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August 27, 1998
Dear Fellow Employee:
As you undoubtedly have seen and heard, AlliedSignal is waging a massive
public relations campaign to try to drum up support for its opportunistic
$44.50 offer. I can assure you that their calculated effort to attack AMP
and its value will not succeed. Our job, as always, is to stay focused on
protecting the interests of our shareholders, employees and other
constituencies, and we are confident that we have chosen the right course
with our strategic plan.
Many of you have questions about AlliedSignal's tender offer and upcoming
consent solicitation, and the impact of these events on the AMP shares you
may own directly or as a participant in the 401(k) plans. Let me address
some of these issues:
o AlliedSignal's tender offer has a scheduled expiration date of
September 11, 1998. In reality, that date has little
significance. The offer is subject to numerous conditions --
such as the elimination of AMP's rights plan -- and I can assure
you that these conditions cannot be met by September 11.
AlliedSignal can be expected to extend its offer for a
substantial period of time, and even shareholders who may
ultimately wish to consider the offer have no need to tender
their shares now.
o AlliedSignal also intends to engage in a consent solicitation,
asking AMP shareholders to more than double the size of the Board
and "pack" the Board with 17 AlliedSignal officers and directors.
These AlliedSignal insiders, if elected, would constitute a
majority of our Board and, not surprisingly, would support the
AlliedSignal takeover.
o AMP will be conducting an active countersolicitation, asking our
shareholders to oppose AlliedSignal's solicitation of consents.
Only shareholders of record on October 15, 1998 will be eligible
to vote, so you can expect that this solicitation will not begin
in earnest until mid-October.
o We believe that AlliedSignal's desire to pack AMP's Board with 17
of its own officers and directors is particularly outrageous and
would create irreconcilable conflicts of interest. It is hard to
imagine a circumstance in which AlliedSignal's nominees would
want to continue our efforts to increase the value of AMP. It
is, after all, in AlliedSignal's own interest to pay our
shareholders as low a price as possible for their shares.
o AMP's Board recently amended our shareholder rights plan in order
to protect AMP's shareholders, employees and other
constituencies. AlliedSignal has complained long and loud about
this -- just as we expected they would -- because the amendments
were designed to prevent AlliedSignal from buying AMP on the
cheap. The rights plan now provides that if AMP's independent
directors cease to constitute a majority of the Board, the rights
plan could not be "redeemed" until November 1999.
o The effect of the rights plan, as amended, is that if
AlliedSignal places its nominees on AMP's Board, AMP could not be
sold until November 1999 giving AMP the opportunity to realize
the benefits of its profit improvement plan. Of course, once AMP
has demonstrated the ability to meet -- and hopefully beat -- the
profit improvement plan, AMP will no longer be a bargain purchase
opportunity for AlliedSignal, which may well cause it to lose
interest.
o As evidence of its confidence in the AMP management team and in
all of our employees -- and in the expected results of our
strategic program -- our Board also resolved not to adopt a new
shareholder rights plan for at least 6 months following the
expiration of our existing plan in November 1999.
Finally, I want to reiterate what I said about our profit improvement plan
at our Town meeting on Monday: we are accelerating its implementation with
a renewed spirit and an absolute determination to make AMP a stronger and
more competitive company for all of us.
I will continue to provide you with regular updates as events develop --
and you should feel free to contact me with any thoughts or questions you
may have.
Remember: Our best response to AlliedSignal's opportunistic offer is to
really move the performance needle. Please direct your energy and skills
to making AMP the premier company we know it to be. And, of course, for
those of you that are shareholders, we urge you not to tender your shares
to AlliedSignal and we ask you to oppose their solicitation of consents.
These are challenging times for AMP, and I need your support. Our
customers are counting on us, and it is vital that we not let them down.
Robert Ripp
Chairman and CEO
TO BE PRINTED ON REVERSE SIDE OF LETTER
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 of AMP: Richard Skaare
(Director, Corporate Communication), Douglas Wilburne (Director, Investor
Relations) and Mary Rakoczy (Manager, Shareholder Services). 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") to act as
its financial advisor in connection with the AlliedSignal Offer, for which
CSFB will receive customary fees, as well as reimbursement of reasonable
out-of-pocket expenses. In addition, AMP has agreed to indemnify CSFB and
certain related persons against certain liabilities, including certain
liabilities under the federal securities laws, arising out of its
engagement. CSFB is an investment banking firm that provides a full range
of financial services for institutional and individual clients. CSFB does
not admit 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 CSFB. 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 the normal course of its business, CSFB
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
and its associates 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 August 19, 1998, CSFB had a net long position of 124,466
shares of AMP common stock.
