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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.20)
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
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This Amendment No.20 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 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
Subsection (b) of Item 7 is hereby amended by adding the following
paragraphs at the end thereof:
THE AMP SELF TENDER OFFER
In furtherance of AMP's goal to provide enhanced value to its
shareholders in the nearer term on a basis consistent with the pursuit of
its business strategy, the Board, after having had the benefit of
discussions with, and the advice of, AMP's management and its financial and
legal advisors, at a meeting held on September 28, 1998, approved the
commencement of a self tender offer by AMP for up to 30 million shares of
Common Stock (including the Rights associated therewith) at a price per
Share of $55.00 net to the seller in cash (the "AMP Self Tender Offer").
The AMP Self Tender Offer will be subject to certain conditions, including
receipt of the necessary financing (the "Financing Condition"). AMP has
received financing commitments for $3.25 billion from affiliates of Credit
Suisse First Boston and Donaldson, Lufkin & Jenrette Securities
Corporation. The proceeds of this financing will be used to: (i)
repurchase shares of Common Stock, (ii) potentially refinance certain
existing indebtedness that may be repaid in connection with the AMP Self
Tender Offer and related financing, (iii) pay related fees and expenses,
and (iv) provide AMP with working capital. AMP expects to obtain this
financing from the following sources: (a) proceeds of borrowings under
senior secured credit facilities (consisting of $1,750 million of term
facilities and a $750 million revolving credit facility) (the "Facilities")
to be provided pursuant to a commitment letter, dated September 27, 1998,
from Credit Suisse First Boston and DLJ Capital Funding, Inc. (the
"Facilities Commitment Letter"); and (b) (i) proceeds obtained from the
issuance of up to $750 million of senior notes by AMP (the "Senior Notes")
through a private placement pursuant to Rule 144A of the Securities Act of
1933, as amended, and/or (ii) to the extent that the Senior Notes are not
sold prior to the purchase of Shares pursuant to the AMP Self Tender Offer,
proceeds of borrowings under a bridge loan (the "Bridge Loan") of up to
$750 million from Credit Suisse First Boston and DLJ Bridge Finance, Inc.,
(collectively, the "Bridge Lenders") as contemplated by a commitment
letter, dated September 27, 1998, by and among the Company and the Bridge
Lenders (the "Bridge Commitment Letter"). The Facilities Commitment Letter
and the Bridge Commitment Letter are subject to certain conditions,
including, among others, finalization of certain financial terms and other
provisions and that AMP shall not have had a change in its Board of
Directors resulting in less than a majority of directors being
"disinterested directors" (as defined in the Pennsylvania Business
Corporation Law). The Financing Condition will be satisfied upon the
receipt of the proceeds of the financings referred to above if (i) the
availability of such proceeds does not require closing under the Bridge
Loan and (ii) the overall final terms of the Senior Notes and the
Facilities are satisfactory to AMP. THIS AMENDMENT NO. 20 DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SENIOR NOTES. The Facilities Commitment Letter and the Bridge Commitment
Letter are filed as Exhibits 67 and 68 hereto, respectively, and are
incorporated herein by reference.
THE FLEXITRUST ARRANGEMENT
On September 28, 1998, the Board authorized AMP management to enter
into a Trust Agreement (the "Trust Agreement") to establish a grantor trust
(the "Trust") to hold shares of Common Stock. The Trust is targeted to
free operating cash flow, which would otherwise be used to fund, among
other things, cash benefit and compensation requirements, of approximately
$1 billion over the next ten years. The Trust will not affect AMP's
employee benefit and compensation plans. Pursuant to the terms of the
Trust, the shares will periodically be released from the Trust, at which
time they may be used in kind to satisfy certain stock-based obligations or
sold to raise the cash necessary to fund certain cash-based obligations.
The Trust will be administered by a committee consisting of AMP's Chief
Financial Officer, General Legal Counsel (or, prior to November 1, 1998,
AMP's Associate General Legal Counsel) and Chief Human Resource Officer
(the "Trust Committee"). Assets of the Trust remain subject to the claims
of AMP's creditors.
In connection with the establishment of the Trust, AMP expects,
pursuant to a Stock Purchase Agreement, to sell to the Trust on or about
October 5, 1998, an aggregate of 25 million authorized but unissued shares
of Common Stock (the "Trust Shares") for a purchase price of $39 3/16 per
Share, the closing price per Share on the New York Stock Exchange on
September 25, 1998. The Trust will issue to AMP, as payment for the Trust
Shares, a 10-year note payable to AMP in the principal amount of
approximately $980 million. AMP will make future contributions to the
Trust which, together with dividends paid in respect of the Trust Shares,
will be sufficient to allow the Trust to make principal and interest
payments due on such note. As principal payments are made on such note, a
proportionate number of Trust Shares will become available for use by the
Trust in satisfaction of certain benefit and compensation obligations of
AMP.
Generally, Trust Shares held by the Trust will be voted or consented
on any matter or tendered in the same proportion that all other shares of
Common Stock are voted, consented or tendered. However, in the case of a
self tender made by AMP or in the case of a third party tender or exchange
offer for less than a majority of all outstanding shares of Common Stock,
Trust Shares will be tendered only upon directions of the Trust Committee.
The Trust Committee is expected to instruct the trustee of the Trust not to
tender the Trust Shares pursuant to the AMP Self Tender Offer or the
Amended Allied Signal Offer. Accordingly, after taking into account the
repurchase of Shares pursuant to the AMP Self Tender Offer, the Trust is
expected to hold approximately 11.7% of the outstanding Shares. The
formation of the Trust and issuance of Trust Shares will have no effect on
AMP's earnings per share calculation and will not change the number of
Shares to be issued under AMP's existing stock-based plans. Creation of
the Trust will add no debt to AMP's balance sheet, will increase AMP's
equity base over time and will bolster AMP's credit position. A copy of
the Trust Agreement and Stock Purchase Agreement are filed as Exhibits 69
and 70 hereto, respectively, and are incorporated herein by reference.
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 25, 1998, AlliedSignal filed a motion for leave to file a
third amended complaint in the United States District Court for the Eastern
District of Pennsylvania. Adding to the claims asserted in its earlier
complaints, AlliedSignal's proposed third amended complaint challenges the
November 16, 1998 record date set by AMP's Board of Directors for the
solicitation of consents regarding the Rights Plan Proposal. AlliedSignal
asks the Court either to fix a record date of October 15, 1998 for the
consent solicitation with respect to the Rights Plan Proposal or to order
AMP to fix October 15, 1998 as the record date for that proposal.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
The following exhibits are filed herewith:
Exhibit
No. Description
65 Text of a press release issued by AMP on September 27, 1998.
66 Text of a press release issued by AMP on September 28, 1998.
67 Commitment Letter, dated September 27, 1998, by and between
Credit Suisse First Boston, DLJ Capital Funding, Inc. and
AMP.
68 Commitment Letter, dated September 27, 1998, by and between
Credit Suisse First Boston, DLJ Bridge Finance, Inc. and
AMP.
69 Trust Agreement, dated September 28, 1998, between AMP and
Wachovia Bank N.A.
70 Stock Purchase Agreement, dated September 28, 1998, by and
between AMP and Wachovia Bank N.A. (including, as an
Appendix thereto, the form of promissory note).
71 Text of a letter sent by AMP to its employees on September
28, 1998.
72 Information posted by AMP on its Intranet on September 28,
1998.
73 Text of materials distributed by AMP to its employees and
others.
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 SEC. 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 28, 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
65 Text of a press release issued by AMP on September 27, 1998.
66 Text of a press release issued by AMP on September 28, 1998.
67 Commitment Letter, dated September 27, 1998, by and between
Credit Suisse First Boston, DLJ Capital Funding, Inc. and
AMP.
68 Commitment Letter, dated September 27, 1998, by and between
Credit Suisse First Boston, DLJ Bridge Finance, Inc. and
AMP.
69 Trust Agreement, dated September 28, 1998, between AMP and
Wachovia Bank N.A.
70 Stock Purchase Agreement, dated September 28, 1998, by and
between AMP and Wachovia Bank N.A. (including, as an
Appendix thereto, the form of promissory note).
71 Text of a letter sent by AMP to its employees on September
28, 1998.
72 Information posted by AMP on its Intranet on September 28,
1998.
73 Text of materials distributed by AMP to its employees and
others.
FOR IMMEDIATE RELEASE
Contacts:
Richard Skaare Dan Katcher / Joele Frank
AMP Corporate Communication Abernathy MacGregor Frank 717/592-2323
212/371-5999
Doug Wilburne
AMP Investor Relations
717/592-4965
AMP ISSUES STATEMENT IN RESPONSE TO ALLIEDSIGNAL'S
ANNOUNCEMENT ON CERTAIN AMP EMPLOYEES
HARRISBURG, Pennsylvania (September 27, 1998) - AMP Incorporated
(NYSE: AMP) today issued a statement in response to AlliedSignal's (NYSE:
ALD) announcement concerning certain AMP employees.
Robert Ripp, chairman and chief executive officer of AMP, said, "I am
disappointed and disgusted with AlliedSignal's repeated rhetoric that
distorts reality. AlliedSignal is trying to frighten our employees. Once
again AlliedSignal is talking out of both sides of its mouth and has
produced a pandering ploy on the eve of our legislative initiative and an
important court hearing. Any suggestion that AlliedSignal would take care
of AMP employees better than AMP is ridiculous. AlliedSignal's statements
last only one year, pointedly omit any reference to over 43,000 employees
(90% of our overall employee base), including thousands in Pennsylvania,
and since the hard decisions on our Profit Improvement Plan have been made
AlliedSignal is merely trying to piggyback on our work. The fundamental
fact is that AlliedSignal is trying to buy AMP on the cheap no matter how
they try to spin it."
Headquartered in Harrisburg, PA, AMP is the world's leading manufacturer of
electrical, electronic and fiber optic wireless interconnection devices and
systems. The Company has 48,300 employees in 53 countries serving
customers in the automotive, computer, communications, consumer, industrial
and power industries. AMP sales reached $5.75 billion in 1997.
# # #
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 solicita-tion. 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 Busi-nesses), 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 Presi-dent, 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 (Communica-tions 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 Ex-change 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 11, 1998,
DLJ held no shares of AMP common stock for its own account and CSFB had a
net long position of 103,966 shares of AMP common stock.
Exhibit 66
FOR IMMEDIATE RELEASE
Contacts:
Richard Skaare Dan Katcher / Joele Frank
AMP Corporate Communication Abernathy MacGregor Frank
717/592-2323 212/371-5999
Doug Wilburne
AMP Investor Relations
717/592-4965
AMP ANNOUNCES SELF-TENDER OFFER FOR UP TO 30 MILLION
SHARES OF AMP COMMON STOCK AT $55 IN CASH PER SHARE
STOCK REPURCHASE IS PROMISED 'DOWN PAYMENT' TO SHAREHOLDERS
HARRISBURG, Pennsylvania (September 28, 1998) - AMP Incorporated (NYSE:
AMP) today announced that it intends to commence a self-tender offer to
repurchase up to 30 million shares of AMP Common Stock at a price of $55.00
per share in cash. The offer is expected to commence early next week.
Robert Ripp, chairman and chief executive officer of AMP, said, "This self-
tender, together with the acceleration of our Profit Improvement Plan, is a
winning program all around. We chose the $55 price because it gives AMP
the ability to deliver value to shareholders today while the Company
continues to take the necessary steps to increase value for tomorrow. We
are maintaining our financial strength to remain competitive and grow for
the benefit of our shareholders, employees, customers, suppliers and
Pennsylvania. AMP's self-tender offer will provide our shareholders with
an opportunity to sell a portion of their shares at a price far in excess
of AlliedSignal's offer for 20 million shares at only $44.50 per share.
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.
"When AlliedSignal made its opportunistic, low-ball offer, we promised to
increase shareholder value in the near term," Mr. Ripp continued. "We now
are fulfilling that promise, and we are confident there is more value to
come. AMP will continue to pursue its legislative initiatives and all
other appropriate means to prevent AlliedSignal from capturing AMP's value
for the benefit of AlliedSignal shareholders rather than AMP's. We are
convinced that this down payment together with our Profit Improvement Plan
will deliver greater value than AlliedSignal's $44.50 offer."
AMP has received financing commitments for $3.25 billion from affiliates of
Credit Suisse First Boston and Donaldson, Lufkin & Jenrette Securities
Corporation for share repurchases, potential refinancing of existing
indebtedness, and working capital needs. This financing is subject to
certain conditions, including finalization of certain financial terms and
other provisions, and that AMP shall not have had a change in its Board of
Directors resulting in less than a majority being disinterested directors.
The offer will be subject to certain conditions, including receipt of the
necessary financing.
AMP has been advised on a preliminary basis that, after the self-tender,
AMP's indebtedness will continue to maintain an investment grade rating.
AMP remains confident in achieving earnings per share of approximately
$2.30 in 1999 and in excess of $3.00 in 2000 because the estimated interest
expense of the financing is anticipated to be offset by the reduction in
shares outstanding and the additional savings resulting from the
acceleration of the Profit Improvement Plan.
Mr. Ripp stated, "AMP's financial strength and anticipated strong future
cash flow have made it possible for the Board to commit to this major stock
repurchase. It reflects our confidence that the self-tender will not
affect our ability to execute our Profit Improvement Plan, nor will it
affect our ability to maintain our current dividend or to grow our
businesses and increase our strong presence in and commitment to
Pennsylvania and all the communities we serve."
The Company also announced that it is creating a new Flexitrust funded with
25 million AMP shares. The Flexitrust is targeted to free operating cash
flow currently used to fund, among other things, cash benefit and
compensation requirements of approximately $1 billion over the next ten
years. The trust will not affect AMP's employee benefit and compensation
plans. Formation of the trust and issuance of the shares to the trust will
have no effect on AMP's earnings per share calculation and will not change
the number of shares to be issued under AMP's existing stock-based benefit
plans. The creation of the trust will add no debt to AMP's balance sheet,
will increase the Company's equity base over time, and will bolster AMP's
credit position.
Voting and tendering shares held by the trust will generally be
proportionate to the voting and tendering of the shares held by all other
Company shareholders, except that it is expected that the trust will not
tender any of the trust shares pursuant to AMP's self-tender offer or
AlliedSignal's pending partial offer.
Credit Suisse First Boston and Donaldson, Lufkin & Jenrette Securities
Corporation will serve as Dealer Managers for the self-tender offer, and
Innisfree M&A Incorporated will serve as the Information Agent. Complete
details of the offer and full instructions for tendering shares will be
contained in AMP's Offer to Purchase which will be mailed to all
shareholders next week.
Headquartered in Harrisburg, PA, AMP is the world's leading manufacturer of
electrical, electronic and fiber optic wireless interconnection devices and
systems. The Company has 48,300 employees in 53 countries serving
customers in the automotive, computer, communications, consumer, industrial
and power industries. AMP sales reached $5.75 billion in 1997.
# # #
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 solicita-tion. 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 Busi-nesses), 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 Presi-dent, 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 (Communica-tions 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 Ex-change 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 11, 1998, DLJ held no shares
of AMP common stock for its own account and CSFB had a net long position of
103,966 shares of AMP common stock.
This press release 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, sharehold-ers 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 may have been distracted by AlliedSignal's
tender offer and whose numbers will have been reduced as a result of these
initiatives.
Exhibit 67
EXECUTION COPY
CREDIT SUISSE FIRST BOSTON
Eleven Madison Avenue
New York, NY 10010
DLJ CAPITAL FUNDING, INC.
277 Park Avenue
New York, NY 10172
AMP Incorporated
470 Friendship Road
Mail Stop 176-40
P.O. Box 3608
Harrisburg, PA 17105-3608
Attention: Mr. Robert Ripp
September 27, 1998
Project Connect
Senior Secured Credit Facilities
Commitment Letter
Ladies and Gentlemen:
AMP Incorporated ("you" or the "Borrower") has advised Credit
Suisse First Boston ("CSFB") and DLJ Capital Funding, Inc. ("DLJC" and,
together with CSFB, "we" or "us") that you intend to acquire up to
30 million shares of Common Stock, without par value (the "Common Stock"),
of the Borrower 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 Borrower may refinance some or all of its outstanding debt. You
have further advised us that concurrently with the consummation of the
Tender Offer, (i) 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 $2,500.0 million (consisting of $1,750.0 million of term
facilities and a $750.0 million revolving credit facility) which aggregate
principal amount will be reduced by the aggregate principal amount of the
Company's outstanding indebtedness that is not so refinanced and (ii) you
will issue senior notes (the "Notes") in an aggregate principal amount of
$750.0 million pursuant to a Rule 144A/Regulation S distribution (the "Note
Offering") or, in lieu thereof, obtain certain bridge loans (the "Bridge
Loans") in such principal amount (the Tender Offer and the foregoing
transactions 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 50% of the
aggregate principal amount of the Facilities and (ii) DLJC is pleased to
advise you of its commitment (the "DLJC Commitment") to provide 50% 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 and the DLJC 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, and that CSFB and DLJC will act as co-lead
arrangers and as the sole and exclusive advisors for the Facilities, and
that CSFB and DLJC 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, 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) will be paid in connection with the
Facilities unless you and we shall so agree.
You agree to assist CSFB and DLJC 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 agree to use your reasonable best efforts to deliver no later
than October 9, 1998, to CSFB and DLJC a completed Confidential Information
Memorandum, in form and substance reasonably satisfactory to CSFB and DLJC
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 and the
Revolving 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 and DLJC 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 and DLJC 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 and DLJC's commitments are subject to the agreements in
this paragraph.
You further agree to prepare and provide promptly to us all
information with respect to the 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
Company's 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 us 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 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 and
their respective affiliates, whether incurred before or after the execution
of this letter.
You hereby agree to indemnify and hold harmless CSFB, DLJC 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 offering circular or prospectus relating to the Note
Offering, (ii) in any filing or disclosure required in connection with the
Transactions under federal securities laws or (iii) in any other manner
otherwise required by applicable law (in each of clauses (i), (ii) and
(iii) 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 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 or DLJC'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 2, 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 and DLJC
hereunder shall automatically terminate unless each of CSFB and DLJC 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 and DLJC's commitments hereunder shall
not be assignable by you without the prior written consent of CSFB and DLJC
(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. Any such assignment to an
affiliate shall not relieve CSFB or DLJC, 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 or DLJC, 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 and DLJC. 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 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: /s/ Marisa J. Harney
_________________________
Name: Marisa J. Harney
Title: Director
By: /s/ Lori Sivaslian
_________________________
Name: Lori Sivaslian
Title: Director
DLJ CAPITAL FUNDING, INC.,
By: /s/ Harold Phillips
_________________________
Name: Harold Phillips
Title: Managing Director
Accepted and agreed to as of
the date first written above,
AMP INCORPORATED,
By: /s/ Robert Ripp
_________________________
Name: Robert Ripp
Title: Chairman and Chief
Executive Officer
CONFIDENTIAL EXHIBIT A
September 27, 1998
Project Connect
Senior Secured Credit Facilities
Summary of Principal Terms and Conditions
Borrower: AMP Incorporated (the "Borrower").
Tender Offer: The Borrower 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 Borrower may refinance some or
all of its outstanding debt. In connection with
the Tender Offer (i) the Borrower will obtain the
Facilities and (ii) the Borrower will issue senior
notes (the "Notes") in an aggregate principal
amount of $750.0 million or, in lieu thereof,
obtain bridge loans (the "Bridge Loans") in such
principal amount (the Tender Offer and the
foregoing transactions 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
$1,750.0 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
$750.0 million (the "Tranche B Facility").
(B) Senior Secured Revolving Credit Facility (the
"Revolving Facility" and, together with the
Term Loan Facilities, the "Facilities") in an
aggregate principal amount of $750.0 million
(of which up to $200.0 million 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" and, together with
the Administrative Agent, the "Agents") for (and
may appoint a collateral agent for) a syndicate of
financial institutions identified in consultation
with the Borrower and with the consent of the
Borrower (such consent not to be unreasonably
withheld) (the "Lenders"), and each will perform
the duties customarily associated with such role.
Arrangers: CSFB and DLJC 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 will
be used on the date of the initial funding
under the Facilities (the "Closing Date"),
together with the proceeds from the Bridge
Loans or Notes, as the case may be, solely
(i) to finance the Tender Offer, (ii) to repay
certain existing indebtedness and (iii) to pay
related fees and expenses.
(B) Thereafter, the proceeds of loans under the
Revolving Facility 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.
(B) Loans under the Revolving Facility will be
available at any time prior to the final
maturity of the Revolving Facility. Amounts
repaid under the Revolving Facility 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 Revolving
Facility.
The availability of the Facilities will be
reduced by the aggregate amount of certain
indebtedness of the Company (excluding any
indebtedness of the Company incurred prior to
the Closing Date) that remains outstanding
after giving effect to the Transactions (and
any other transactions contemplated in the
Commitment Letter).
Default Rate: The applicable interest rate plus 2% per annum.
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.
(C) The Revolving Facility will mature on the
fifth anniversary of the Closing Date.
(D) The amortization schedule of the Tranche A
Facility and the Tranche B Facility is set
forth on Annex IV hereto.
Guarantees: All obligations of the Borrower under the
Facilities will be unconditionally guaranteed by
each existing and each subsequently acquired or
organized subsidiary of the Borrower as fully as is
permitted by applicable law (provided that no
foreign subsidiary shall be required to provide a
guarantee to the extent and for so long as to do so
would cause adverse tax consequences to the
Borrower).
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 Borrower and each existing and each
subsequently acquired or organized subsidiary of
the Borrower (collectively, the "Collateral"),
including but not limited to (a) a first priority
pledge of all the capital stock of each existing
and each subsequently acquired or organized
subsidiary of the Borrower (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 Borrower) and (b) perfected
first priority security interests in, and mortgages
on, substantially all tangible and intangible
assets of the Borrower and each existing and each
subsequently acquired or organized domestic (and,
to the extent no adverse tax consequences would
result, foreign) subsidiary of the Borrower
(including but not limited to accounts receivable,
inventory, general intangibles, intellectual
property, real property, equipment, cash and
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.
All the above-described pledges, security interests
and mortgages shall be created on terms, and
pursuant to documentation, reasonably satisfactory
to the Borrower 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 (other than
security interests in the Collateral which will be
shared equally and ratably with the Lenders under
the Borrower's 6 billion yen facility).
Interest Rates As set forth in Annex II hereto.
and Fees:
Mandatory Prepayment: Loans under the Term Loan Facilities shall be
prepaid with (a) so long as any Bridge Loans or
Exchange Notes are outstanding, a percentage to be
agreed upon of Excess Cash Flow (to be defined),
(b) a percentage of the net cash proceeds of all
non-ordinary-course asset sales or other
dispositions of property by the Borrower and its
subsidiaries (including insurance and condemnation
proceeds), subject to exceptions to be agreed upon,
(c) a percentage of the net cash proceeds of
issuances of debt obligations of the Borrower and
its subsidiaries, subject to exceptions to be
agreed upon; provided, that if the Bridge Loans are
provided on the Closing Date, the net cash proceeds
of a subsequent offering of Notes or other
securities will be used first to prepay the Bridge
Loans, and (d) 100% of the net cash proceeds of
issuances of equity securities of the Borrower and
its subsidiaries, subject to exceptions to be
agreed upon.
Except as provided above with respect to the
proceeds of the Notes, 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
Provisions: Facility may, so 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
Prepayments: permitted in whole or in part, at
the option of the Borrower, 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 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
Warranties: transactions of this 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; and validity, priority
and perfection of security interests
in the Collateral.
Conditions Precedent Customary for facilities and
to Initial Borrowing: transactions of this type, including
but not limited to the satisfaction
or waiver of the conditions set
forth on Exhibit B hereto.
Affirmative Customary for facilities and
Covenants: transactions of this 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.
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
Investors Service ("Moody's") and
Standard & Poor's Corporation
("S&P") assign ratings of Baa3 and
BBB-, respectively, or better, to
the Borrower's long term unsecured
senior indebtedness ("Designated
Indebtedness"), the Borrower shall
be subject to the restricted
payments test described in the
following paragraph; (b) Moody's
assigns a rating of Ba1 or S&P
assigns a rating of BB+ to the
Designated Indebtedness, the
Borrower shall be subject to the
Restricted Payments Test and a free
cash flow test; and (c) Moody's
assigns a rating of Ba2 or lower or
S&P assigns a rating of BB or lower
to the Designated Indebtedness, the
Borrower shall not be permitted to
make any Restricted Payments (to be
defined).
The Borrower shall not, and shall
not permit any subsidiary, directly
or indirectly, to make a Restricted
Payment if at the time the Borrower
or such subsidiary makes such
Restricted Payment (a) a Default
shall have occurred and be
continuing (or would result
therefrom); (b) after giving effect
to such Restricted Payment the
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 $200.0 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 for 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 Borrower 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 its 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
Covenants: transactions of this type and others
to be agreed upon, including:
(a) maximum ratio of Total Debt to
EBITDA, (b) minimum ratio of EBITDA
to Interest Expense, (c) minimum
fixed charge coverage ratio and (d)
minimum net worth. Such covenants
will be tested quarterly and
calculated on a trailing four
quarter basis as outlined in
Annex III hereto.
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
Protection: transactions of this type.
Assignments and The Lenders will be permitted to
Participations: assign loans and commitments to
other Lenders (or their affiliates)
without restriction, or to other
financial institutions with the
consent of the Agents and the
Borrower, in each case not to be
unreasonably withheld. The Agents
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 payment dates and
(c) certain releases of guarantees
or Collateral.
Expenses and In addition to those reasonable out-
Indemnification: of-pocket 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 Borrower.
The Borrower 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:
ANNEX I
Sources and Uses of Funds
(in millions of dollars)
(all figures are approximate)
Sources of Funds Use of Funds
Senior Credit $1,603.8 Tender Offer $1,650.0
Facilities (1)
750.0 Repayment of 610.8 (2)
Existing Debt
Notes/Bridge Loans
Transaction 93.0 (3)
Expenses
_______ ___________
Total Sources $2,353.8 Total Uses $2,353.8
---------------------
1 Represents total availability of $2,500.0 million,
comprised of $1,000.0 million under the Tranche A
Facility, $750.0 million under the Tranche B Facility
and up to $750.0 million under the Revolving Facility.
2 Assumes refinancing of all existing indebtedness.
3 Includes financing fees, fees associated with the
Tender Offer, legal fees and other expenses.
ANNEX II
Interest The interest rates under the Facilities will be, at
Rates: the Borrower's option, as follows:
Revolving Facility 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 Borrower 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.
Commitment Fees: 0.50% per annum of the undrawn portion of the commitments
in respect of the Facilities (subject to adjustment as
set forth below under the caption "Change in Commitment
Fees and Interest Rates"), commencing to accrue upon the
execution and delivery of the Credit Agreement 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.
The Borrower shall pay a commission on the face amount of 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 Facility and shall be payable quarterly
in arrears.
Letter of Credit
Fees: 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 Agreement 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.
ANNEX III
Indicative Covenants Levels
(at December 31 of the applicable year)
I. Total Debt/EBITDA
1998 1999 2000 2001 and Thereafter
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 Fixed Charge Leverage Ratio
1998 1999 2000 2001 and Thereafter
1.15x 1.15x 1.15x 1.20x
IV. Minimum Net Worth
Initially 75% of the net worth of the Borrower 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.
ANNEX IV
Amortization Schedule
(in millions)
I. Tranche A Facility
Year 1 Year 2 Year 3 Year 4 Year 5
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 $7.5 $7.5 $7.5 $7.5 $7.5 $712.5
EXHIBIT B
The commitments of Credit Suisse First Boston ("CSFB") and DLJ
Capital Funding, Inc. ("DLJC" and, together with CSFB, the "Advisors")
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 either of the Advisors any event or events, adverse
condition or change in or affecting the 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 Advisors, in connection with
(a) the Bridge Loans or the Notes, as the case may be, (b) the Senior
Bank Facilities and (c) 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) each of the Advisors and the Lenders shall be reasonably
satisfied as of the Closing Date with the material terms and conditions
of the Flexitrust;
(v) after giving effect to the Transactions and the other
transactions contemplated by the Letter, the Borrower and its
subsidiaries shall have outstanding no indebtedness or preferred stock
other than (a) the loans under the Senior Bank Facilities, (b) the
Bridge Loans or the Notes, as the case may be and (c) other indebtedness
or preferred stock to be agreed upon;
(vi) customary closing conditions for transactions similar to the
Bridge Loans and the Senior Bank 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 the 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 Advisors of
reasonably satisfactory legal opinions;
(vii) each of the Advisors, and, if applicable, the Lenders, shall
have received a certificate reasonably satisfactory in all respects to
each of the Advisors and the Lenders, as applicable, from the Chief
Financial Officer of the Borrower certifying that, after giving effect
to the Transactions, the 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;
(viii) 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 has
had or reasonably could be expected to have a material adverse effect
on, or has materially impaired, the syndication of bank credit
facilities or the consummation of securities offerings, as the case may
be, that any of the Advisors shall determine to have impaired their
ability successfully to complete (1) the Note Offering or the
syndication of the Bridge Loans, as the case may be, or (2) the
syndication of the Senior Bank Facilities, in each case prior to the
termination of the marketing period with respect thereto;
(ix) each of the Advisor's satisfaction that, immediately prior to
and during the marketing period for (a) the Note Offering or the
syndication of the Bridge Loans, as the case may be, and (b) the Senior
Bank Facilities, there shall be no competing issues of debt securities
or commercial bank facilities (other than the Senior Bank Facilities and
the Note Offering or the Bridge Loans, as applicable) of the Borrower or
any of its affiliates;
(x) after the date of the Letter, no information becomes known to
either Advisor that either of the Advisors 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 Advisors during their due
diligence investigation;
(xi) there shall have not occurred after the date of the Letter any
Change of Control;
(xii) the Borrower shall have received investment grade ratings on
its long term unsecured senior indebtedness from both Standard & Poor's
Corporation and Moody's Investors Service;
(xiii) the Borrower'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
(xiv) 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 Borrower 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.
Exhibit 68
EXECUTION COPY
CREDIT SUISSE FIRST BOSTON
Eleven Madison Avenue
New York, NY 10010
DLJ BRIDGE FINANCE, INC.
277 Park Avenue
New York, NY 10172
AMP Incorporated
470 Friendship Road
Mail Stop 176-40
P.O. Box 3608
Harrisburg, PA 17105-3608
Attention: Mr. Robert Ripp
September 27, 1998
Project Connect
Bridge Loan
Commitment Letter
Ladies and Gentlemen:
AMP Incorporated ("you" or the "Company") has advised Credit
Suisse First Boston ("CSFB") and DLJ Bridge Finance, Inc. ("DLJB" and,
together with CSFB, "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 may refinance some or all of its outstanding debt. You
have further advised us that concurrently with the consummation of the
Tender Offer, (i) you will obtain senior secured credit facilities (the
"Senior Bank Facilities") in an aggregate principal amount of
$2,500.0 million (consisting of $1,750.0 million of term facilities and a
$750.0 million revolving credit facility) which aggregate principal amount
will be reduced by the aggregate principal amount of the Company's
outstanding indebtedness that is not so refinanced and (ii) you will issue
senior notes (the "Notes") in a principal amount of $750.0 million pursuant
to a Rule 144A/Regulation S distribution (the "Note Offering") or, in lieu
thereof, obtain the Bridge Loans (as defined) in such principal amount (the
Tender Offer and the foregoing transactions 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 (as defined).
In connection therewith, you have requested that we commit to
provide bridge loans of up to $750.0 million (the "Bridge Loans") to the
Company. CSFB is pleased to commit to provide 50% of the aggregate
principal amount of the Bridge Loans and DLJB is pleased to commit to
provide 50% of the aggregate principal amount of the Bridge Loans, in each
case on the terms and subject to the conditions herein and in the Summary
of Principal Terms and Conditions attached as Exhibit A hereto (the "Term
Sheet") and in Exhibit B hereto (the "Conditions").
Each of CSFB and DLJB reserves the right and intends, prior to or
after the execution of the definitive documentation with respect to the
Bridge Loans (the "Bridge Loan Documents"), to syndicate all or a portion
of its commitment to one or more financial institutions (such financial
institutions, together with CSFB and DLJB, the "Lenders") identified by us
in consultation with you and with your consent (such consent not to be
unreasonably withheld), which Lenders will become parties to the Bridge
Loan Documents. It is agreed that CSFB will act as the sole and exclusive
administrative agent for, that DLJB will act as the sole and exclusive
syndication agent for, and that CSFB and DLJB will act as co-lead arrangers
and sole and exclusive syndication managers of, the Bridge Loans and that
no additional agents or co-agents or arrangers will be appointed without
the prior written consent of CSFB and DLJB. In connection with the
syndication of the Bridge Loans, CSFB and DLJB may, in their discretion,
allocate to other Lenders portions of any fees payable to CSFB and DLJB in
connection with the Bridge Loans. You agree that no Lender will receive
any compensation or titles of any kind for its participation in the Bridge
Loans except as expressly provided for in this letter or in the Bridge Loan
Fee Letter referred to below.
You agree to assist CSFB and DLJB 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 an information package 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
and participants.
You further agree to prepare and provide promptly to us all
information with respect to the Company 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 Bridge Loans. 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
Company's 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 Bridge
Loans, 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 us the
nonrefundable fees set forth in the Term Sheet and in the Bridge Loan Fee
Letter dated the date hereof and delivered herewith (the "Bridge Loan Fee
Letter").
You agree to reimburse CSFB, DLJB and their respective
affiliates, upon request made from time to time, for their reasonable out-
of-pocket fees and expenses incurred in connection with the preparation,
execution and delivery of this letter and the Bridge Loan Documents and the
activities thereunder or contemplated thereby, including without limitation
syndication expenses (other than fees allocated in accordance with the
preceding paragraph) and the reasonable fees and expenses of counsel to
CSFB, DLJB and their respective affiliates, whether incurred before or
after the execution of this letter.
You hereby agree to indemnify and hold harmless CSFB, DLJB 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 Bridge Loans, 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 Bridge Loans.
This letter is delivered to you on the understanding that neither
this letter nor any other agreement between us related to this letter or
the Transactions, including the Term Sheet, the Conditions and the Bridge
Loan 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 applicable law or compulsory legal process (in
which case you agree to inform us promptly thereof prior to any such
disclosure); provided, however, after your acceptance of this letter and
the Bridge Loan Fee Letter, you may disclose the material terms of this
letter, the Term Sheet and the Conditions and the Bridge Loan Fee Letter
(i) in any offering circular or prospectus relating to a Loan Refinancing
(as defined in the Term Sheet), (ii) in any filing or disclosure required
in connection with the Transactions under federal securities laws or (iii)
in any other manner otherwise required by applicable law (in each of
clauses (i), (ii) and (iii) above , you agree to inform us promptly thereof
prior to any such disclosure).
The reimbursement, indemnification and confidentiality provisions
contained herein and in the Bridge Loan Fee Letter shall remain in full
force and effect notwithstanding the termination of this letter or CSFB's
or DLJB's commitment hereunder.
Our offer to provide the Bridge Loans will terminate at
5:00 P.M., New York time, (i) on October 2, 1998, unless on or before that
time you accept this letter by signing and returning an enclosed
counterpart of this letter and the Bridge Loan Fee Letter and (ii) if
accepted by you prior to such time, on December 18, 1998.
This 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
letter and CSFB's and DLJB's commitment hereunder may not be assigned by
you without the prior written consent of CSFB and DLJB (and any purported
assignment without such consent shall be void). CSFB's commitment
hereunder may be assigned by CSFB to any of its affiliates or any Lender,
and DLJB's commitment hereunder may be assigned by DLJB to any of its
affiliates or any Lender. Any such assignment to an affiliate shall not
relieve CSFB or DLJB, as the case may be, from any of its obligations
hereunder unless and until the Bridge Loans so assigned shall have been
funded in full by such affiliate. Any assignment to a Lender shall be by
novation and shall release CSFB or DLJB, 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 letter may not be amended or modified or any provision hereof waived
except by an instrument in writing signed by you, CSFB and DLJB. This
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 letter by facsimile
transmission shall be effective as delivery of a manually signed
counterpart hereof. This letter shall be governed by and construed in
accordance with the internal laws of the State of New York.
We appreciate the opportunity to assist you in this very
important transaction.
Very truly yours,
CREDIT SUISSE FIRST BOSTON,
By: /s/ Marisa J. Harney
_________________________
Name: Marisa J. Harney
Title: Director
By: /s/ Lori Sivaslian
_________________________
Name: Lori Sivaslian
Title: Director
DLJ BRIDGE FINANCE, INC.,
By: /s/ Harold Phillips
_________________________
Name: Harold Phillips
Title: Managing Director
Accepted and agreed to as of
the date first written above,
AMP INCORPORATED,
By: /s/ Robert Ripp
_________________________
Name: Robert Ripp
Title: Chairman and Chief
Executive Officer
Exhibit A
Bridge Loan Facility
Summary of Principal Terms and Conditions 1/
Administrative Agent: Credit Suisse First Boston ("CSFB"
or the "Agent").
Syndication Agent: DLJ Bridge Finance, Inc. ("DLJB" or
the "Syndication Agent").
Lenders: A syndicate of lenders (the
"Lenders") arranged by CSFB and
DLJB (together with CSFB, the
"Co-Lead Arrangers") in
consultation with the Borrower and
with the Borrower's consent (such
consent not to be unreasonably
withheld).
Borrower: AMP Incorporated (the "Borrower").
Sources and Uses: The approximate sources and uses of
funds necessary to consummate the
Transactions are set forth on
Annex I hereto.
Bridge Loan Amount: Up to $750.0 million aggregate
principal amount.
Rank: The loans to be made hereunder by
each of the Lenders (the "Bridge
Loans") will be senior debt of the
Borrower, ranking pari passu in
right of payment to all existing
and future senior indebtedness of
the Borrower. However, borrowings
under the Senior Bank Facilities
will be secured by substantially
all the assets of the Borrower.
Guarantees: The obligations of the Borrower
under the Bridge Loans will be
unconditionally guaranteed on a
senior unsecured basis by each
existing and subsequently organized
subsidiary of the Borrower that
guarantees the Senior Bank
Facilities.
- -----------------------
1/ All capitalized terms used but not defined herein have the
meanings given to them in the Commitment Letter to which this term sheet
is attached.
Use of Proceeds: The proceeds of the Bridge Loans
will be used, together with the
initial proceeds of the Senior Bank
Facilities, solely (i) to finance
the Tender Offer, (ii) to repay
certain existing indebtedness of
the Borrower and (iii) to pay
related fees and expenses.
Funding: The Lenders will make the Bridge
Loans on a date simultaneous with
the consummation of the other
Transactions (the date of making
such Bridge Loans, the "Closing
Date").
Senior Notes: The Borrower will use its
reasonable best efforts to offer
and sell senior notes of the
Borrower (the "Notes") yielding
aggregate gross proceeds
of $750.0 million, in lieu of
borrowing the Bridge Loans (the
"Note Offering").
The Borrower's reasonable best
efforts to offer and sell the Notes
in lieu of borrowing the Bridge
Loans will include, at a minimum,
the following:
(i) no later than
October 30, 1998, the Borrower
will deliver to CSFB and DLJB,
a completed preliminary
offering circular, in form and
substance reasonably
satisfactory to CSFB and DLJB,
that would be suitable to use
on a road show for the sale of
the Notes (such completed
preliminary offering circular
shall include certain of the
Borrower's financial
information as of September
30, 1998, to be reasonably
specified by CSFB and DLJB;
and
(ii) upon delivery of such
completed registration
statement or offering
circular, the Borrower will
cause its senior management to
participate in a customary
road show for the sale of the
Notes.
In the event that the Borrower has
not issued the Notes prior to the
Closing Date, the Borrower will use
its reasonable best efforts to
refinance the Bridge Loans as
promptly as practicable after the
Closing Date, as further described
under "Affirmative Covenants".
Maturity/Exchange: The Bridge Loans will mature on the
date which is 364 days after the
Closing Date (the "Bridge Maturity
Date"). Each Lender thereof will
have the option at any time or from
time to time to receive, in
exchange for its Bridge Loans or a
portion thereof, exchange notes of
the Borrower (the "Exchange Notes")
ranking pari passu with the Bridge
Loans and having the terms set
forth in the term sheet attached as
Annex II to this Exhibit A;
provided, however, any Exchange
Notes issued prior to the Bridge
Maturity Date will have the same
terms and rights until the Bridge
Maturity Date as the Bridge Loans
notwithstanding the terms and
rights described in Annex II
hereto. If any Lender does not
exchange its Bridge Loan for
Exchange Notes on or prior to the
Bridge Maturity Date, such Lender
shall be required to extend the
maturity of such loan to another
date selected by such Lender. If,
on or prior to such extended
maturity, such Lender does not
exchange its Bridge Loan, such
Lender shall be required again to
extend the maturity of such Bridge
Loan to another date selected by
such Lender (provided, however,
that such Lender shall not be
required to extend the maturity of
its Bridge Loan beyond the tenth
anniversary of the Closing Date
(the "Final Maturity Date")) and
this sentence shall apply to each
extended maturity of its Bridge
Loan prior to the Final Maturity
Date.
Interest Rates: Prior to the Bridge Maturity Date,
the Bridge Loans will accrue
interest at a rate per annum equal
to the greater of (i) 3-month
Adjusted LIBOR (or the Alternate
Base Rate described below) plus the
Applicable Spread or (ii) the
Treasury Rate (as defined in Annex
II to this Exhibit A) plus the
Treasury Spread.
The Applicable Spread on the Bridge
Loans will initially be 400 basis
points and will increase by 50
basis points at the end of each
three-month period until the Bridge
Maturity Date.
The Treasury Spread on the Bridge
Loans will initially be 475 basis
points and will increase by 50
basis points at the end of each
three-month period until the Bridge
Maturity Date.
Adjusted LIBOR will at all times
include any applicable statutory
reserves.
In the event that Adjusted LIBOR
cannot be determined, or any Lender
is unable lawfully to maintain a
Bridge Loan accruing interest at
Adjusted LIBOR, the "Alternate Base
Rate" will be the higher of
(i) CSFB's Prime Rate less 1% and
(ii) the Federal Funds Effective
Rate plus 1/2 of 1%.
In no event shall the interest rate
on the Bridge Loans exceed the
highest rate permitted under
applicable law.
Following the Bridge Maturity Date,
all outstanding Bridge Loans will
accrue interest at the rate
provided for the Exchange Notes in
Annex II hereto, subject to the cap
therein.
Calculation of interest shall be on
the basis of (i) actual days
elapsed in a year of 360 days in
the case of Bridge Loans based on
Adjusted LIBOR, (ii) 365 or 366
days, as the case may be, in the
case of Bridge Loans based on the
Alternate Base Rate or (iii) twelve
30-day months in the case of Bridge
Loans based on the Treasury Rate.
Interest Payments: Interest will be payable in arrears
(a) for Bridge Loans accruing
interest at a rate based on
Adjusted LIBOR or the Treasury
Rate, at the end of each Adjusted
LIBOR period and on the Bridge
Maturity Date, (b) for Bridge Loans
accruing interest at the Alternate
Base Rate, at the end of each
fiscal quarter of the Borrower
following the Closing Date and on
the Bridge Maturity Date and
(c) for Bridge Loans outstanding
after the Bridge Maturity Date, at
the end of each fiscal quarter of
the Borrower following the Bridge
Maturity Date and on the date on
which such Bridge Loans are repaid
in full.
Mandatory Subject to compliance with the
Prepayments: Senior Bank Facilities, the Bridge
Loans will be required to be
prepaid with (a) a percentage to be
agreed upon of Excess Cash Flow (to
be defined), (b) 100% of the net
cash proceeds of all non-ordinary-
course asset sales or other
dispositions of property by the
Borrower and its subsidiaries
(including insurance and
condemnation proceeds), subject to
exceptions to be agreed upon,
(c) 100% of the net cash proceeds
of issuances of debt obligations of
the Borrower and its subsidiaries,
subject to exceptions to be agreed
upon, and (d) 100% of the net cash
proceeds of issuances of equity
securities of the Borrower and its
subsidiaries, subject to exceptions
to be agreed upon.
Optional Bridge Loans may be repaid at any
Prepayments: time upon five days' prior written
notice to the Agent, in whole or in
part at the option of the Borrower,
in a minimum principal amount and
in multiples to be agreed upon,
without premium or penalty (other
than breakage costs and funding
losses).
Payments: Payments by the Borrower shall be
made by wire transfer of
immediately available funds.
Conditions to The obligations of CSFB, DLJB and
Closing: the Lenders to make the Bridge
Loans on the Closing Date shall be
subject to the satisfaction or
waiver of conditions precedent set
forth in Exhibit B to the
Commitment Letter.
Representations and Customary for loans and
Warranties: transactions of this type,
including but not limited to: no
Default or Event of Default;
absence of material adverse change;
financial statements; absence of
undisclosed material liabilities or
material contingent liabilities;
compliance with laws; solvency; no
conflicts with laws, charter
documents or agreements; good
standing; capitalization; payment
of taxes; ownership of properties;
and absence of liens and security
interests.
Affirmative Customary for loans and
Covenants: transactions of this 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
material adverse action; delivery
of financial statements, financial
projections and compliance
certificates; and further
assurances.
In addition, if the Borrower has
not issued the Notes prior to the
Closing Date in accordance with its
undertaking set forth above under
"Senior Notes", the Borrower will
agree to file a registration
statement under the Securities Act
or prepare an offering circular
covering senior notes of the
Borrower (the "Refinancing
Securities") to be issued in a
public offering or private
placement to refinance in full the
Bridge Loans (the "Loan
Refinancing") and to consummate
such Loan Refinancing as soon as
possible after the Closing Date in
an amount sufficient to refinance
all amounts outstanding under the
Bridge Loan Documents and on such
terms and conditions (including
interest rate, yield, redemption
prices and dates) as CSFB and DLJB
may in their reasonable judgment
determine to be appropriate in
light of prevailing circumstances
and market conditions and the
financial condition and prospects
of the Borrower. The indenture for
the Refinancing Securities will be
substantially in the form of CSFB's
standard indenture for debt
securities, modified as appropriate
to reflect the terms of this
transaction and the financial
condition and prospects of the
Borrower and its subsidiaries, and
in form and substance reasonably
satisfactory to CSFB, DLJB and the
Borrower. If any Refinancing
Securities are issued in a
transaction not registered under
the Securities Act to effect the
Loan Refinancing, all such
Refinancing Securities shall be
entitled to the benefit of
registration rights agreements to
be entered into by the Borrower in
customary form acceptable to CSFB
and DLJB.
Negative Covenants: Customary for loans and
transactions of this type,
including but not limited to:
limitations on incurrence of
indebtedness; limitations on loans,
investments and joint ventures;
limitations on guarantees or other
contingent obligations; limitations
on restricted payments; limitations
on fundamental changes; limitations
on liens and sale-leaseback
transactions; limitations on
transactions with affiliates;
limitations on dividend and other
payment restrictions affecting
subsidiaries; limitations on
changes in business conducted;
limitations on amendment of
indebtedness and other material
documents; and limitations on
prepayment or repurchase of other
indebtedness (all such covenants to
be similar in scope to the same
covenants in the Senior Bank
Facilities).
The Borrower shall not own or
acquire any margin stock (except
for the Common Stock) of any other
entity, unless at such time the
Borrower delivers evidence
satisfactory to the Agent, in its
sole discretion, that no violation
of Regulations T, U and X of the
Board of Governors of the Federal
Reserve System of the United States
results.
Events of Default: Customary for loans 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 any Bridge Loan Document.
Yield Protection and Customary for facilities of this
Increased Costs: type.
Assignments and The Borrower may not assign its
Participations: rights or obligations in connection
with the Bridge Loan Documents
without the prior written consent
of all the Lenders.
Lenders will be permitted to assign
Bridge Loans and commitments to
other Lenders (or their affiliates)
without restriction, or to other
financial institutions with the
consent of the Borrower (such
consent not to be unreasonably
withheld).
The Lenders will be permitted to
participate Bridge Loans and
commitments to other financial
institutions; provided, however,
that the Lenders granting
participations retain the voting
rights to such participated
amounts. Participants will have
the same benefits as the selling
Lenders would have with regard to
yield protection and increased
costs and provision of information
on the Borrower and its
subsidiaries.
Voting: Amendments and waivers of any
provision of any Bridge Loan
Documents will require the approval
of Lenders holding commitments or
loans, as the case may be,
representing a majority of the
aggregate amount of commitments or
loans, respectively, under the
Bridge Loan Documents, except that
the consent of all affected Lenders
shall be required with respect to
(a) increases in commitments,
(b) reductions of principal,
interest or fees and (c) extensions
of the Bridge Maturity Date.
Expenses and In addition to those out-of-pocket
Indemnification: expenses reimbursable under the
Commitment Letter, all out-of-
pocket expenses of the Agent and
the Syndication Agent (and the
Lenders for enforcement costs and
documentary taxes) associated with
the preparation, execution and
delivery of any waiver or
modification (whether or not
effective) of, and the enforcement
of, any Bridge Loan Document or any
document relating to the
refinancing of the Bridge Loans
(including the reasonable fees,
disbursements and other charges of
counsel for the Agent) are to be
paid by the Borrower.
The Borrower will indemnify each of
CSFB and DLJB and the other Lenders
and their respective officers,
directors, employees, affiliates,
agents, advisors 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 proceeding
(regardless of whether any such
indemnified person is a party
thereto) that relate to the
Transactions, the Bridge Loans or
refinancing thereof 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 and New York
Forum:
ANNEX I
Sources and Uses of Funds
(in millions of dollars)
(all figures are approximate)
Sources of Funds Use of Funds
Senior Credit Facilities 1/ $1,603.8 Tender Offer $1,650.0
Notes/Bridge Loans 750.0 Repayment of 610.8 2/
Existing Debt
Transaction 93.0 3/
Expenses
_______ _______
Total Sources $2,353.8 Total Uses $2,353.8
-----------------------
1/ Represents total availability of $2,500.0 million, comprised of
$1,000.0 million under the Tranche A Facility, $750.0 million under the
Tranche B Facility and up to $750.0 million under the Revolving Facility.
2/ Assumes refinancing of all existing indebtedness.
3/ Includes financing fees, fees associated with the Tender Offer,
legal fees and other expenses.
Annex II
to Exhibit A
Exchange Notes
Summary of Principal Terms and Conditions 1/
Issuer: The Borrower will issue Exchange
Notes under an indenture that
complies with the Trust Indenture
Act (the "Indenture").
Principal Amount: The Exchange Notes will be
available only in exchange for the
Bridge Loans. The face amount of
any Exchange Note will equal 100%
of the aggregate principal amount
of the Bridge Loan for which it is
exchanged.
Maturity: The Exchange Notes will mature on
the tenth anniversary of the
Closing Date.
Interest Rate: Exchange Notes will bear interest
at a rate equal to the Initial Rate
(as defined below) plus the
Exchange Spread (as defined below).
Notwithstanding the foregoing, the
interest rate on Exchange Notes in
effect at any time shall not exceed
16% per annum. Interest on
Exchange Notes will be payable
semiannually in arrears.
In no event shall the interest rate
on the Exchange Notes exceed the
highest rate permitted under
applicable law.
"Exchange Spread" shall mean 50
basis points during the six-month
period commencing on the Bridge
Maturity Date and shall increase by
50 basis points at the beginning of
each subsequent three-month period.
"Initial Rate" shall be determined
on the Bridge Maturity Date and
shall be equal to the greater of
(a) the interest rate borne by
Bridge Loans on the day immediately
preceding the Bridge Maturity Date,
and (b) the Treasury Rate (as
defined below) on the Bridge
Maturity Date plus 675 basis
points.
- -------------------
1/ All capitalized terms used but not defined herein have the meanings
given in the Summary of Principal Terms and Conditions of the Bridge Loan
Facility to which this Annex II is attached.
"Treasury Rate" means (i) the rate
borne by direct obligations of the
United States maturing on the tenth
anniversary of the Closing Date and
(ii) if there are no such
obligations, the rate determined by
linear interpolation between the
rates borne by the two direct
obligations of the United States
maturing closest to, but
straddling, the tenth anniversary
of the Closing Date, in each case
as published by the Board of
Governors of the Federal Reserve
System.
Rank: Exchange Notes will rank pari passu
with Bridge Loans.
Guarantees: The obligations of the Borrower
under the Exchange Notes will be
unconditionally guaranteed on a
senior unsecured basis by each
existing and subsequently organized
subsidiary of the Borrower that
guarantees the Senior Bank
Facilities.
Mandatory Redemption: Same as Bridge Loans.
Optional Redemption: Subject to the following sentence,
the Exchange Notes will be
redeemable at the option of the
Borrower, in whole or in part, at
any time at par plus accrued and
unpaid interest to the redemption
date. If any Exchange Note is sold
after the Bridge Maturity Date by a
Lender or a holder to an
unaffiliated third party purchaser,
such Lender or holder shall have
the right to fix the interest rate
on such Exchange Note at a rate not
higher than the then applicable
rate of interest and, if such
Lender or holder exercises such
right, such Exchange Note will be
non-callable until the fifth
anniversary of the Closing Date and
will be callable thereafter at par
plus accrued interest plus a
premium, which premium shall
initially be one half of the fixed
interest rate borne by such
Exchange Note declining ratably
each year thereafter to zero on the
date that is one year prior to the
maturity of the Exchange Notes;
provided, however, that such call
protection shall not apply to any
call for redemption issued prior to
the sale to such third party
purchaser.
Registration Rights: Subject to the conditions precedent
to fundings, the Borrower will use
its reasonable best efforts to
cause to become effective an
exchange offer registration
statement or a shelf registration
statement no later than the Bridge
Maturity Date, and the Borrower
will use its reasonable best
efforts to keep such registration
statement effective and available
(subject to customary exceptions)
until it is no longer needed to
permit unrestricted resales of such
Exchange Notes, but in no event
longer than two years from the date
of issuance of any such Exchange
Notes. If the registration
statement ceases to be effective or
ceases to be useable in connection
with resales of such Exchange Notes
(subject to customary exceptions),
cash interest will accrue and be
payable (in addition to interest
otherwise accruing on the Exchange
Notes) at a rate of 0.5% per annum
until such default shall be cured,
increasing by 0.5% at the end of
each 90-day period thereafter;
provided, however, that in no event
shall the interest on the Exchange
Notes increase by more than an
aggregate of 2.0% per annum.
The Borrower agrees, at its
expense, to assist CSFB and DLJB in
connection with resales of any of
the Exchange Notes, including
making its appropriate senior
officers available to CSFB and DLJB
to assist in the preparation of
marketing materials relating to any
resales, to participate in due
diligence sessions and to
participate in road shows or other
presentations to prospective
purchasers of such Exchange Notes.
Exchange Notes The Exchange Notes will be
Escrowed: delivered on the Closing Date and
held, undated, in escrow by a
mutually agreeable fiduciary.
Right to Transfer The holders of the Exchange Notes
Exchange Notes: shall have the absolute and
unconditional right to transfer
such Exchange Notes to any third
parties in compliance with
applicable law.
Covenants: Same as Bridge Loans.
Events of Default: Same as Bridge Loans.
Governing Law and New York.
Forum:
Exhibit B
CONDITIONS
The commitments of Credit Suisse First Boston ("CSFB")
and DLJ Bridge Finance, Inc. ("DLJB" and, together with CSFB, the
"Advisors") pursuant to the Bridge Loan 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 either of the Advisors any event
or events, adverse condition or change in or affecting the
Company 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
Advisors, in connection with (a) the Bridge Loans or the
Notes, as the case may be, (b) the Senior Bank Facilities
and (c) 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) each of the Advisors and the Lenders shall be
reasonably satisfied as of the Closing Date with the
material terms and conditions of the Flexitrust;
(v) after giving effect to the Transactions and the
other transactions contemplated by the Letter, the Company
and its subsidiaries shall have outstanding no indebtedness
or preferred stock other than (a) the loans under the Senior
Bank Facilities, (b) the Bridge Loans or the Notes, as the
case may be and (c) other indebtedness or preferred stock to
be agreed upon;
(vi) customary closing conditions for transactions
similar to the Bridge Loans and the Senior Bank 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 the
Company 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 Advisors of
reasonably satisfactory legal opinions;
(vii) each of the Advisors, and, if applicable, the
Lenders, shall have received a certificate reasonably
satisfactory in all respects to each of the Advisors and the
Lenders, as applicable, from the Chief Financial Officer of
the Company certifying that, after giving effect to the
Transactions, the Company 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;
(viii) 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 has had or
reasonably could be expected to have a material adverse
effect on, or has materially impaired, the syndication of
bank credit facilities or the consummation of securities
offerings, as the case may be, that any of the Advisors
shall determine to have impaired their ability successfully
to complete (1) the Note Offering or the syndication of the
Bridge Loans, as the case may be, or (2) the syndication of
the Senior Bank Facilities, in each case prior to the
termination of the marketing period with respect thereto;
(ix) each of the Advisor's satisfaction that,
immediately prior to and during the marketing period for
(a) the Note Offering or the syndication of the Bridge
Loans, as the case may be, and (b) the Senior Bank
Facilities, there shall be no competing issues of debt
securities or commercial bank facilities (other than the
Senior Bank Facilities and the Note Offering or the Bridge
Loans, as applicable) of the Company or any of its
affiliates;
(x) after the date of the Letter, no information
becomes known to either Advisor that either of the Advisors
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 Advisors during
their due diligence investigation;
(xi) there shall have not occurred after the date of the
Letter any Change of Control;
(xii) the Company shall have received investment grade
ratings on its long term unsecured senior indebtedness from
both Standard & Poor's Corporation and Moody's Investors
Service;
(xiii) the Company's EBITDA (excluding restructuring and
one-time charges due to the Company'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
(xiv) 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.
Exhibit 69
AMP INCORPORATED
BENEFIT TRUST AGREEMENT
BENEFIT TRUST AGREEMENT ("Trust Agreement"), dated September 28,
1998, but effective as of the Effective Date (as hereinafter defined) by
and between AMP Incorporated, a Pennsylvania corporation (the "Company"),
and Wachovia Bank, N.A., as trustee of the Trust created hereby (the
"Trustee"). For purposes of this Trust Agreement, the "Effective Date"
shall mean the date of the Closing (as such term is defined in the Stock
Purchase Agreement referred to in Section 2.1(a) hereof).
WHEREAS, the Company is or may become obligated in respect of its
existing compensation and benefit plans, agreements, programs, arrangements
and practices listed on Exhibit A attached hereto and such existing and
future plans, agreements, programs, arrangements and practices as may
hereafter be listed on said Exhibit A (the plans, agreements, programs,
arrangements and practices listed on said Exhibit A from time to time being
collectively referred to herein as the "Plans") to make payments to or
contributions on behalf of its past, present or future employees or their
beneficiaries; and
WHEREAS, for purposes of providing a source for the satisfaction,
in whole or in part, of the contractual obligations of the Company under
the Plans, the Company desires to establish a trust (the "Trust"), which is
intended to constitute a grantor trust within the meaning of Section 671 of
the Internal Revenue Code of 1986, as amended (the "Code"), the assets of
which shall be subject to the claims of the Company's existing or future
creditors; and
WHEREAS, the Company desires that the assets to be held in the
Trust should be principally or exclusively equity securities of the Company
and, therefore, expressly waives any diversification of investments that
might otherwise be necessary, appropriate or required pursuant to
applicable law;
NOW, THEREFORE, in consideration of the mutual agreements
contained herein and for other good and valuable consideration, the
parties, intending to be legally bound, hereto agree as follows:
ARTICLE I
PURPOSE OF THE TRUST
SECTION 1.1 Purpose. (a) The purpose of the Trust is to hold
shares of Common Stock of the Company, no par value ("Common Stock"), or
other property as herein provided as a source to satisfy the Company's
contractual obligations under the Plans.
(b) The Company shall continue to be liable to make all payments
and deliver shares of Common Stock as required of the Company under the
terms of the Plans to the extent such payments have not been made or such
shares of Common Stock have not been delivered pursuant to this Trust
Agreement. Distributions made from the Trust in respect of the Plans
pursuant to Section 3.1 shall, to the extent of such distributions, satisfy
the Company's contractual obligations under the Plans.
ARTICLE II
TRUST AND THE TRUST CORPUS
SECTION 2.1 Delivery of Funds and Common Stock. (a)
Concurrently with the execution of this Trust Agreement, the Company has
agreed to sell to the Trustee an aggregate of 25 million authorized but
previously unissued shares (the "Acquired Shares") of Common Stock,
pursuant to the terms of a Stock Purchase Agreement, dated the date hereof,
between the Company and the Trustee (the "Stock Purchase Agreement"), such
Acquired Shares (including earnings thereon, property received as a
distribution in respect thereof and proceeds realized from the sale,
exchange or other disposition of such Acquired Shares or property) to be
held, administered and disposed of by the Trustee as provided herein.
Concurrently with its acquisition of the Acquired Shares, the Trustee shall
deliver to the Company, on behalf of the Trust, a Note (the "Note") of the
Trust with an original principal amount equal to the purchase price for the
Acquired Shares, such purchase price having been determined based on the
closing price per share of Common Stock on the New York Stock Exchange on
the last business day immediately preceding the signing of the Stock
Purchase Agreement.
(b) The Company may sell or otherwise deliver to the Trustee
additional amounts of cash or shares of Common Stock, to be held in trust
hereunder.
(c) Except as otherwise provided herein, all ordinary cash
dividends paid in respect of shares of Common Stock held in the Trust shall
be invested in Cash Equivalents. Any dividend or other distribution of
property (other than Common Stock) made with respect to Common Stock other
than an ordinary dividend (an "Extraordinary Dividend") shall be (i) held
in the Trust, (ii) disposed of and the proceeds reinvested in Common Stock,
(iii) disposed of and invested in Cash Equivalents, or (iv) any combination
of the foregoing, as directed by the Committee. All Extraordinary
Dividends in respect of shares of Common Stock held in the Trust, and any
proceeds therefrom and shares of Common Stock acquired with such proceeds,
shall become available for use by the Trustee (pursuant to Section 3.2
hereof) in the same proportion as Acquired Shares become available for use
by the Trustee pursuant to, and shall be applied in a manner consistent
with the provisions of, Section 3.2 hereof.
SECTION 2.2 Contributions to Repay Trust Indebtedness. The
Company shall contribute to the Trust in cash an amount which, when added
to cash dividends and other proceeds received by the Trust in respect of
Acquired Shares (or other shares of Common Stock) held in the Trust and not
previously applied under this Section 2.2, shall enable the Trustee to make
payments of principal and interest due under the Note (or other
indebtedness of the Trust relating to the acquisition of Common Stock) on a
timely basis or to make prepayments of such principal or interest. The
Trustee shall promptly apply all ordinary cash dividends paid in respect of
Acquired Shares (or other shares of Common Stock held in the Trust) and all
cash contributions to the payment of principal and interest under the Note
(or such other indebtedness). To the extent the Company fails to make any
contribution required under this Section 2.2 when due, or to the extent the
Committee (as hereinafter defined) notifies the Trustee that the Company
wishes to prepay any principal or interest under the Note (or such other
indebtedness) without making a contribution hereunder, such contribution
shall be deemed to have been made in the form of forgiveness of principal
and interest then due and owing on the Note (or forgiveness of principal
and interest to the extent of any prepayment, as the case may be). The
Trustee shall be accountable for all contributions received by it, but
shall have no duty to require any contributions to be made to it. The
Committee shall provide timely notice to the Trustee regarding each
dividend payment and each contribution to be made (or deemed to be made)
pursuant to this Section 2.2.
SECTION 2.3 Trust Corpus. As used herein, the term "Trust
Corpus" shall mean any cash, Cash Equivalents or shares of Common Stock
delivered, sold or otherwise contributed to the Trustee as described in
Section 2.1 or 2.2 hereof, together with any dividends or earnings thereon,
any property received as a distribution in respect thereof or any proceeds
from the disposition thereof, plus any cash or Cash Equivalents or shares
of Common Stock sold or otherwise delivered thereafter pursuant to Section
2.1 or 2.2 hereof, together with any earnings thereon, any property
received as a distribution in respect thereof or any proceeds from the
disposition thereof (and less such amounts distributed from the Trust
pursuant to the terms hereof). As used herein, the term "Cash Equivalents"
shall mean securities issued or directly and fully guaranteed by the United
States or any agency or instrumentality thereof (provided that the full
faith and credit of the United States is pledged in support thereof) having
maturities of less than one year from the date of acquisition or money
market portfolios of registered mutual funds, including those for which the
Trustee or its affiliates acts as investment advisor. Except as otherwise
provided in Section 2.1(c) hereof, the Trust Corpus shall at all times be
limited to shares of Common Stock and cash or Cash Equivalents.
ARTICLE III
RELEASE OF THE TRUST CORPUS
SECTION 3.1 Use of Assets. In accordance with the provisions
hereof and subject to Section 3.3 hereof, upon the direction of the
Committee, the Trustee shall apply the Trust Corpus (1) to the payment of
outstanding principal and interest on the Note or other indebtedness of the
Trust which is then outstanding, in accordance with the terms thereof, (2)
on behalf of the Company to the satisfaction of the Company's contractual
obligations under the Plans, or (3) otherwise as provided in Section 5.1
upon termination of the Trust. Notwithstanding the foregoing, (i) the
Trustee shall not transfer shares of Common Stock to the Company in
satisfaction of any outstanding principal and interest on the Note or other
indebtedness of the Trust, and (ii) the Trustee shall not be required to
apply the Trust Corpus in the manner described in clauses (2) or (3) above
during the period that the Company exercises its right to prevent the
Trustee from disposing of shares of Common Stock pursuant to the second
sentence of Section 4.3, if and to the extent that, at the time the
direction of the Committee to so apply the Trust Corpus is received by the
Trustee, the Trust Corpus does not contain sufficient cash or Cash
Equivalents to comply with the Committee's direction without disposing of
shares of Common Stock. A direction by the Committee to apply the Trust
Corpus for a purpose described in clauses (2) or (3) above may include a
direction to deliver shares of Common Stock in kind or to dispose of shares
of Common Stock and apply the proceeds therefrom for such purpose. For
purposes of this Trust Agreement, the term "Committee" shall mean a
committee comprised of the Company's Chief Financial Officer, General Legal
Counsel (or prior to November 1, 1998, the Company's Associate General
Legal Counsel) and Chief Human Resource Officer. The members of the
Committee shall be certified to the Trustee by the Secretary or Assistant
Secretary of the Company. Any action with respect to the Trust by the
Committee shall be taken by vote or consent of at least a majority of its
members or by any member authorized by the Committee to take action with
respect thereto and shall be communicated to the Trustee by the Committee
or any member designated thereby. Vacancies on the Committee shall be
filled automatically by the successor(s) to the positions set forth above.
SECTION 3.2 Release of Shares. (a) On each date on which
payment is made (or deemed to have been made) of any principal amount of
the Note (a "Principal Payment Date"), the following number of Acquired
Shares shall become available for use by the Trustee for the purposes
specified in Section 3.1 above: the number of Acquired Shares held in the
Trust immediately prior to the Principal Payment Date multiplied by a
fraction, the numerator of which is the amount of the principal payment
made (or deemed to have been made) on such date and the denominator of
which is the principal amount of the Note outstanding immediately prior to
such principal payment. Any shares of Common Stock subsequently acquired
by the Trust with borrowed funds or other indebtedness of the Trust shall
become available for the purposes specified in Section 3.1 above in a
manner consistent with the first sentence of this Section 3.2(a). The
Trustee may confirm with the Committee the number of Acquired Shares
becoming so available, and if it does so, it may rely upon such
confirmation.
(b) The Acquired Shares and other shares of Common Stock
becoming available pursuant to Section 3.2(a) above (the "Released Shares")
shall be contributed to the trust established under a Plan or, in the case
of any Plan under which no trust has been established, directly to or on
behalf of Participants or Beneficiaries (as such terms are hereinafter
defined), in accordance with the directions of the Committee. Upon
receiving directions from the Committee, the Trustee shall sell any
Released Shares and transfer the proceeds of such sale to the trust
established under such Plan or, in the case of any Plan under which no
trust has been established, to or on behalf of such Plan's Participants or
Beneficiaries. Any such sale shall be made in the manner directed by the
Committee, and may be made in the open market or in a private transaction,
excluding, however, any sale to the Company. If the sales are to be public
sales, the Company shall prepare and file an appropriate registration
statement with respect to such shares under the Securities Act of 1933, as
amended. In addition, in connection with any such sale, the Company shall
prepare and file any documents necessary to register such sales on all
stock exchanges on which the Common Stock is registered for trading.
SECTION 3.3 Deliveries to Creditors of the Company. It is the
intent of the parties hereto that the Trust Corpus is and shall remain at
all times subject to the claims of the general creditors of the Company.
Accordingly, neither the Trustee nor the Company shall create a security
interest in the Trust Corpus in favor of the Plans, any participant therein
(each, a "Participant"), any beneficiary of such Participant (each, a
"Beneficiary") or any creditor. If the Trustee receives the notice
provided for in Section 3.4, or if the Trustee otherwise receives actual
notice that the Company is insolvent or bankrupt as defined in Section 3.4,
the Trustee shall make no further distributions of the Trust Corpus but
shall deliver the entire amount of the Trust Corpus only as a court of
competent jurisdiction, or duly appointed receiver or other person
authorized to act by such a court, may direct. The Trustee shall resume
distribution of the Trust Corpus under the terms hereof, upon no less than
30 days' advance notice to the Company, if the Trustee determines that the
Company was not, or is no longer, bankrupt or insolvent. Such
determination shall be made in a timely fashion, and shall be based upon a
decision of a court of competent jurisdiction, a report of a nationally
recognized appraisal firm or a certification by the Chief Executive Officer
of the Company or a determination of the Board of Directors of the Company
(the "Board"). The Trustee may conclusively rely upon any such decision,
report or certification. Unless the Trustee has actual knowledge of the
Company's bankruptcy or insolvency, the Trustee shall have no duty to
inquire whether the Company is bankrupt or insolvent.
SECTION 3.4 Notification of Bankruptcy or Insolvency. The Chief
Executive Officer of the Company shall advise the Trustee promptly in
writing of the Company's bankruptcy or insolvency. The Company shall be
deemed to be bankrupt or insolvent upon the occurrence of any of the
following:
(i) the Company shall make an assignment for the
benefit of creditors; file a petition in bankruptcy; petition or
apply to any tribunal for the appointment of a custodian,
receiver, liquidator, sequestrator, or any trustee for it or a
substantial part of its assets; commence any case under any
bankruptcy, insolvency, reorganization, arrangement, readjustment
of debt, dissolution, liquidation or similar law or statute of
any jurisdiction (federal or state), whether now or hereafter in
effect; or if there shall have been filed any such petition or
application, or any such case shall have been commenced against
it, in which an order for relief is entered or which remains
undismissed for a period of 120 days; or the Company by any act
or omission shall indicate its consent to, approval of or
acquiescence in any such petition, application or case or order
for relief or to the appointment of a custodian, receiver or any
trustee for it or any substantial part of any of its property, or
shall suffer any such custodianship, receivership or trusteeship
to continue undischarged for a period of 120 days; or
(ii) the Company shall generally not pay its
debts as such debts become due or shall cease to pay its debts
generally in the ordinary course of business.
ARTICLE IV
ADMINISTRATION OF TRUST FUND
SECTION 4.1 Trustee. (a) The duties and responsibilities of
the Trustee shall be limited to those expressly set forth in this Trust
Agreement and the Stock Purchase Agreement, and no implied covenants or
obligations shall be read into this Trust Agreement against the Trustee.
Without limiting any other provision of this Section 4.1, the Company and
the Trustee agree that the Trustee shall be under no obligation to comply
with any otherwise applicable common law or statutory requirement regarding
investment of the Trust Corpus, including, but not limited to any "prudent
man rule."
(b) If, under circumstances described in Section 3.4 or
otherwise, all or any part of the Trust Corpus is at any time attached,
garnished, or levied upon by any court order, or in case the payment,
assignment, transfer, conveyance or delivery of any such property shall be
stayed or enjoined by any court order, or in case any order, judgment or
decree shall be made or entered by a court affecting such property or any
part thereof, then and in any of such events the Trustee is authorized, in
its sole discretion, to rely upon and comply with any such order, writ,
judgment or decree, and it shall not be liable to the Company, any Plan or
any Participant or Beneficiary by reason of such compliance even though
such order, writ, judgment or decree subsequently may be reversed,
modified, annulled, set aside or vacated.
(c) The Trustee or its agent shall maintain such books,
records and accounts as may be necessary for the proper administration of
the Trust Corpus (and agreed to from time to time between the Committee and
the Trustee), and shall render to the Committee, within 30 days of the end
of each fiscal quarter of the Company, commencing with the fiscal quarter
ending December 31, 1998, until the termination of the Trust (and on the
date of such termination or as promptly as practicable thereafter), an
accounting with respect to the Trust Corpus as of the end of the then most
recent fiscal quarter (and as of the date of such termination).
(d) The Trustee shall not be liable for any act taken or
omitted to be taken hereunder if taken or omitted to be taken by it in good
faith. The Trustee shall also be fully protected in relying upon any
notice or instruction given hereunder which it in good faith believes to be
genuine and executed and delivered in accordance with this Trust.
(e) The Trustee may consult with legal counsel to be
selected by it, including counsel to the Company, and the Trustee shall not
be liable for any action taken or omitted to be taken by it in good faith
in accordance with the advice of such counsel.
(f) The Trustee shall be reimbursed by the Company for its
reasonable expenses incurred in connection with the performance of its
duties hereunder and shall be paid reasonable fees for the performance of
such duties. Any amounts payable to the Trustee under this paragraph (f)
may be payable from the Trust Corpus if not paid by the Company.
(g) Except for any damages, losses, claims or expenses
resulting from the Trustee's gross negligence or willful misconduct, the
Company agrees to indemnify and hold harmless the Trustee from and against
any and all damages, losses, claims or expenses as incurred (including
reasonable expenses of investigation and reasonable fees, charges and
disbursements of counsel to the Trustee and any taxes imposed on the Trust
Corpus or income of the Trust) arising out of or in connection with (i) the
performance by the Trustee of its duties hereunder, (ii) the Stock Purchase
Agreement, or (iii) the Note. The Company shall promptly reimburse the
Trustee for the fees, charges and disbursements of counsel described in the
preceding sentence and may advance to the Trustee such funds as are
necessary or desirable to assist the Trustee in any actual, anticipated or
threatened claim, action or other proceeding relating to the Trust, the
Stock Purchase Agreement or the Note. Without limiting the generality of
the foregoing, the Trustee shall be under no liability to any person for
(and the Company shall indemnify and hold the Trustee harmless from and
against) any loss of any kind which may result by reason of any action
taken by it pursuant to Section 4.4 or by reason of its exercising any
power or authority under Section 4.4 or by reason of the purchase or
retention of Common Stock. The provisions of this Section 4.1(g) shall
survive the termination of this Trust or the failure to occur of the
Effective Date.
(h) Subject to the provisions of this Trust Agreement, the
Trustee shall have the following additional powers and authority, in
furtherance of the purpose of the Trust as described in Section 1.1(a),
with respect to property constituting a part or all of the Trust Corpus:
(i) To acquire and hold shares of Common Stock
and cash or Cash Equivalents, and, subject to Section 4.3 and 4.4
hereof, at the direction of the Committee, to sell, exchange or
transfer any such property at public or private sale for cash or
on credit and grant options for the purchase or exchange thereof;
(ii) To exercise any conversion privilege or
subscription right available in connection with any such
property; subject to Sections 4.3 and 4.4 hereof, to oppose or to
consent to the reorganization, consolidation, merger or
readjustment of the finances of any corporation, company or
association, or to the sale, mortgage, pledge or lease of the
property of any corporation, company or association, any of the
securities of which may at any time be held in the Trust and to
do any act with reference thereto, including the exercise of
options, the making of agreements or subscriptions and the
payment of expenses, assessments or subscriptions, which may be
deemed necessary or advisable in connection therewith, and to
hold and retain any securities or other property which it may so
acquire;
(iii) To commence or defend suits or legal
proceedings and to represent the Trust in all suits or legal
proceedings; to settle, compromise or submit to arbitration, any
claims, debts or damages, due or owing to or from the Trust;
(iv) Subject to Sections 4.3 and 4.4 hereof, to
exercise, personally or by general or limited power of attorney,
any right, including the right to vote, appurtenant to any shares
of Common Stock or other property;
(v) To engage legal counsel, including counsel to
the Company, or any other suitable agents, to consult with such
counsel or agents with respect to the construction of this Trust
Agreement, the duties of the Trustee hereunder, the transactions
contemplated by this Trust Agreement or any act which the Trustee
proposes to take or omit to take, to rely upon the advice of such
counsel or agents, and to pay its reasonable fees, expenses and
compensation;
(vi) To register any securities held by it in its
own name or in the name of any custodian of such property or of
its nominee, including the nominee of any system for the central
handling of securities, with or without the addition of words
indicating that such securities are held in a fiduciary capacity,
to deposit or arrange for the deposit of any such securities with
such a system and to hold any securities in bearer form;
(vii) To make, execute and deliver, as Trustee,
any and all deeds, leases, notes, bonds, guarantees, mortgages,
conveyances, contracts, waivers, proxies, releases or other
instruments in writing necessary or proper for the exercise of
any of the foregoing powers;
(viii) to borrow from any lender (including the Company
pursuant to this Trust Agreement, the Stock Purchase Agreement and
Note);
(ix) To take any other action necessary or
advisable in furtherance of the foregoing powers and the purposes
of this Trust.
SECTION 4.2 Successor Trustee. The Trustee may resign and be
discharged from its duties hereunder at any time by giving to the Company
notice in writing of such resignation specifying a date (not less than 30
days after the giving of such notice) when such resignation shall take
effect. Promptly after such notice, the Company shall appoint an
independent financial institution as successor trustee, such trustee to
become Trustee hereunder upon the resignation date specified in such
notice. The Trustee shall continue to serve until its successor accepts
the trust and receives delivery of the Trust Corpus. The Company may at
any time substitute an independent financial institution as successor
trustee by giving 15 days' notice thereof to the Trustee then acting. In
the event of such removal or resignation, the Trustee shall duly file with
the Committee a written statement or statements of account as provided in
Section 4.1(c) for the period since the last previous accounting of the
Trust, and if written objection to such account is not filed within 90
days, the Trustee shall to the maximum extent permitted by applicable law
be forever released and discharged from all liability and accountability
with respect to the propriety of its acts and transactions shown in such
account.
SECTION 4.3 Limitations on Sales. Except as otherwise provided
in Sections 3.2, 3.3 or 4.4, or as may be necessary to implement the
provisions of Section 5.1 hereof, the Trustee shall not sell, exchange or
transfer any shares of Common Stock or grant any option for the purchase or
exchange of any shares of Common Stock (a "Securities Transaction"). If
the Company is advised in writing by a recognized independent investment
banking firm that a Securities Transaction would adversely affect any
financing by the Company that had been contemplated by the Company prior to
the receipt of such notice or if the Company determines in its good faith
judgment that such Securities Transaction would require the Company to
disclose material information which the Company has a bona fide business
purpose for preserving as confidential or that the Company is unable to
comply with requirements of the Securities and Exchange Commission prior to
such Securities Transaction, the Company may give notice to the Trustee not
to effect such Securities Transaction. Upon receipt of such a notice from
the Company, the Trustee shall not effect such Securities Transaction for a
period not to exceed 120 days from the date of the Company's notice or such
lesser period as shall be specified in the Company's notice.
SECTION 4.4 Voting and Tendering of Common Stock.
(a) In General. Except as hereinafter provided, the number of
shares of Common Stock held by the Trust (1) to be voted in a particular
manner with respect to each matter brought before an annual or special
stockholders' meeting of the Company, (2) consenting with respect to each
matter as to which there is sought action by consent of stockholders in
lieu of a meeting or (3) to be tendered or exchanged in connection with a
tender or exchange offer for shares of Common Stock, as the case may be,
shall equal the product of (x) the total number of shares of Common Stock
held by the Trust as of the record date for such annual or special
stockholders' meeting or such matter with respect to which consents are
sought (or, in the case of a tender or exchange offer, as of the expiration
date for such offer) and (y) a fraction the numerator of which is, as the
case may be, (I) the aggregate number of shares of Common Stock voted in
such manner with respect to such matter by all stockholders of the Company
(other than the Trust), (II) the aggregate number of shares of Common Stock
consenting on such matter by all stockholders of the Company (other than
the Trust), or (III) the aggregate number of shares of Common Stock which
are tendered or exchanged by all stockholders of the Company (other than
the Trust), and the denominator of which is the aggregate number of
outstanding shares of Common Stock held by all stockholders of the Company
(other than the Trust). Notwithstanding the foregoing, in the event that a
tender or exchange offer for shares of Common Stock (i) is made by the
Company or (ii) is made by a third party for less than a majority of all
outstanding shares of Common Stock, the Trustee shall follow the
instructions of the Committee with respect to the tender or exchange of
such shares. The instructions of the Committee with respect to those
matters referred to in the preceding sentence shall be determined by the
Committee in its independent discretion, without direction from the Board.
(b) Trustee Powers. Except as provided in this Section 4.4, the
Trustee shall have no power to vote, act by written consent with respect
to, tender or exchange Common Stock held in the Trust.
ARTICLE V
TERMINATION AND AMENDMENT
SECTION 5.1 Termination. The Trust shall be terminated on the
earlier of December 31, 2008, or the date on which any of the following
events occurs (the "Termination Date"): (a) the Company's contractual
obligations under the Plans are satisfied in full; (b) the Trust Corpus is
exhausted; (c) the Department of Labor or a court of competent jurisdiction
has determined that the assets of the Trust are subject to Part 4 of
Subtitle B of Title I of ERISA; (d) the Internal Revenue Service or a court
of competent jurisdiction has determined that any portion of the Trust
Corpus is presently taxable to any Participant or Beneficiary; or (e) the
date of occurrence of a Change of Control (as defined in Section 5.2(c)
hereof). Upon termination of the Trust, any remaining portion of the Trust
Corpus shall be applied as expeditiously as possible as follows: first, to
satisfy any outstanding principal and interest on the Note or other
indebtedness of the Trust; second, the remaining shares of Common Stock and
other assets constituting the Trust Corpus shall be applied, as directed by
the Committee, in accordance with Section 3.1(2) hereof; and thereafter,
any remaining shares of Common Stock or other assets constituting the Trust
Corpus shall be utilized to fund contractual obligations of the Company, or
otherwise provide benefits to current employees of the Company, under one
or more employee benefit plans, agreements, programs, arrangements or
practices of the Company (other than Plans) as determined by the Committee.
In no event shall the Company receive any distribution of the Trust Corpus
upon termination of the Trust, except in repayment of unpaid principal and
interest due under the Note or other indebtedness of the Trust to the
Company.
SECTIONS 5.2 Amendment. (a) The Company may amend this Trust
Agreement, by written instrument executed and duly authorized by the
Company; provided however, that no such amendment shall accelerate the
Termination Date, materially alter the provisions of Sections 2.2, 3.1,
3.2, 3.3, 4.3 or 5.1 hereof or this Section 5.2 or permit the Company to
receive any distribution of the Trust Corpus except in repayment of unpaid
principal and interest due under the Note or any subsequent indebtedness
incurred by the Trustee to the Company; and provided, further, however,
that no amendment to this Trust Agreement pursuant to this Section 5.2(a)
or Section 5.2(b) hereof shall modify the responsibilities or duties of the
Trustee without its written consent.
(b) Notwithstanding Section 5.2(a) hereof, the Company may amend
this Trust Agreement from time to time in such a manner as may be
necessary, in the opinion of independent counsel, to prevent this Trust
Agreement or the Trust from becoming subject to ERISA or to prevent the
current taxation of the Trust Fund to any Participant or Beneficiary.
(c) For purposes of this Trust Agreement, a "Change of Control"
shall be deemed to have occurred if the event set forth in any one of the
following paragraphs shall have occurred:
(i) any Person (as defined below) is or becomes the beneficial owner
(as defined in Rule 13d-3 under the Securities Exchange Act of 1934,
as amended (the "Exchange Act")), directly or indirectly, of
securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired directly
from the Company or its affiliates) representing 30% or more of either
the then outstanding shares of Common Stock or the combined voting
power of the Company's then outstanding securities; or
(ii) the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals who, on
the date hereof, constitute the Board and any new director (other than
a director whose initial assumption of office is in connection with an
actual or threatened election contest, including but not limited to a
consent solicitation, relating to the election of directors of the
Company) whose appointment or election by the Board or nomination for
election by the Company's stockholders was approved by a vote of at
least two-thirds (2/3) of the directors then still in office who
either were directors on the date hereof or whose appointment,
election or nomination for election was previously so approved; or
(iii) there is consummated a merger or consolidation of the Company
with any other corporation or the issuance of voting securities of the
Company in connection with a merger or consolidation of the Company
(or any direct or indirect subsidiary of the Company) pursuant to
applicable stock exchange requirements, other than (A) a merger or
consolidation that would result in the voting securities of the
Company outstanding immediately prior to such merger or consolidation
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity or any parent
thereof) at least 66 2/3% of the combined voting power of the voting
securities of the Company, or such surviving entity or any parent
thereof, outstanding immediately after such merger or consolidation,
or (B) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no
Person is or becomes the beneficial owner (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Company (not including in the securities beneficially owned by such
Person any securities acquired directly from the Company or its
affiliates) representing 30% or more of either the then outstanding
shares of Common Stock or the combined voting power of the Company's
then outstanding securities; or
(iv) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or there is consummated an
agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets, other than a sale or
disposition by the Company of all or substantially all of the
Company's assets to an entity, at least 70% of the combined voting
power of the voting securities of which are owned by Persons in
substantially the same proportions as their ownership of the Company
immediately prior to such sale.
The Committee shall notify the Trustee promptly in writing upon
any Change of Control; the Trustee may conclusively rely upon such notice,
and the Trustee shall have no responsibility for independently determining
whether any such event has occurred.
(d) For the purpose of Section 5.2(c) hereof, "Person" shall have
the meaning given in Section 3(a)(9) of the Exchange Act, as modified and
used in Sections 13(d) and 14(d) thereof, except that such term shall not
include (i) the Company or any of its subsidiaries, (ii) a trustee or other
fiduciary holding securities under an employee benefit plan of the Company
or any of its subsidiaries, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (iv) a
corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of stock
of the Company.
ARTICLE VI
GENERAL PROVISIONS
SECTION 6.1 Certain Provisions Relating to This Trust Agreement.
(a) This Trust Agreement shall be binding upon and inure to the benefit of
the parties and their respective successors and legal representatives.
(b) This Trust Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Pennsylvania, without
reference to any provisions of such laws regarding choice of laws or
conflict of laws.
(c) In the event that any provision of this Trust Agreement
or the application thereof to any person or circumstances shall be
determined by a court of proper jurisdiction to be invalid or unenforceable
to any extent, the remainder of this Trust Agreement, or the application of
such provision to persons or circumstances other than those as to which it
is held invalid or unenforceable, shall not be affected thereby, and each
other provision of this Trust Agreement shall be valid and enforced to the
fullest extent permitted by law.
SECTION 6.2 Notices. Any notice, report, demand or waiver
required or permitted hereunder shall be in writing and shall be given
personally, delivered by overnight delivery service or sent by telecopier,
addressed as follows:
If to the Company:
AMP Incorporated
P.O. Box 3608 Mailstop 176-40
Harrisburg, Pennsylvania 17105
Attention: Chief Financial Officer
If to the Trustee:
Wachovia Bank, N.A.
100 Main Street
Winston-Salem, North Carolina
Attention: Beverley H. Wood,
Executive Services, NC31013
Notices shall be effective only upon receipt.
The Company or Trustee may change the address to which notices,
requests and other communications are to be sent to it by giving written
notice of such address change to the other parties in conformity with this
Section 6.2.
SECTION 6.3 Gender and Number. Wherever any words are used
herein in the masculine gender, they shall be construed as though they were
also used in the feminine gender in all cases where they would so apply,
and wherever any words are used herein in the singular form, they shall be
construed as though they were also used in the plural form in all cases
where they would so apply. Likewise, wherever any words are used herein in
the plural form, they shall be construed as though they were also used in
the singular form in all cases where they would so apply.
SECTION 6.4 Headings. The headings and subheadings of this
Agreement have been inserted for convenience of reference and are to be
ignored in any construction of the provisions hereof.
SECTION 6.5 No Third Party Beneficiaries. Nothing in this
Trust, express or implied, is intended to or shall confer on any particular
person, other than the Company and the Trustee, any right, benefit or
remedy of any nature whatsoever under or by reason of this Trust, and no
such person shall have any right, title or interest in or any claim to the
Trust Corpus except as expressly provided herein. In particular, it is the
express intent of the parties that (i) this Trust shall not form part of
any of the Plans, (ii) neither any Plan nor any Participant in any of the
Plans (nor any Beneficiary of such Participant) shall have any right, title
or beneficial ownership or other interest in or any claim (preferred or
otherwise) to the Trust Corpus, nor shall any such participant have any
right to compel, restrain or otherwise direct the exercise of the
respective powers of Trustee and the Company hereunder, it being understood
that the rights of each such Participant (and Beneficiary) shall be
determined in accordance with the provisions of the Plans and (iii) the
Trust Corpus shall not be deemed to be held under any trust for the benefit
of any such Participant (or Beneficiary) or to be collateral security for
the performance of the obligations of the Company.
SECTION 6.6 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original,
but all of which together constitute but one instrument, which may be
sufficiently evidenced by any counterpart.
SECTION 6.7 Successors. Effective upon consolidation of the
Company with, or merger of the Company with or into, any corporation or
corporations or other entity or entities, or any sale or conveyance of all
or substantially all of the assets of the Company, the Trustee shall deal
with the corporation formed by such consolidation, or with or into which
the Company is merged, or the person that acquires the assets of the
Company, on the same basis as it dealt with the Company prior to such
transactions and, in such event, the term "Company" within this Agreement
shall mean such corporation or person.
SECTION 6.8 Grantor Trust. The Trust shall be treated as a
grantor trust of the Company under the Code, and the Company shall take
into account in computing its tax liability, those items of income,
deductions and credits against tax attributable to assets held in the Trust
to which the Company would have been entitled had the Trust not been in
existence. The Trustee shall notify the Company promptly after it becomes
aware of any tax liability assessed against, or imposed upon, the Trust or
the Trustee in its capacity as Trustee of the Trust. The Company shall be
responsible for all matters in respect of such assessment or imposition,
and shall have sole responsibility for any defense in connection therewith.
Payments in respect of any tax liability of the Company arising in
connection with earnings, gains or activities relating to the Trust,
including, without limitation interest and penalties, shall be made by the
Company. The Committee shall also be responsible for directing the Trustee
with respect to any tax withholding and filing applicable to any
distributions from the Trust.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed in their respective names by their duly authorized officers on the
day and year first above written, to be effective as of the Effective Date.
AMP INCORPORATED
By: /s/ Robert Ripp
____________________________________
Name: Robert Ripp
Title: Chairman and Chief Executive Officer
WACHOVIA BANK, N.A.
solely in its capacity as
trustee under this Trust
Agreement
By: /s/ Joe O. Long
____________________________________
Name: Joe O. Long
Title: Senior Vice President
Exhibit 70
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement"), dated September 28,
1998, between AMP Incorporated, a Pennsylvania corporation (the "Seller"),
and Wachovia Bank N.A., not in its individual or corporate capacity, but
solely in its capacity as trustee (the "Trustee") of the Trust (the
"Trust," which is hereinafter sometimes referred to as the "Purchaser")
under a trust agreement between the Seller and the Trustee dated September
28, 1998 (the "Trust Agreement").
WHEREAS, as contemplated by the Trust Agreement, the Purchaser is
to purchase from the Seller, and the Seller is to issue and sell to the
Purchaser, an aggregate of 25 million authorized but unissued shares (the
"Acquired Shares") of the common stock, no par value, of Seller ("Common
Stock"), all as more specifically provided herein;
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and subject to and on the terms and
conditions herein set forth, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
SECTION 1.1 Purchase and Sale. Subject to the terms and
conditions set forth herein, at the Closing (as defined below) the Seller
shall issue and sell to the Purchaser, and the Purchaser shall purchase
from the Seller, the Acquired Shares for a purchase price per share equal
to, $39.1875 the closing price per share of Common Stock on the New York
Stock Exchange on the business day immediately preceding the signing of
this Agreement. In consideration for the Acquired Shares, the Purchaser
will deliver to the Seller at the Closing (as hereinafter defined) a note
substantially in the form of Appendix I to this Agreement in the principal
amount of $979,687,500.00 (the "Note").
SECTION 1.2 Closing. The closing of the sale and purchase of
the Acquired Shares hereunder (the "Closing") will be held at the offices
of the Seller on such date as the Purchaser may designate, but in no event
prior to October 5, 1998.
SECTION 1.3 Delivery and Payment. At the Closing, the Seller
will deliver to the Purchaser a certificate representing the Acquired
Shares, which certificate shall be registered in the name of the Trustee,
or the name of its nominee, against payment by the Purchaser to the Seller
of the aggregate consideration set forth in Section 1.1 therefor. The
Seller will pay all stamp and other transfer taxes, if any, that may be
payable in respect of the sale and delivery of the Acquired Shares.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Purchaser, as of the
date of this Agreement, as follows:
SECTION 2.1 Corporate Existence and Authority. The Seller (a) is
a corporation duly organized, validly existing and in good standing under
the laws of the Commonwealth of Pennsylvania, (b) has all requisite
corporate power to execute, deliver and perform this Agreement and (c) has
taken all necessary corporate action to authorize the execution, delivery
and performance of this Agreement.
SECTION 2.2 No Conflict. Neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated hereby
will violate, conflict with or constitute a default under (a) the Seller's
certificate of incorporation or bylaws, (b) any agreement, indenture or
other instrument to which the Seller is a party or by which the Seller or
its assets may be bound or (c) any law, regulation, order, arbitration,
award, judgment or decree applicable to the Seller.
SECTION 2.3 Validity. This Agreement has been duly executed and
delivered by the Seller and is a valid and binding agreement of the Seller
enforceable against the Seller in accordance with its terms, except as the
enforceability thereof may be limited by any applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other laws
affecting the enforcement of creditors' rights generally, and by general
principles of equity.
SECTION 2.4 The Acquired Shares. The Acquired Shares have been
duly authorized and when sold as contemplated hereby will be validly
issued, fully-paid and nonassessable shares of the Seller. No stockholder
of the Seller has any preemptive or other subscription right to acquire any
Acquired Shares. The Seller will convey to the Purchaser, on the date of
Closing, good and valid title to the Common Shares, free and clear of any
liens, claims, security interests and encumbrances, except for those liens,
claims, security interests and encumbrances described in the Trust
Agreement, including Section 3.3 thereof (relating to the delivery of trust
assets to general creditors of the Company).
SECTION 2.5 Business and Financial Information. Seller has
previously delivered (or prior to Closing will deliver) to Purchaser copies
of (a) the consolidated balance sheets of Seller and its subsidiaries, as
of December 31, 1997 and September 30, 1997, and the related consolidated
statements of operations, stockholders' equity and cash flows for the
fiscal years then ended, as reported in Seller's Annual Report on Form 10-K
for the fiscal year ended December 31, 1997, filed with the Securities and
Exchange Commission (the "SEC") under the Securities Exchange Act of 1934,
as amended (the "1934 Act"), and (b) the unaudited consolidated balance
sheet of Seller and its subsidiaries as of March 31, 1998, and June 30,
1998 and the related unaudited consolidated statements of operations,
stockholders' equity and cash flows for the quarterly periods then ended as
reported in Seller's Quarterly Report on Form 10-Q for the period ended
June 30, 1998, filed with the SEC under the Exchange Act. The June 30,
1998 consolidated balance sheet of Seller (including the related notes,
where applicable) fairly presents the consolidated financial position of
Seller and its subsidiaries as of the date thereof, and the other financial
statements referred to in this Section 2.5 (including the related notes,
where applicable) fairly present (subject, in the case of the unaudited
statements, to recurring audit adjustments normal in nature and amount) the
results of the consolidated operations and changes in stockholders' equity
and consolidated financial position of Seller and its subsidiaries for the
respective fiscal periods or as of the respective dates therein set forth.
Since June 30, 1998, Seller has filed with the SEC all forms, reports and
documents required pursuant to the Securities Act of 1933, as amended (the
"1933 Act"), and the 1934 Act, to be filed by it (the "Disclosure
Documents"). At the time filed, all of the Disclosure Documents complied
as to form in all material respects with all applicable requirements of
such Acts. None of the Disclosure Documents, at the time filed, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Seller as
follows:
SECTION 3.1 Authority; Validity. The Purchaser has full power
and authority under the Trust to execute and deliver this Agreement and the
Note and to consummate the transactions contemplated hereby. This
Agreement has been duly authorized, executed and delivered by the Trustee
on behalf of the Trust and is a valid and binding agreement of the
Purchaser enforceable in accordance with its terms, except as the
enforceability thereof may be limited by any applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other laws
affecting the enforcement of creditors' rights generally, and by general
principles of equity. The Note has been duly authorized by the Trustee on
behalf of the Trust and, upon the execution and delivery by the Trustee on
behalf of the Trust, the Note will be a valid and binding agreement of the
Purchaser enforceable in accordance with its terms, except as the
enforceability thereof may be limited by any applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or other laws
affecting the enforcement of creditors' rights generally, and by general
principles of equity.
SECTION 3.2 No Conflict. To the best of the Purchaser's
knowledge, none of the execution and delivery of this Agreement, the
execution and delivery of the Note, and the consummation of the
transactions contemplated hereby and thereby will violate, conflict with or
constitute a default under (a) the terms of the Trust, (b) any agreement,
indenture or other instrument to which the Trust is a party or by which the
Trust or its assets may be bound or subject or (c) any law, regulation,
order, arbitration award, judgment or decree applicable to the Trust.
ARTICLE IV
RESTRICTIONS ON DISPOSITION OF THE COMMON SHARES
SECTION 4.1 Restricted Securities. The Purchaser acknowledges
that the Purchaser is acquiring the Acquired Shares pursuant to a
transaction exempt from registration under the 1933 Act. The Purchaser
represents, warrants and agrees that all Acquired Shares acquired by the
Purchaser pursuant to this Agreement are being acquired for investment
without any intention of making a distribution thereof, or of making any
sale or other disposition thereof which would be in violation of the 1933
Act or any applicable state securities law, and that the Purchaser will not
dispose of any of the Acquired Shares, except that the Trustee may, from
time to time, convey a portion of the Acquired Shares pursuant to the terms
of the Trust Agreement.
SECTION 4.2 Legend. Until such time as the Acquired Shares are
registered pursuant to the provisions of the 1933 Act, any certificate or
certificates representing the Acquired Shares delivered pursuant to Section
1.3 will bear a legend in substantially the following form:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and may
not be sold, transferred or otherwise disposed of unless they
have first been registered under such Act or unless an exemption
from registration is available."
The Seller may place stop transfer orders against the registration of
transfer of any share evidenced by such a certificate or certificates until
such time as the requirements of the foregoing are satisfied.
ARTICLE V
COVENANTS OF SELLER
The Seller agrees that:
SECTION 5.1 Financial Statements, Reports and Documents.
Subsequent to the Closing, and for as long as any of the Acquired Shares
are held by the Trust (unless the Trustee shall otherwise consent in
writing), the Seller shall deliver to the Trustee each of the following:
(a) Annual Statements. As soon as available and in any
event within one hundred twenty (120) days after the close of each fiscal
year of the Seller, copies of the consolidated balance sheet of the Seller
and its subsidiaries as of the close of such fiscal year and the
consolidated statement of operations, consolidated statement of changes in
stockholders' equity and consolidated statement of cash flow of the Seller
and its subsidiaries for such fiscal year, in each case setting forth in
comparative form the figures for the preceding fiscal year, all in
reasonable detail and accompanied by an opinion thereon of Arthur Andersen
LLP, or of other independent public accountants of recognized national
standing, to the effect that such financial statements have been prepared
in accordance with generally accepted accounting principles and that the
examination of such accountants in connection with such financial
statements has been made in accordance with generally accepted auditing
standards and, accordingly, include such tests of the accounting records
and such other auditing procedures as were considered necessary in the
circumstances;
(b) SEC and Other Reports. Promptly upon their becoming
available, one copy of each financial statement, report, notice or proxy
statement sent by the Seller to stockholders generally and of each regular
or periodic report, registration statement or prospectus (other than any
registration statement on Form S-8 and its related prospectus) filed by the
Seller with the SEC or any successor agency; and
SECTION 5.2 Registration; Listing. As soon as practicable
after the Closing, the Seller shall use commercially reasonable efforts to
cause the Acquired Shares to be listed on the New York Stock Exchange, Inc.
The Seller shall take all actions necessary or appropriate, at its own
expense, to ensure that prior to any disposition of Acquired Shares by the
Trustee in accordance with the Trust Agreement, a registration statement
has been filed with the SEC (and remains effective) with respect to the
Acquired Shares being so disposed. The Seller shall also use its
commercially reasonable efforts to register or qualify such Acquired Shares
under the securities blue sky laws of such jurisdictions within the United
States as the Trustee may reasonably request, within seventy-five (75) days
of such request; provided, however, that the Seller shall not be required
to consent to general service of process for all purposes in any
jurisdiction where it is not then qualified.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1 Expenses. The Seller shall pay all of its expenses,
and it shall pay the Purchaser's expenses, in connection with the
authorization, preparation, execution and performance of this Agreement,
including without limitation the reasonable fees and expenses of the
Trustee, its agents, representatives, counsel, financial advisors and
consultants. The provisions of this Section 6.1 shall survive the failure
to occur of the Closing.
SECTION 6.2 Notices. All notices, requests, or other
communications required or permitted to be delivered hereunder shall be in
writing, delivered by registered or certified mail, return receipt
requested, as follows:
(a) To the Seller:
AMP Incorporated
P.O. Box 3608 Mailstop 176-40
Harrisburg, Pennsylvania 17105
Attention: Chief Financial Officer
(b) To the Purchaser:
Wachovia Bank, N.A.
100 Main Street
Winston-Salem, North Carolina
Attention: Beverley H. Wood
Executive Services
NC31013
Any party hereto may from time to time, by written notice given as
aforesaid, designate any other address to which notices, requests or other
communications addressed to it shall be sent.
SECTION 6.3 Specific Performance. The parties hereto
acknowledge that damages would be an inadequate remedy for any breach of
the provisions of this Agreement and agree that the obligations of the
parties hereunder shall be specifically enforceable, and neither party will
take any action to impede the other from seeking to enforce such rights of
specific performance.
SECTION 6.4 Successors and Assigns; Integration; Assignment.
This Agreement shall be binding upon, inure to the benefit of and be
enforceable by the parties hereto and their respective legal
representatives, successors and assigns. This Agreement (a) constitutes,
together with the Note, the Trust Agreement and any other written
agreements between the Purchaser and the Seller executed and delivered on
the date hereof, the entire agreement between the parties hereto and
supersedes all other prior agreements and understandings, both written and
oral, among the parties, with respect to the subject matter hereof, (b)
shall not confer upon any person other than the parties hereto any rights
or remedies hereunder and (c) shall not be assignable by operation of law
or otherwise, except that the Trustee may assign all its rights hereunder
to any corporation or other institution exercising trust powers in
connection with any such institution assuming the duties of a trustee under
the Trust.
SECTION 6.5 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the Commonwealth of
Pennsylvania, without regard to its conflicts of law doctrine.
SECTION 6.6 Further Assurances. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all action and to do, or
cause to be done, all things necessary, proper or advisable to consummate
and make effective the transactions contemplated by this Agreement.
SECTION 6.7 Amendment and Waiver. No amendment or waiver of any
provision of this Agreement or consent to departure therefrom shall be
effective unless in writing and signed by the Purchaser and the Seller.
SECTION 6.8 Counterparts. This Agreement may be executed in any
number of counterparts with the same effect as if the signatures thereto
were upon one instrument.
SECTION 6.9 Certain Limitations. The execution, delivery and
performance by the Trustee of this Agreement have been, and will be,
effected by the Trustee, solely in its capacity as Trustee under the terms
of the Trust and not in its individual or corporate capacity. Nothing in
this Agreement shall be interpreted to increase, decrease or modify in any
manner any liability of the Trustee to the Seller or to any trustee,
representative or other claimant by right of the Seller resulting from the
Trustee's performance of its duties under the constituent instruments of
the Trust.
SECTION 6.10 Incorporation. The terms and conditions of the
Trust Agreement relating to the nature of the responsibilities of the
Trustee and the indemnification of the Trustee by the Seller are
incorporated herein by reference and made applicable to this Agreement.
IN WITNESS WHEREOF, the undersigned have duly executed this
Agreement on the date and year first above written.
AMP INCORPORATED
By: /s/ Robert Ripp
_________________________________
Name: Robert Ripp
Title: Chairman and Chief Executive Officer
WACHOVIA BANK, N.A., solely in its
capacity as trustee under the
Trust Agreement
By: /s/ Joe O. Long
_______________________________
Name: Joe O. Long
Title: Senior Vice President
APPENDIX I
TRUST NOTE
Wachovia Bank, N.A., AS TRUSTEE
$979,687,500.00 October __, 1998
FOR VALUE RECEIVED, the undersigned, Wachovia Bank, N.A., solely
in its capacity as trustee (the "Trustee"), under the Benefit Trust
Agreement dated September 28, 1998 (the "Trust Agreement") between the
Trustee and AMP Incorporated (the "Company"), hereby unconditionally
promises to pay to the order of the Company the principal amount of
$979,687,500.00 (the "Original Principal Amount"), with interest (computed
on the basis of the actual number of days elapsed over a year of 365 days)
on the unpaid principal balance at the rate of 5.39% per annum from and
including the date hereof, until the principal hereof shall be paid in
full.
This Note is issued by the Trustee pursuant to the Stock Purchase
Agreement, dated September 28, 1998, between the Company and the Trustee
(the "Stock Purchase Agreement") as payment for the Acquired Shares, as
defined in the Stock Purchase Agreement, and is the Note referred to in
Section 2.1(a) of the Trust Agreement. This Note is entitled to the
benefits, and shall be subject to the applicable provisions, of the Stock
Purchase Agreement and the Trust Agreement, including, but not limited to,
the provisions of Section 2.2 of the Trust Agreement. The Trustee is
executing this Note solely in its capacity as trustee under the Trust
Agreement. The Trustee shall have no liability or obligation of any kind
in its individual capacity to the Company or its successors as a result of
the execution or issuance of this Note.
The unpaid principal balance and accrued and unpaid interest
hereunder shall be due and payable in accordance with the following
schedule, if not sooner paid:
o accrued and unpaid interest shall be due and payable on each
payment date for the payment of a quarterly cash dividend by the
Company, but only to the extent of cash dividends paid on
Acquired Shares and other shares of Common Stock (as defined in
the Trust Agreement) held in the Trust (as defined in the Trust
Agreement) on the record date for the payment of such dividend;
and
o 5% of the Original Principal Amount plus accrued and unpaid
interest, shall be due and payable on or before October __, of
each of the years 1999 through and including 2007;
o 55% of the Original Principal Amount plus accrued and unpaid
interest, shall be due and payable on or before October __, 2008.
The Trustee shall have the right to prepay principal or interest owed by
the Trustee under this Note in whole or in part at any time without
penalty. To the extent of any such prepayment of principal, principal
amounts due under the foregoing schedule shall be reduced in the reverse
order of their maturity. Upon termination of the Trust, the unpaid
principal balance and accrued and unpaid interest hereunder shall become
due and payable in full. If any payment of principal or interest owed by
the Trustee under this Note becomes due and payable on a day other than a
business day in the Commonwealth of Pennsylvania, the maturity thereof
shall be extended to the next succeeding business day.
The Trustee hereby waives presentment, demand, protest and notice
of dishonor. The Trustee shall be entitled to exercise any and all voting,
conversion and other rights pertaining to the Acquired Shares or any part
thereof in the manner prescribed in the Trust Agreement.
The Trustee shall be obligated to make the payments indicated as
aforesaid only from (i) cash dividends or other earnings received by the
Trustee in respect of the Acquired Shares and other shares of Common Stock
held in the Trust, which dividends or other earnings have not previously
been applied for such purpose, (ii) cash contributions made (or deemed to
have been made under the Trust Agreement) for such purpose by the Company
or any corporation affiliated therewith and earnings thereon, and (iii) any
proceeds realized from the sale, exchange or other disposition of the
Acquired Shares upon termination of the Trust.
Any failure by the Company to exercise any right, remedy or
recourse shall not be deemed a waiver or release of same, such waiver or
release or any other modification of any such right, remedy or recourse to
be effective only if set forth in a written document executed by the
Company and then only to the extent specifically recited therein. A waiver
or release with reference to one event shall not be construed as
continuing, as a bar to or as a waiver or release of any subsequent event.
The acceptance by the Company of payment hereunder that is less than
payment in full of all amounts due and payable at the time of such payment
shall not constitute a waiver of the right to exercise any right, remedy or
recourse at that time or at any subsequent time, or nullify any prior
exercise of any such right, remedy or recourse without the express written
consent of the Company.
Subject to the provisions hereof, and to the extent not
inconsistent with applicable law, in the event of default hereunder, the
Trustee agrees to pay from Trust assets all reasonable costs of collection
hereof when billed therefore, including reasonable attorneys' fees, whether
or not any action shall be instituted to enforce this Note.
All of the terms of this Note shall be binding upon the Trustee
and the Trustee's successors and assigns (including without limitation any
successor trustee under the Trust Agreement), and all references herein to
the "Trustee" shall refer to such successors and assigns.
This Note shall be construed in accordance with and shall be
governed by the law of the Commonwealth of Pennsylvania without regard to
its conflicts of law doctrine.
Wachovia Bank, N.A.,
solely in its
capacity as trustee
under the Trust Agreement
By:_________________________
Name:
Title:
EXHIBIT 71
September 28, 1998
Fellow AMP Employees:
I want to address two issues: 1) The self-tender offer we announced today
for 30 million shares of AMP stock at $55 a share in cash, and 2) The
AlliedSignal so-called "guarantee" to Pennsylvania employees who earn less
than $50,000 a year.
The offer for 30 million of our shares, combined with the results of our
Profit Improvement Plan, is a significant statement. We have been saying
all along that our Profit Improvement Plan will deliver far more value in
the near- and long-term than AlliedSignal's low-ball offer. With this
self-tender offer, we essentially are putting our money where our mouth is.
AMP's financial strength and anticipated strong future cash flow have made
it possible for the Board to commit to this major stock repurchase. It
reflects our confidence that the self-tender will not affect our ability to
execute our Profit Improvement Plan, nor will it affect our ability to
maintain our current dividend, grow our businesses and increase our strong
presence in and commitment to Pennsylvania and all the communities we
serve.
Another element of our announcement is the creation of a Flexitrust with 25
million AMP shares. The Flexitrust is targeted to free operating cash flow
currently used to fund, among other things, cash benefit and compensation
requirements of approximately $1 billion over the next 10 years. The trust
will not affect AMP's employee benefit and compensation plans.
The creation of the trust will add no debt to AMP's balance sheet, will
increase the Company's equity base over time, and will bolster AMP's credit
position. Many companies such as Air Products and Chemicals, DuPont, Enron,
Pfizer and Corning have all used Flexitrusts.
This self-tender, together with the acceleration of our Profit Improvement
Plan, is a winning program all around. We are maintaining our financial
strength to remain competitive and grow for the benefit of our employees,
shareholders, customers, suppliers and Pennsylvania.
Let me say that I am immensely proud of all AMP employees. I don't
categorize them by salary level. AMP employees, regardless of how much
they earn, are winners. They are the best in the connector industry.
They certainly are a lot smarter than AlliedSignal gives them credit for.
In a newspaper ad on Sunday, AlliedSignal "guaranteed" employment for one
year for certain AMP employees in Pennsylvania.
What about all other AMP employees? What about the more than 2,000 highly
skilled Pennsylvania employees who earn more than $50,000? Among the
employees that AlliedSignal excludes in its "guarantee" are senior
engineers, production managers, sales representatives, experts in all
phases of connector technology, and others -- people who know the connector
business inside and out.
Is AlliedSignal, which knows little about the connector business, saying
that it can run AMP without the skills that these employees bring to our
business? We all know better. AMP has been a leader in the connector
industry for half a century and during those years has provided stable
employment for thousands of Pennsylvanians. Against that commitment,
AlliedSignal's one-year "guarantee" for certain Pennsylvania employees is
meaningless.
AMP will continue to pursue its legislative initiatives and all other
appropriate means to prevent AlliedSignal from capturing AMP's value. Let
me remind you to keep calling your legislators. Your calls have really
been making a difference.
Thank you for your hard work and dedication. It gives me tremendous
confidence in our future.
Sincerely,
Robert Ripp
Chairman and CEO
Because AlliedSignal has stated that it will initiate a consent
solicitation, the participant information below is required under
Securities and Exchange Commission rules:
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 11, 1998, DLJ held no shares
of AMP common stock for its own account and CSFB had a net long position of
103,966 shares of AMP common stock.
This 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 may have been distracted by AlliedSignal's
tender offer and whose numbers will have been reduced as a result of these
initiatives.
EXHIBIT 72
THE FOLLOWING INFORMATION WAS POSTED TODAY ON AMP'S INTRANET:
ALLIEDSIGNAL'S DOUBLE STANDARD
It has come to light that New Jersey-based AlliedSignal Inc. plays by a
different set of rules than those it is trying to force on AMP.
Beginning October 15, AlliedSignal intends to force key decisions that
would affect control of AMP and its board of directors by using a procedure
called a "consent solicitation." In essence, this means that votes would be
taken through the mail rather than at a scheduled shareholder meeting,
where there could be a full and free exchange of information and opinions,
and where the decisions could be made carefully and responsibly.
Ironically, AlliedSignal doesn't allow its own shareholders to make
decisions by a consent procedure.
AMP has asked the General Assembly to tighten Pennsylvania's anti-takeover
law by requiring that important decisions be made only at duly convened
shareholder meetings. Given AlliedSignal's announced intention to cut
hundreds of millions of dollars in expenses once it seizes control of AMP,
the General Assembly's decision clearly will have a profound effect on
Pennsylvania jobs. AMP has some 8,000 employees in central Pennsylvania
alone, and the company has hundreds of suppliers throughout the Commonwealth.
The economic slump in Asia, where AMP sells many of its products, has made
it possible for AlliedSignal to make a bargain-basement bid for AMP,
despite the fact that AMP's Profit Improvement Plan is well underway.
"It is ironic that Pennsylvania could lose hundreds or thousands of jobs
and a responsible corporate citizen, all because a New Jersey-based
corporate raider is able to force its victim to play by a different set of
rules," said Bob Ripp, AMP's new chief executive. "We're proposing only to
be allowed to play by the same rules as AlliedSignal."
The change would not prevent hostile takeovers, which are a fact of life in
a free-enterprise system, but it would give AMP a few more months to prove
that AlliedSignal's bid is inadequate and not in the best interests of AMP
and its shareholders, employees, customers, suppliers and communities.
PARTICIPANT INFORMATION
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 Ex-change 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 11, 1998, DLJ held no shares
of AMP common stock for its own account and CSFB had a net long position of
103,966 shares of AMP common stock.
Exhibit 73
TEXT OF MATERIALS DISTRIBUTED BY AMP TO ITS EMPLOYEES AND OTHERS:
TO ALL AMP EMPLOYEES
AlliedSignal has tried to get a big public relations splash by claiming
that AMP employees have nothing to worry about if AlliedSignal succeeds in
its hostile effort to take over AMP. But once you examine AlliedSignal's
statements--what they say and what they don't say--we think you'll find
them less than reassuring. We think AlliedSignal's assertions are
misleading and insulting. Here are some of AlliedSignal's statements, and
our translation of what they really mean.
ALLIEDSIGNAL SAYS: OUR TRANSLATION:
"Your employment is safe You may be among the one in 10 AMP
with AlliedSignal." employees AlliedSignal commits not to
fire in the first year. Everyone
else--look out!
"If you are a Pennsylvania It will probably take about one year to
employee of AMP earning up to figure out which of you AlliedSignal is
$50,000, AlliedSignal commits going to fire.
to maintaining your
employment for at least one
year..."
"This commitment covers all Let's see if anyone notices that
full-time, active AMP AlliedSignal totally omitted any
employees in Pennsylvania reference to more than 40,000 AMP
whose annual base wages or employees, including thousands in
salary is up to $50,000." Pennsylvania.
"In addition, AlliedSignal AlliedSignal can just fire
makes the following many of you right away and
commitments to all AMP the rest of you after one
Pennsylvania employees: We year--so why should
will not reduce your current AlliedSignal worry about your
salary and benefit package." salary or benefit package?
"We will provide you with at When AlliedSignal phases out your job
least 40 hours of training or shuts down your plant, maybe we can
each year--at our expense and find something else for you if you're
on our time--to help you keep willing to pull up your family and
your job skills current and relocate.
to help you learn new ones."
"We want to allay your AlliedSignal wants to do everything
concerns." possible so that if AlliedSignal
terminates your employment, it will be
totally unexpected.
WHEN YOU CUT THROUGH ALLIEDSIGNAL'S RHETORIC,
THE MESSAGE IS CLEAR:
ALLIEDSIGNAL DOESN'T REALLY CARE ABOUT YOU.
[AMP LOGO]
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 solicita-tion. 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 Busi-nesses), 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 Presi-dent, 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 (Communica-tions 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 Ex-change 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 11, 1998,
DLJ held no shares of AMP common stock for its own account and CSFB had a
net long position of 103,966 shares of AMP common stock.
