financial
projections and compliance certificates; and further
assurances.
<PAGE>
9
Negative Covenants: Customary for facilities and transactions of this
- ------------------
type, including, but not limited to: limitations on
indebtedness; limitations on loans, investments and
joint ventures; limitations on dividends on, and
redemptions and repurchases of, capital stock;
limitations on mergers, acquisitions and asset sales
(with such carve-outs as may be agreed upon);
limitations on liens and sale-leaseback
transactions; limitations on transactions with
affiliates; limitations on changes in business
conducted; limitations on amendment of indebtedness
and other material documents; and limitations on
prepayments, redemptions and repurchases of
subordinated debt and senior debt.
Limitation on Restricted Payments: to the extent
that: (a) Moody's and S&P assign ratings of Baa3 and
BBB-, respectively, or better, to the Designated
Indebtedness, the Borrowers shall not be subject to
a restricted payments test; (b) Moody's assigns a
rating of Ba1 or S&P assigns a rating of BB+ to the
--
Designated Indebtedness, the Borrowers shall be
subject to the restricted payments test described in
the following paragraph and a free cash flow test;
and (c) notwithstanding clause (b) above, Moody's
assigns a rating of Ba2 or lower or S&P assigns a
--
rating of BB or lower to the Designated
Indebtedness, the Borrowers shall not be permitted
to make any Restricted Payments (to be defined).
The Borrowers shall not, and shall not permit any
subsidiary, directly or indirectly, to make a
Restricted Payment if at the time such Borrower or
such subsidiary makes such Restricted Payment (a) a
Default shall have occurred and be continuing (or
would result therefrom);
<PAGE>
10
(b) after giving effect to such Restricted Payment
such Borrower is not in compliance (on a pro forma
basis) with any of the covenants or (c) the
aggregate amount of such Restricted Payments exceeds
$250.0 million (the "Basket"). The Basket shall be
------
increased by (i) 50% of the Consolidated Net Income
(to be defined) accrued during the period (treated
as one accounting period) from the beginning of the
fiscal quarter immediately following the fiscal
quarter in which the initial funding of the
Facilities occurs (the "Closing Date") to the end of
------------
the most recent fiscal quarter ending at least 45
days prior to the date of a particular Restricted
Payment and (ii) 100% of any new cash proceeds of
the sale of equity securities (other than certain
disqualified stock). If such Consolidated Net Income
shall be a deficit, the Basket shall be decreased by
100% of such deficit.
The Borrowers shall not own or acquire any margin
stock (except for the Common Stock) of any other
entity, unless at such time, (i) such margin stock
is pledged to the Lenders (the "Margin Stock
------------
Pledge") and (ii) the Borrower delivers evidence
------
satisfactory to the Agents, in their sole
discretion, that the Margin Stock Pledge complies
with Regulations T, U and X of the Board of
Governors of the Federal Reserve System of the
United States.
Selected Financial Usual for facilities and transactions of this type
- ------------------
Covenants: and others to be agreed upon, including: (a)
- ---------
maximum ratio of Total Debt to EBITDA, (b) minimum
ratio of EBITDA to Interest Expense, and (c) minimum
net worth. Such covenants will be tested quarterly
and calculated on a trailing four quarter basis as
outlined in Annex III hereto.
<PAGE>
11
Events of Default: Customary for facilities and transactions of this
- -----------------
type, subject to applicable grace periods, including
but not limited to: nonpayment of principal,
interest fees or other amounts when due; violation
of covenants; failure of any representation or
warranty to be true in all material respects when
made or deemed made; cross default and cross
acceleration; Change of Control; bankruptcy events;
material judgments; ERISA; and actual or asserted
invalidity of the guarantees or security documents.
In the event that a Change of Control occurs within
the first twelve months following the Closing Date,
the Lenders will have the right to require the
Borrower to prepay the Tranche B Facility at a
purchase price equal to 101% of the principal amount
thereof.
Cost and Yield Customary for facilities and transactions of this
- --------------
Protection: type.
- ----------
Assignments and The Lenders will be permitted to assign loans and
- ---------------
Participations: commitments to other Lenders (or their affiliates)
- --------------
without restriction, or to other financial
institutions with the consent of the Administrative
Agent and the Company, in each case not to be
unreasonably withheld. The Administrative Agent
will receive a customary processing and recordation
fee, payable by the assignor and/or the assignee,
with each assignment. Assignments will be by
novation.
The Lenders will be permitted to participate loans
and commitments to other financial institutions
without restriction. Voting rights of participants
shall be limited to matters in respect of (a)
reductions of principal, interest or fees, (b)
extensions of scheduled principal
<PAGE>
12
payment dates and (c) certain releases of guarantees
or Collateral.
Expenses and In addition to those reasonable out-of-pocket
- ------------
Indemnification: expenses reimbursable under the Commitment Letter,
- ---------------
all reasonable out-of-pocket expenses of the Lenders
for enforcement costs and documentary taxes
associated with the Facilities are to be paid by the
Borrowers.
The Borrowers will indemnify the Co-Lead Arrangers,
the Agents, the Lenders and their respective
officers, directors, employees, affiliates, agents
and controlling persons and hold them harmless from
and against all liabilities, costs and expenses
(including reasonable fees, disbursements and other
charges of counsel) arising out of or relating to
any claim or any litigation or other proceedings
(regardless of whether any such indemnified person
is a party thereto) that relate to the Transactions,
the Facilities or any transactions connected
therewith; provided, however, that no indemnified
-------- -------
person will be indemnified for any cost, expense or
liability to the extent determined by a court of
competent jurisdiction in a final and nonappealable
judgment to have resulted from its gross negligence
or willful misconduct.
Governing Law New York.
- -------------
and Forum:
- ---------
<PAGE>
ANNEX I
Sources and Uses of Funds
(in millions of dollars)
(all figures are approximate)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
Sources of Funds Use of Funds
- ---------------- ------------
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Senior Credit Tender Offer $1,650.0
Facilities/1/
Term Loan Facilities $1,400.0
Revolving Facilities $ 332.3 Transaction 82.3/2/
Expenses
- -----------------------------------------------------------------------------
-------- --------
- -----------------------------------------------------------------------------
Total Sources $1,732.3 Total Uses $1,732.3
- ------------- ======== ---------- ========
- -----------------------------------------------------------------------------
</TABLE>
________________________
/1/ Represents expected amount drawn at the Closing Date, comprised of $1,000.0
million under the Tranche A Facility, $400.0 million under the Tranche B
Facility and $332.3 million under the Five-Year Facility.
/2/ Includes financing fees, fees associated with the Tender Offer, legal fees
and other expenses.
<PAGE>
ANNEX II
--------
Interest Rates: The interest rates under the Facilities will be, at the
- --------------
Borrowers' option, as follows:
Revolving Facilities and Tranche A Facility
-------------------------------------------
Adjusted LIBOR plus 200 basis points or Base Rate plus 100
basis points, subject to adjustment as set forth below
under the caption "Change in Commitment Fees and Interest
Rates".
Tranche B Facility
------------------
Adjusted LIBOR plus 275 basis points or Base Rate plus 175
points, subject to adjustment as set forth below under the
caption "Change in Commitment Fees and Interest Rates".
All Facilities
--------------
The Borrowers may elect interest periods of 1, 2, 3 or 6
months for Adjusted LIBOR borrowings.
Calculation of interest shall be on the basis of actual
days elapsed in a year of 360 days (or 365 or 366 days, as
the case may be, in the case of Base Rate loans based on
the Prime Rate) and interest shall be payable at the end
of each interest period and, in any event, at least every
3 months.
The Base Rate is the highest of CSFB's Prime Rate and the
Federal Funds Effective Rate (to be defined) plus 1/2 of
1%.
Adjusted LIBOR will at all times include statutory
reserves.
Default Rate: The applicable interest rate plus 2% per annum.
- ------------
Commitment Fees: 0.25% per annum of the undrawn portion of the commitments in
- ---------------
respect of the 364-Day Facility and 0.50% per annum of the
undrawn portion of the commitments
<PAGE>
2
in respect of the Five-Year Facility and the Term Loan
Facilities (subject to adjustment as set forth below under
the caption "Change in Commitment Fees and Interest Rates"),
in each case commencing to accrue upon the execution and
delivery of the Credit Agreements and payable quarterly in
arrears and upon the termination of any commitment, in each
case for the actual number of days elapsed in a 360-day year.
Letter of Credit The Borrowers shall pay a commission on the face amount of
- ----------------
Fees: all outstanding letters of credit at a per annum rate equal
- ----
to the applicable margin over Adjusted LIBOR. Such commission
shall be shared ratably among the Lenders participating in
the Revolving Credit Facilities and shall be payable
quarterly in arrears.
A fronting fee in the amount of 0.25% per annum on the face
amount of each letter of credit shall be payable quarterly in
arrears to the Lender issuing such letter of credit (the
"Issuing Bank") for its own account. In addition, customary
------------
administrative, issuance, amendment, payment and negotiation
charges shall be payable to the applicable Issuing Bank for
its own account.
Change in The Credit Agreements will contain provisions under which
- ---------
Commitment Fees commitment fees and interest rates under the Facilities will
- ---------------
and Interest be adjusted in increments to be agreed upon based on
- ------------
Rates: performance goals or ratings to be agreed upon.
- -----
<PAGE>
ANNEX III
Indicative Covenant Levels
--------------------------
(commencing December 31 of the applicable year)
-----------------------------------------------
<TABLE>
<CAPTION>
I. Total Debt/EBITDA
-----------------
1998 1999 2000 2001 and Thereafter
- ---- ---- ---- -------------------
<S> <C> <C> <C>
3.50x 3.00x 2.75x 2.50x
II. Minimum Ratio of EBITDA/Interest Expense
----------------------------------------
1998 1999 2000 and Thereafter
- ---- ---- -------------------
3.50x 3.75x 4.00x
III. Minimum Net Worth
-----------------
</TABLE>
Initially 75% of the net worth of the Company at the Closing Date, after
giving effect to the Transactions. This covenant level shall increase by 25% of
Consolidated Net Income on December 31 of each year thereafter (excluding any
years during which Consolidated Net Income is negative).
<PAGE>
ANNEX IV
Amortization Schedule
(in millions)
<TABLE>
<CAPTION>
I. Tranche A Facility
Year 1 Year 2 Year 3 Year 4 Year 5
- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
0 $125.0 $225.0 $275.0 $375.0
II. Tranche B Facility
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
- ------ ------ ------ ------ ------ ------ ------
0 $4.0 $4.0 $4.0 $4.0 $4.0 $380.0
</TABLE>
<PAGE>
EXHIBIT B
The commitments of Credit Suisse First Boston ("CSFB"), DLJ Capital
----
Funding, Inc. ("DLJC") and The Chase Manhattan Bank ("Chase" and, together with
----
CSFB and DLJC, the "Agents") pursuant to the Senior Secured Credit Facilities
------
Commitment Letter (the "Letter") shall be subject to the following conditions
------
(capitalized terms used but not defined herein shall, unless otherwise
specified, have the meanings assigned to such terms in the Letter):
(i) after the date of the Letter there shall not have occurred or
become known to any of the Agents any event or events, adverse condition or
change in or affecting a Borrower that, individually or in the aggregate,
could have a Material Adverse Effect;
(ii) the preparation, execution and delivery of definitive
documentation satisfactory to each of the Agents, in connection with (a)
the Facilities and (b) the Tender Offer;
(iii) the Transactions shall have been consummated or shall be
consummated simultaneously on the Closing Date, in each case in all
material respects in accordance with the terms hereof and the terms of the
relevant documentation therefor (and without the waiver of any such terms);
(iv) the Company shall not have entered into a definitive agreement
or an agreement in principle (and the Company shall not have announced an
intention to pursue, or seek to pursue, a transaction) with respect to a
merger, other business combination or acquisition proposal or disposition
of substantial assets (excluding any assets disposed of in the ordinary
course of business) which the Agents in their reasonable judgment have
determined will adversely affect their ability to successfully syndicate
the Facilities upon the terms offered and within the time permitted prior
to the termination of the Commitment Letter;
(v) each of the Agents and the Lenders shall be reasonably satisfied
as of the Closing Date with the material terms and conditions of the
Flexitrust;
(vi) after giving effect to the Transactions and the other
transactions contemplated by the Letter, each Borrower and its subsidiaries
shall have outstanding no indebtedness or preferred stock other than (a)
the loans under the Facilities and (b) other indebtedness or preferred
stock to be agreed upon;
<PAGE>
2
(vii) customary closing conditions for transactions similar to the
Facilities, as applicable, including without limitation (a) the accuracy of
all representations and warranties, (b) the absence of any defaults,
prepayment events or creation of liens under debt instruments or other
agreements as a result of the Transactions and the other transactions
contemplated by the Letter, (c) the absence of any material change in the
capital, corporate and organizational structure of each Borrower and its
subsidiaries (after giving effect to the Transactions and the establishment
of the Flexitrust), (d) first-priority perfected security interests in the
Collateral (except as otherwise agreed), (e) compliance with applicable
laws and regulations (including employee health and safety, margin
regulations and environmental laws), (f) obtaining reasonably satisfactory
insurance, (g) evidence of authority, (h) consents of all relevant persons,
and (i) the receipt by each of the Agents of reasonably satisfactory legal
opinions;
(viii) each of the Agents, and, if applicable, the Lenders, shall have
received a certificate reasonably satisfactory in all respects to each of
the Agents and the Lenders, as applicable, from the Chief Financial Officer
of each Borrower certifying that, after giving effect to the Transactions,
each Borrower will not (a) be insolvent, (b) be rendered insolvent by the
indebtedness incurred in connection therewith, (c) be left with
unreasonably small capital with which to engage in its business or (d) have
incurred debts beyond its ability to pay such debts as they mature;
(ix) there shall not have occurred after the date of the Letter (a)
any general suspension of trading in, or limitation on prices for,
securities on any national securities exchange or in the over-the-counter
market in any Applicable Jurisdiction, (b) the declaration of a banking
moratorium or any suspension of payments in respect of banks in any
Applicable Jurisdiction, (c) the commencement of a war, armed hostilities
or other international or national calamity or emergency, directly or
indirectly involving the United States, (d) any limitations (whether or not
mandatory) imposed by any governmental authority on the nature or extension
of credit or further extension of credit by banks or other lending
institutions, (e) in the case of the foregoing clauses (c) and (d), a
material escalation or worsening thereof, or (f) any other material adverse
change in banking or capital market conditions that (A) has had or
reasonably could be expected to have a material adverse effect on, or has
materially impaired, the syndication of
<PAGE>
3
bank credit facilities, and (B) that any of the Agents shall determine
makes it impracticable to complete the syndication of the Facilities prior
to the termination of the marketing period with respect thereto;
(x) each of the Agents' satisfaction that, immediately prior to and
during the marketing period for the Facilities, there shall be no competing
issues of debt securities or commercial bank facilities (other than the
Facilities) of a Borrower or any of its affiliates;
(xi) after the date of the Letter, no information becomes known to
any Agent that any of the Agents in good faith believes is inconsistent in
a material and adverse manner with (a) any information or other matter
disclosed prior to the date of the Letter or (b) any information or other
matter obtained by the Agents during their due diligence investigation;
(xii) there shall have not occurred after the date of the Letter any
Change of Control;
(xiii) the Company shall have received investment grade ratings on its
long term secured senior indebtedness from both Standard & Poor's
Corporation & Moody's Investors Service;
(xiv) the Company's EBITDA (excluding restructuring and one-time
charges due to the Borrower's profit improvement plan and expenses incurred
in connection with the Transactions, the Flexitrust and the Allied Signal
tender offer) during the fiscal quarter ending September 30, 1998 shall
have been at least $205.0 million; and
(xv) payment of fees and expenses.
A "Material Adverse Effect" shall mean the result of one or more
events, changes or effects which, individually or in the aggregate, could
reasonably be expected to have a material adverse effect on (i) the business,
results of operations, property, condition (financial or otherwise) or prospects
of the Company and its subsidiaries, taken as a whole, or (ii) the validity or
enforceability of any of the documents entered into in connection with the
Transactions or the other transactions contemplated by the Letter or the rights,
remedies and benefits available to the parties thereunder.
"Applicable Jurisdiction" means the United States and New York State.
