<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC. 20549
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RULE 13E-1 STATEMENT
(PURSUANT TO SECTION 13(E) OF THE SECURITIES EXCHANGE ACT OF 1934)
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AMP INCORPORATED
(NAME OF THE ISSUER)
AMP INCORPORATED
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, WITHOUT PAR VALUE
(INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS)
(TITLE OF CLASS OF SECURITIES)
031897-10-1
(CUSIP NUMBER OF CLASS OF SECURITIES)
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DAVID F. HENSCHEL PETER ALLAN ATKINS
CORPORATE SECRETARY DAVID J. FRIEDMAN
AMP INCORPORATED SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
P.O. BOX 3608 919 THIRD AVENUE
HARRISBURG, PENNSYLVANIA 17105- NEW YORK, NEW YORK 10022-3897
3608 (212) 735-3000
(717) 564-0100
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF PERSON(S) FILING
STATEMENT)
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ITEM 1. SECURITY AND ISSUER.
The issuer is AMP Incorporated, a Pennsylvania corporation (the "Company"),
which has its principal executive offices at P.O. Box 3608, Harrisburg,
Pennsylvania 17105-3608.
This Rule 13e-1 Statement relates to the offer by the Company for up to
30,000,000 shares of its Common Stock, without par value (the "Shares")
(including the associated Common Stock Purchase Rights), at $55 net per Share
to the seller in cash, upon the terms and subject to the conditions set forth
in the Offer to Purchase and in the related Letter of Transmittal (which, as
amended from time to time, together constitute the "Offer"), copies of which
are attached hereto as Exhibits 1 and 2, respectively. The information set
forth on the cover page of the Offer to Purchase and in "Introduction" to the
Offer to Purchase is incorporated herein by reference.
ITEM 2. PURPOSES OF THE TENDER OFFER.
The information set forth in "Introduction" and in "Section 7. Background
and Purpose of the Offer; Certain Effects of the Offer" in the Offer to
Purchase is incorporated herein by reference.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The information set forth in "Section 9. Source and Amount of Funds" in the
Offer to Purchase is incorporated herein by reference.
2
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
AMP Incorporated
Date: October 9, 1998
/s/ Robert Ripp
By __________________________________
ROBERT RIPP
CHAIRMAN AND CHIEF EXECUTIVE
OFFICER
3
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EXHIBIT INDEX
The following exhibits are filed herewith:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
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<C> <S>
1. Offer to Purchase, dated October 9, 1998
2. Letter of Transmittal
</TABLE>
4
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Exhibit (a)(1)
OFFER TO PURCHASE FOR CASH
BY
AMP INCORPORATED
OF
UP TO 30,000,000 SHARES OF ITS COMMON STOCK
(INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS)
AT
$55 NET PER SHARE
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THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, NOVEMBER 20, 1998, UNLESS THE
OFFER IS EXTENDED.
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AMP Incorporated, a Pennsylvania corporation (the "Company" or "AMP"),
invites its shareholders to tender shares of its common stock, without par
value (the "Shares") (including the associated common stock purchase rights
(the "Rights"), issued pursuant to the Rights Agreement, dated as of October
25, 1989 and as amended, between the Company and ChaseMellon Shareholder
Services L.L.C., as Rights Agent), to the Company at $55 per Share, net to the
seller in cash, without interest (such amount, or any greater amount per Share
as may be paid pursuant to the Offer, being referred to herein as the
"Purchase Price"), upon the terms and subject to the conditions set forth in
this Offer to Purchase and the related Letter of Transmittal (which, as
amended from time to time, together constitute the "Offer"). Unless the
context otherwise requires, all references to Shares shall include the
associated Rights.
The purpose of the Offer is to allow shareholders to sell a portion of their
Shares at a price far in excess of the price being offered by AlliedSignal
Inc. ("AlliedSignal") and thereby be in a position to realize in the near term
a portion of the benefits which the Company expects to generate through the
implementation of its plan to significantly improve profits (the "Profit
Improvement Plan"), the first elements of which were announced in June of this
year and are currently being implemented.
The Company will pay the Purchase Price for up to 30,000,000 Shares validly
tendered on or prior to the Expiration Date (as defined below) and not
properly withdrawn, upon the terms and subject to the conditions of the Offer
including the proration terms hereof. Shares not purchased because of
proration will be returned.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED.
THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS INCLUDING THE
COMPANY'S HAVING OBTAINED SUFFICIENT FINANCING FOR THE PURCHASE OF SHARES AND
ALL CONDITIONS TO SUCH FINANCING, OTHER THAN THE PURCHASE OF SHARES PURSUANT
TO THE OFFER, BEING SATISFIED ON OR PRIOR TO THE EXPIRATION DATE OF THE OFFER.
SEE SECTIONS 5 AND 9.
The Shares are listed on the New York Stock Exchange, Inc. (the "NYSE") and
traded on the NYSE, Boston, Cincinnati, Chicago, Pacific and Philadelphia
exchanges under the symbol "AMP." On September 25, 1998, the last full trading
day on the NYSE prior to announcement of the Offer, the closing per Share
sales price as reported on the NYSE Composite Tape was $39 3/16. SHAREHOLDERS
ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES. SEE SECTION 6.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MAKING OF
THE OFFER. HOWEVER, SHAREHOLDERS MUST MAKE THEIR OWN DECISIONS WHETHER TO
TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER. NEITHER THE COMPANY NOR
ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO ANY SHAREHOLDER AS TO
WHETHER TO TENDER OR REFRAIN FROM TENDERING SHARES.
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THE DEALER MANAGERS FOR THE OFFER ARE:
CREDIT SUISSE FIRST BOSTON DONALDSON, LUFKIN & JENRETTE
The Date of this Offer to Purchase is October 9, 1998.
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IMPORTANT
Any shareholders desiring to tender all or any portion of their Shares
should either (i) complete and sign the Letter of Transmittal or a facsimile
thereof in accordance with the instructions in the Letter of Transmittal, mail
or deliver the Letter of Transmittal with any required signature guarantee and
any other required documents to ChaseMellon Shareholder Services L.L.C. (the
"Depositary"), and either mail or deliver the stock certificates for such
Shares to the Depositary (with all such other documents) or follow the
procedure for book-entry delivery set forth in Section 2, or (ii) request a
broker, dealer, commercial bank, trust company or other nominee to effect the
transaction for such shareholder. A shareholder having Shares registered in
the name of a broker, dealer, commercial bank, trust company or other nominee
must contact that broker, dealer, commercial bank, trust company or other
nominee if such shareholder desires to tender such Shares. Shareholders who
desire to tender Shares and whose certificates for such Shares are not
immediately available or who cannot comply with the procedure for book-entry
transfer on a timely basis or whose other required documentation cannot be
delivered to the Depositary, in any case, by the expiration of the Offer
should tender such Shares by following the procedures for guaranteed delivery
set forth in Section 2. TO EFFECT A VALID TENDER OF THEIR SHARES, SHAREHOLDERS
MUST VALIDLY COMPLETE THE LETTER OF TRANSMITTAL.
Questions and requests for assistance or for additional copies of this Offer
to Purchase, the Letter of Transmittal or the Notice of Guaranteed Delivery
may be directed to the Information Agent or the Dealer Managers at their
addresses and telephone numbers set forth on the back cover of this Offer to
Purchase.
<PAGE>
SUMMARY
This general summary is provided for the convenience of the Company's
shareholders and is qualified in its entirety by reference to the full text
and more specific details of this Offer to Purchase.
<TABLE>
<S> <C>
Number of Shares to be Purchased.. 30,000,000 Shares (or such lesser number of
Shares as are validly tendered).
Purchase Price.................... $55 net per Share, without interest.
How to Tender Shares.............. See Section 2. Call the Information Agent
or consult your broker for assistance.
Brokerage Commissions............. None for registered shareholders who tender
Shares directly to the Depositary.
Shareholders holding Shares through their
broker or bank are urged to consult such
institutions to determine whether they
charge any fees or transaction costs if
shareholders tender Shares through such
institutions and not directly to the
Depositary.
Stock Transfer Tax................ None, if payment and delivery of any Shares
not purchased are made to the registered
holder. See Section 4.
Expiration and Proration Dates.... Friday, November 20, 1998, at 12:00
Midnight, New York City time, unless
extended by the Company.
Payment Date...................... As soon as practicable after the Expiration
Date.
Position of the Company and its Neither the Company nor its Board of
Directors........................ Directors makes any recommendation to any
shareholder as to whether to tender or
refrain from tendering Shares.
Withdrawal Rights................. Tendered Shares may be withdrawn at any
time until 12:00 Midnight, New York City
time, on Friday, November 20, 1998, unless
the Offer is extended by the Company, and,
unless previously purchased, after 12:00
Midnight, New York City time, on Tuesday,
December 8, 1998. See Section 3.
Further Developments Regarding the Call the Information Agent or consult your
Offer............................ broker.
</TABLE>
i
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THE COMPANY HAS NOT AUTHORIZED ANY PERSON TO MAKE ANY RECOMMENDATION ON
BEHALF OF THE COMPANY AS TO WHETHER SHAREHOLDERS SHOULD TENDER OR REFRAIN FROM
TENDERING SHARES PURSUANT TO THE OFFER. THE COMPANY HAS NOT AUTHORIZED ANY
PERSON TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION
WITH THE OFFER ON BEHALF OF THE COMPANY OTHER THAN THOSE CONTAINED IN THIS
OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL. DO NOT RELY ON ANY SUCH
RECOMMENDATION OR ANY SUCH INFORMATION OR REPRESENTATION, IF GIVEN OR MADE, AS
HAVING BEEN AUTHORIZED BY THE COMPANY.
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TABLE OF CONTENTS
<TABLE>
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SECTION PAGE
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INTRODUCTION............................................................. 1
FORWARD-LOOKING STATEMENTS............................................... 4
THE OFFER................................................................ 5
1. Number of Shares; Proration.......................................... 5
2. Procedure for Tendering Shares....................................... 6
3. Withdrawal Rights.................................................... 10
4. Purchase of Shares and Payment of Purchase Price..................... 11
5. Certain Conditions of the Offer...................................... 12
6. Price Range of Shares; Dividends..................................... 14
7. Background and Purpose of the Offer; Certain Effects of the Offer.... 14
8. Interests of Directors and Executive Officers; Transactions and
Arrangements Concerning the Shares.................................. 21
9. Source and Amount of Funds........................................... 22
10. Certain Information about the Company................................ 25
11. Effects of the Offer on the Market for Shares; Registration Under the
Exchange Act........................................................ 35
12. Certain Legal Matters; Regulatory Approvals.......................... 36
13. Certain U.S. Federal Income Tax Consequences......................... 36
14. Extension of the Offer; Termination; Amendments...................... 39
15. Fees and Expenses.................................................... 39
16. Miscellaneous........................................................ 42
SCHEDULE I--Certain Transactions Involving Shares........................ S-1
</TABLE>
ii
<PAGE>
TO THE HOLDERS OF SHARES OF COMMON STOCK OF AMP INCORPORATED:
INTRODUCTION
AMP Incorporated, a Pennsylvania corporation (the "Company" or "AMP"),
invites its shareholders to tender shares of its common stock, without par
value (the "Shares") (including the associated common stock purchase rights
(the "Rights"), issued pursuant to the Rights Agreement ("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, between the Company and
ChaseMellon Shareholder Services L.L.C., as Rights Agent), to the Company at
$55 per Share, net to the seller in cash, without interest, (such amount, or
any greater amount per Share as may be paid pursuant to the Offer, being
referred to herein as the "Purchase Price"), upon the terms and subject to the
conditions set forth in this Offer to Purchase and the related Letter of
Transmittal (which, as amended from time to time, together constitute the
"Offer"). Unless the context otherwise requires, all references to Shares in
this Offer to Purchase shall include the associated Rights.
The Company will pay the Purchase Price for up to 30,000,000 Shares validly
tendered on or prior to the Expiration Date (as defined in Section 1) and not
properly withdrawn, upon the terms and subject to the conditions of the Offer
including the proration terms described below.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED.
THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS INCLUDING THE
COMPANY'S HAVING OBTAINED SUFFICIENT FINANCING FOR THE PURCHASE OF SHARES AND
ALL CONDITIONS TO SUCH FINANCING, OTHER THAN THE PURCHASE OF SHARES PURSUANT
TO THE OFFER, BEING SATISFIED ON OR PRIOR TO THE EXPIRATION DATE OF THE OFFER
(THE "FINANCING CONDITION"). SEE SECTIONS 5 AND 9.
If, on or before the Expiration Date, more than 30,000,000 Shares are
validly tendered and not properly withdrawn (or such greater number of Shares
as the Company may elect to purchase), the Company will, upon the terms and
subject to the conditions of the Offer, purchase Shares on a pro rata basis
from all shareholders who validly tender Shares (and do not properly withdraw
them on or prior to the Expiration Date). The Company will return at its own
expense all Shares not purchased pursuant to the Offer, including Shares not
purchased because of proration. The Purchase Price will be paid net to the
tendering shareholder in cash for all Shares purchased. Tendering shareholders
who have Shares registered in their own name and who tender directly to the
Depositary will not be obligated to pay brokerage commissions, solicitation
fees or, subject to Instruction 6 of the Letter of Transmittal, stock transfer
taxes on the Company's purchase of Shares pursuant to the Offer. Shareholders
holding Shares through their broker or bank are urged to consult such
institutions to determine whether they charge any fees or transaction costs if
shareholders tender Shares through such institutions and not directly to the
Depositary (as defined below). HOWEVER, ANY TENDERING SHAREHOLDER OR OTHER
PAYEE WHO FAILS TO COMPLETE, SIGN AND RETURN TO THE DEPOSITARY THE SUBSTITUTE
FORM W-9 THAT IS INCLUDED WITH THE LETTER OF TRANSMITTAL MAY BE SUBJECT TO
REQUIRED FEDERAL INCOME TAX BACKUP WITHHOLDING OF 31% OF THE GROSS PROCEEDS
PAYABLE TO SUCH SHAREHOLDER OR OTHER PAYEE PURSUANT TO THE OFFER. SEE SECTION
2. In addition, the Company will pay all fees and expenses of Credit Suisse
First Boston Corporation ("Credit Suisse First Boston" or "CSFB") and
Donaldson, Lufkin & Jenrette Securities Corporation ("Donaldson, Lufkin &
Jenrette" or "DLJ" and together with CSFB, the "Dealer Managers"), Innisfree
M&A Incorporated (the "Information Agent") and ChaseMellon Shareholder
Services L.L.C. (the "Depositary") in connection with the Offer. See Section
15.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MAKING OF
THE OFFER. HOWEVER, SHAREHOLDERS MUST MAKE THEIR OWN DECISIONS WHETHER TO
TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER. NEITHER THE COMPANY NOR
ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO ANY SHAREHOLDER AS TO
WHETHER TO TENDER OR REFRAIN FROM TENDERING SHARES.
The purpose of the Offer is to allow shareholders to sell a portion of their
Shares at a price far in excess of the price being offered by AlliedSignal
Inc. ("AlliedSignal") and thereby be in a position to realize in the near
1
<PAGE>
term a portion of the benefits which the Company expects to generate through
the implementation of its plan to significantly improve profits (the "Profit
Improvement Plan"), the first elements of which were announced in June of this
year and are currently being implemented. The Profit Improvement Plan is
described in greater detail in Section 10 hereof.
In addition to authorizing the Offer, the Board of Directors on September
28, 1998 (i) reaffirmed its commitment to accelerating the implementation of,
and enhancing the steps being taken in connection with, the Profit Improvement
Plan; and (ii) authorized the creation of a flexible employee trust (the
"Flexitrust") to pre- fund employee benefit obligations. The Flexitrust is
targeted to free operating cash flow currently used to fund, among other
things, cash benefits and compensation requirements of approximately $1
billion over the next ten years. Formation of the trust and issuance of the
Shares to the trust will have no effect on the Company's earnings per share
calculation and will not change the number of Shares to be issued under the
Company's existing stock-based benefit plans. The creation of the Flexitrust
will add no debt to the Company's balance sheet, will increase the Company's
equity base over time and will bolster the Company's credit position.
In connection with the Offer, the Company has obtained commitments from an
affiliate of CSFB and affiliates of DLJ to provide on the terms, and subject
to the conditions specified in such commitments, the financing necessary to
consummate the Offer, potentially refinance existing indebtedness and provide
for the Company's anticipated working capital or other needs. The Financing
Condition will not be deemed satisfied, unless otherwise determined by the
Company, upon receipt of the proceeds of the financing contemplated by the
commitment letters signed with these institutions (the "Commitment Letters")
if (i) the availability of such proceeds requires closing under the bridge
loans contemplated therein or (ii) the overall final terms of the senior notes
and bank facilities are not satisfactory to the Company. See Sections 5 and 9.
On August 4, 1998, AlliedSignal announced its intention to commence an offer
to purchase all outstanding Shares at a price of $44.50 per Share (such offer
and the related letter of transmittal, the "Original AlliedSignal Offer"). The
Original AlliedSignal Offer was commenced on August 10, 1998 and had an
initial expiration date of September 11, 1998. At the time of the Original
AlliedSignal Offer, AlliedSignal announced its intention to solicit consents,
among other things, to amend the Company's By-laws to increase the size of the
Board of Directors from 11 to 28 and to elect 17 persons, all of whom are
directors and/or executive officers of AlliedSignal, to the Company's Board of
Directors (the "AlliedSignal Nominees"). A record date of October 15, 1998,
has been established in connection with this consent solicitation. After
careful consideration, the Board of Directors, by the unanimous vote of those
present, determined to reject the Original AlliedSignal Offer as inadequate,
not reflective of the value and prospects of the Company and not in the best
interests of the Company and its relevant constituencies, including its
shareholders. At such time, the Board of Directors also determined not to
redeem the Rights, not to grant certain approvals under the Pennsylvania
Business Corporation Law (the "PBCL") which were a condition to the Original
AlliedSignal Offer, and to amend the Rights Agreement to provide, among other
things, that the Rights would become nonredeemable and the Rights Agreement
nonamendable until November 6, 1999 (when the Rights Agreement will expire in
accordance with its terms) if AlliedSignal were successful in its efforts to
elect persons which would cause the "disinterested directors" (as such term is
defined in Section 1715(e) of the PBCL) presently in office not to constitute
a majority of the members of the Company's Board of Directors.
On September 14, 1998, AlliedSignal amended its offer (the "Amended
AlliedSignal Offer") to reduce to 40,000,000 the number of Shares sought. The
Amended AlliedSignal Offer had an initial expiration date of September 25,
1998. AlliedSignal has also announced its intention to commence another offer,
following the expiration of the Amended AlliedSignal Offer, to purchase any
Shares not purchased in the Amended AlliedSignal Offer at a price of $44.50
per share in cash (the "Second Offer"). According to AlliedSignal, the Second
Offer would be made upon essentially the same terms and subject to the same
conditions set forth in the Original AlliedSignal Offer. AlliedSignal has also
stated that depending on circumstances prevailing at the time of the Second
Offer, including then prevailing interest rates, stock market, financial and
other economic conditions and the Company's business and financial condition,
including any actions taken by the Company, the price per Share in the Second
Offer could be higher or lower and the other terms and conditions of the
Second Offer may be amended.
2
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At the time of the Amended AlliedSignal Offer, AlliedSignal announced its
intention to solicit consents for a new proposal (the "Rights Plan Proposal")
which would amend the Company's By-laws to remove from the Board of Directors
and vest in persons designated by AlliedSignal and to be identified in the
amendment to the By-laws the power to make decisions under the Rights
Agreement.
On September 17, 1998, the Company's Board of Directors rejected the Amended
AlliedSignal Offer and determined to amend the Rights Agreement to reduce the
threshold percentage at which the Rights become exercisable from 20% to 10%
(for any person which has made an unsolicited acquisition proposal) and to
make the Rights nonredeemable and the Rights Agreement nonamendable if the
Rights Plan Proposal is adopted.
On September 18, 1998, AlliedSignal amended the Amended AlliedSignal Offer
(the "Second Amended AlliedSignal Offer") to reduce to 20,000,000 the number
of Shares sought. The Second Amended AlliedSignal Offer expired on October 8,
1998 and AlliedSignal announced that it was purchasing Shares pursuant to the
Second Amended AlliedSignal Offer.
At a meeting of the Board of Directors held on September 22, 1998, the Board
of Directors fixed a record date of November 16, 1998 for the Rights Plan
Proposal.
At a meeting held on September 28, 1998, the Board of Directors authorized
the Offer and the creation of the Flexitrust. See Section 7 for a more
detailed description concerning the background of the Offer including a
description of certain litigation relating to AlliedSignal's offers and its
efforts to solicit consents (the "Consent Solicitation").
THIS OFFER DOES NOT CONSTITUTE A SOLICITATION OF CONSENTS OR PROXIES FOR USE
AT ANY MEETING OF THE COMPANY'S SHAREHOLDERS OR OTHERWISE OR OF REVOCATIONS OF
CONSENTS OR PROXIES. ANY SUCH SOLICITATION WHICH THE COMPANY MAY MAKE WILL BE
MADE ONLY BY MEANS OF SEPARATE PROXY/CONSENT MATERIALS COMPLYING WITH THE
REQUIREMENTS OF SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER.
* * *
As of the close of business on October 7, 1998, there were 218,775,377
Shares outstanding and 2,263,783 Shares issuable upon exercise of outstanding
stock options ("Options") exercisable within 60 days of such date under the
Company's 1993 Long-Term Equity Incentive Plan (the "Option Plan"). The
30,000,000 Shares that the Company is offering to purchase represent
approximately 13.71% of the outstanding Shares (approximately 13.57% assuming
the exercise of all outstanding Options exercisable within 60 days). The
foregoing does not include the 25,000,000 Shares to be issued to the
Flexitrust.
The Company's Employee Savings and Thrift Plan, as amended (the "AMP Savings
Plan"), a defined contribution 401(k) plan available to employees of the
Company, holds Shares in accounts for participants thereunder. Participants
may instruct Vanguard Fiduciary Trust Company ("Vanguard"), as trustee of the
AMP Savings Plan, to tender Shares attributable to a participant's individual
account by following the instructions set forth in "Procedure for Tendering
Shares--AMP Savings Plan" in Section 2.
The MERIT Plan of Benefits (the "M/A-COM Savings Plan"), a defined
contribution 401(k) plan available to employees of M/A-COM, Inc., of which the
Company is the sponsor, holds Shares in accounts for participants thereunder.
Participants may instruct Vanguard, as trustee of the M/A-COM Savings Plan, to
tender Shares attributable to a participant's individual account by following
the instructions set forth in "Procedure for Tendering Shares--M/A-COM Savings
Plan" in Section 2.
A tender of Shares pursuant to the Offer will include a tender of the
associated Rights. No separate consideration will be paid for such Rights.
Unless the context otherwise requires, all references in this Offer to
Purchase to the Shares shall include the associated Rights. For a description
of the Rights, see Section 10.
The Shares are listed on the New York Stock Exchange, Inc. (the "NYSE") and
traded on the NYSE, Boston, Cincinnati, Chicago, Pacific and Philadelphia
exchanges under the symbol "AMP." On September 25, 1998, the last full trading
day on the NYSE prior to the announcement of the Offer, the closing per Share
sales price as reported on the NYSE Composite Tape was $39 3/16. THE COMPANY
URGES SHAREHOLDERS TO OBTAIN CURRENT QUOTATIONS ON THE MARKET PRICE OF THE
SHARES.
3
<PAGE>
FORWARD-LOOKING STATEMENTS
This Offer to Purchase contains certain "forward-looking" statements which
the Company 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. However, shareholders should be aware that any
such forward-looking statements should be considered as subject to the risks
and uncertainties that exist in the Company'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 the Company'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
Company's Schedule 14D-9 filed with the Securities and Exchange Commission. In
addition, the realization of the benefits anticipated from the strategic
initiatives will be dependent, in part, on management's ability to execute its
business plans and to motivate properly the Company 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.
4
<PAGE>
THE OFFER
1. NUMBER OF SHARES; PRORATION.
Upon the terms and subject to the conditions of the Offer, the Company will
accept for payment (and thereby purchase) 30,000,000 Shares or such lesser
number of Shares as are validly tendered on or before the Expiration Date (and
not properly withdrawn in accordance with Section 3) at a net cash price of
$55 per share, without interest. The term "Expiration Date" means 12:00
Midnight, New York City time, on Friday, November 20, 1998, unless and until
the Company in its sole discretion shall have extended the period of time
during which the Offer is open, in which event the term "Expiration Date"
shall refer to the latest time and date at which the Offer, as so extended by
the Company, shall expire. See Section 14 for a description of the Company's
right to extend the time during which the Offer is open and to delay,
terminate or amend the Offer. If the Offer is oversubscribed, Shares tendered
on or prior to the Expiration Date will be eligible for proration. The
proration period also expires on the Expiration Date.
The Company reserves the right, in its sole discretion and subject to
applicable law, to purchase more than 30,000,000 Shares pursuant to the Offer.
The Offer is not conditioned on any minimum number of Shares being tendered.
In accordance with applicable regulations of the Securities and Exchange
Commission (the "Commission"), the Company may purchase pursuant to the Offer
an additional amount of Shares not to exceed 2% of the outstanding Shares
without amending or extending the Offer. If (i) the Company increases or
decreases the price to be paid for Shares, the Company increases the number of
Shares being sought and such increase in the number of Shares being sought
exceeds 2% of the outstanding Shares, or the Company decreases the number of
Shares being sought and (ii) the Offer is scheduled to expire at any time
earlier than the expiration of a period ending on the tenth business day from,
and including, the date that notice of such increase or decrease is first
published, sent or given in the manner specified in Section 14, the Offer will
be extended until the expiration of such period of ten business days. For
purposes of the Offer, a "business day" means any day other than a Saturday,
Sunday or federal holiday and consists of the time period from 12:01 A.M.
through 12:00 Midnight, New York City time.
THE OFFER IS NOT CONDITIONED ON ANY MINIMUM NUMBER OF SHARES BEING TENDERED.
THE OFFER IS, HOWEVER, SUBJECT TO CERTAIN OTHER CONDITIONS INCLUDING THE
COMPANY'S HAVING OBTAINED SUFFICIENT FINANCING FOR THE PURCHASE OF SHARES ON
THE TERMS SET FORTH IN THE COMMITMENT LETTERS OR ON SUCH OTHER TERMS AS MAY BE
REASONABLY SATISFACTORY TO THE COMPANY AND ALL CONDITIONS TO SUCH FINANCING,
OTHER THAN THE PURCHASE OF SHARES PURSUANT TO THE OFFER, BEING SATISFIED ON OR
PRIOR TO THE EXPIRATION DATE OF THE OFFER. SEE SECTIONS 5 AND 9.
The Company will pay the Purchase Price for up to 30,000,000 Shares validly
tendered on or prior to the Expiration Date and not properly withdrawn, upon
the terms and subject to the conditions of the Offer. All Shares not purchased
pursuant to the Offer, including Shares not purchased because of proration,
will be returned to the tendering shareholders at the Company's expense, as
promptly as practicable following the Expiration Date.
If the number of Shares validly tendered and not withdrawn on or prior to
the Expiration Date is less than or equal to 30,000,000 Shares (or such
greater number of Shares as the Company may elect to purchase pursuant to the
Offer), the Company will, upon the terms and subject to the conditions of the
Offer, purchase at the Purchase Price all Shares so tendered.
Proration. In the event that proration of tendered Shares is required, the
Company will determine the final proration factor as promptly as practicable
after the Expiration Date. Proration for each shareholder tendering Shares
shall be based on the ratio of the number of Shares tendered by such
shareholder to the total number of Shares tendered by all shareholders. This
ratio will be applied to shareholders tendering Shares to determine the number
of Shares that will be purchased from each such shareholder pursuant to the
Offer. Although the Company does not expect to be able to announce the final
results of such proration until approximately five business days after the
Expiration Date, it will announce preliminary results of proration by press
release as promptly as practicable after the Expiration Date. Shareholders can
obtain such preliminary information from the Information Agent and may be able
to obtain such information from their brokers.
As described in Section 13, the number of Shares that the Company will
purchase from a shareholder may affect the United States federal income tax
consequences to such shareholder of such purchase and therefore may
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be relevant to a shareholder's decision whether to tender Shares. The Letter
of Transmittal affords each tendering shareholder the opportunity to designate
the order of priority in which Shares tendered are to be purchased in the
event of proration.
This Offer to Purchase and the related Letter of Transmittal will be mailed
to holders of record of Shares and will be furnished to brokers, banks and
similar persons whose names, or the names of whose nominees, appear on the
Company's shareholder list or, if applicable, who are listed as participants
in a clearing agency's security position listing for subsequent transmittal to
beneficial owners of Shares.
2. PROCEDURE FOR TENDERING SHARES.
Proper Tender of Shares. For Shares to be validly tendered pursuant to the
Offer:
(i) the certificates for such Shares (or confirmation of receipt of such
Shares pursuant to the procedures for book-entry transfer set forth below
or, in the case of Shares held in the AMP Dividend Reinvestment Plan or
Shares held in the Direct Registration System, by completing the
appropriate portion of the Letter of Transmittal relating to such Shares),
together with a properly completed and duly executed Letter of Transmittal
(or manually signed facsimile thereof) with any required signature
guarantees, and any other documents required by the Letter of Transmittal,
must be received prior to 12:00 Midnight, New York City time, on the
Expiration Date by the Depositary at its address set forth on the back
cover of this Offer to Purchase; or
(ii) the tendering shareholder must comply with the guaranteed delivery
procedure set forth below.
Signature Guarantees and Method of Delivery. No signature guarantee is
required on the Letter of Transmittal if (i) the Letter of Transmittal is
signed by the registered holder of the Shares (which term, for purposes of
this Section, includes any participant in The Depository Trust Company (the
"Book-Entry Transfer Facility") whose name appears on a security position
listing as the holder of the Shares) tendered therewith and payment and
delivery are to be made directly to such registered holder, or (ii) the Shares
are tendered for the account of a firm or other entity that is a member in
good standing of the Security Transfer Agent's Medallion Program, the New York
Stock Exchange, Inc. Medallion Signature Program or the Stock Exchange
Medallion Program (an "Eligible Institution"). In this regard, see Section 4
for information with respect to applicable stock transfer taxes. In all other
cases, all signatures on the Letter of Transmittal must be guaranteed by an
Eligible Institution. See Instruction l of the Letter of Transmittal. If a
certificate representing Shares is registered in the name of a person other
than the signer of a Letter of Transmittal, or if payment is to be made, or
Shares not purchased or tendered are to be returned, to a person other than
the registered holder, the certificate must be endorsed or accompanied by an
appropriate stock power, in either case signed exactly as the name of the
registered holder appears on the certificate, with the signature on the
certificate or stock power guaranteed by an Eligible Institution. In all
cases, payment for Shares tendered and accepted for payment pursuant to the
Offer will be made only after timely receipt by the Depositary of certificates
for such Shares (or a timely confirmation of a book-entry transfer of such
Shares into the Depositary's account at the Book-Entry Transfer Facility as
described below), a properly completed and duly executed Letter of Transmittal
(or manually signed facsimile thereof) and any other documents required by the
Letter of Transmittal.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING SHARE CERTIFICATES, THE
LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS, IS AT THE ELECTION AND
RISK OF THE TENDERING SHAREHOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL
WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
Book-Entry Delivery. The Depositary will establish an account with respect
to the Shares at the Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase.
Any financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of the Shares by causing the
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account in accordance with the Book-Entry Transfer Facility's procedure for such
transfer. Even though delivery of Shares may be effected through book-entry
transfer into the Depositary's account at the Book-Entry Transfer Facility, a
properly completed and duly executed Letter of Transmittal (or manually signed
facsimile thereof), with any required signature guarantees, or an Agent's
Message (as defined below), and other required documents must, in any case, be
transmitted to and received by the Depositary at one of its addresses set forth
on the back
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cover of this Offer to Purchase on or prior to the Expiration Date, or the
guaranteed delivery procedure set forth below must be followed. The
confirmation of a book-entry transfer of Shares into the Depositary's account
at the Book-Entry Transfer Facility as described above is referred to herein
as a "Book-Entry Confirmation." DELIVERY OF THE LETTER OF TRANSMITTAL AND ANY
OTHER REQUIRED DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility
has received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Company may enforce such agreement against the participant.
Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's Share certificates cannot be delivered to the
Depositary on or prior to the Expiration Date (or the procedures for book-
entry transfer cannot be completed on a timely basis) or time will not permit
all required documents to reach the Depositary on or prior to the Expiration
Date, such Shares may nevertheless be tendered provided that all of the
following conditions are satisfied:
(i) such tender is made by or through an Eligible Institution;
(ii) the Depositary receives (by hand, mail, overnight courier, telegram
or facsimile transmission), on or prior to the Expiration Date, a properly
completed and duly executed Notice of Guaranteed Delivery substantially in
the form the Company has provided with this Offer to Purchase, including
(where required) a signature guarantee by an Eligible Institution in the
form set forth in such Notice of Guaranteed Delivery; and
(iii) the certificates for all tendered Shares in proper form for
transfer (or confirmation of book-entry transfer of such Shares into the
Depositary's account at the Book-Entry Transfer Facility), together with a
properly completed and duly executed Letter of Transmittal (or manually
signed facsimile thereof) and any required signature guarantees or other
documents required by the Letter of Transmittal, are received by the
Depositary no later than 5:00 p.m., New York City time, on the third NYSE
trading day on which banks are open for business after the date the
Depositary receives such Notice of Guaranteed Delivery.
Return of Unpurchased Shares; Direct Registration System Shares. Except as
provided in the next paragraph with respect to Shares returned due to
proration or if less than all Shares evidenced by a shareholder's certificates
are tendered, if any tendered Shares are not purchased, certificates for
unpurchased Shares will be returned as promptly as practicable after the
expiration or termination of the Offer or, in the case of Shares tendered by
book-entry transfer at the Book-Entry Transfer Facility, such Shares will be
credited to the appropriate account maintained by the tendering shareholder at
the Book-Entry Transfer Facility, in each case without expense to such
shareholder.
Unless otherwise indicated by checking the appropriate box in the Letter of
Transmittal, all Shares to be returned to shareholders due to proration or
because less than all Shares evidenced by a shareholder's certificates are
tendered will be returned not by returning the certificates representing such
Shares but by reissuing such Shares in the form of Direct Registration System
("DRS") Shares. DRS Shares are Shares which are registered to the shareholder
by the Company's transfer agent in book-entry form without issuing share
certificates to the shareholder. Shareholders may transfer DRS Shares by
contacting the Company's stock transfer agent. Shareholders may also contact
the Company's transfer agent to have DRS Shares reissued in certificated form.
U.S. Federal Income Tax Backup Withholding. Under the U.S. federal income
tax backup withholding rules, unless an exemption applies under applicable law
and regulations, 31% of the gross proceeds payable to a shareholder or other
payee pursuant to the Offer must be withheld and remitted to the U.S.
Treasury, unless such shareholder or payee provides such person's taxpayer
identification number (i.e., such person's employer identification number or
social security number) to the Depositary and certifies under penalties of
perjury that such number is correct. Accordingly, each tendering shareholder
should complete and sign the Substitute Form W-9 included as part of the
Letter of Transmittal so as to provide the information and certification
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necessary to avoid backup withholding, unless such shareholder otherwise
establishes to the satisfaction of the Depositary that the shareholder is not
subject to backup withholding. Certain shareholders (including, among others,
all corporations and certain foreign shareholders) are exempt from backup
withholding. In order for a foreign shareholder to qualify as an exempt
recipient, that shareholder must submit an IRS Form W-8 Offer to Purchase,
signed under penalties of perjury, attesting to that shareholder's exempt
status. See Instructions 8 and 9 of the Letter of Transmittal. Backup
withholding is not an additional tax; any amounts so withheld may be credited
against the U.S. federal income tax liability of the beneficial holder subject
to backup withholding.
TO PREVENT BACKUP WITHHOLDING EQUAL TO 31% OF THE GROSS PAYMENTS MADE TO
SHAREHOLDERS FOR SHARES PURCHASED BY THE COMPANY PURSUANT TO THE OFFER, EACH
SHAREHOLDER WHO DOES NOT OTHERWISE ESTABLISH AN EXEMPTION FROM SUCH
WITHHOLDING MUST PROVIDE THE DEPOSITARY WITH SUCH SHAREHOLDER'S CORRECT
TAXPAYER IDENTIFICATION NUMBER AND PROVIDE CERTAIN OTHER INFORMATION BY
COMPLETING THE SUBSTITUTE FORM W-9 INCLUDED WITH THE LETTER OF TRANSMITTAL.
For a discussion of certain U.S. federal income tax consequences to
tendering shareholders, see Section 13.
Withholding on Amounts Payable to Foreign Shareholders. Even if a foreign
shareholder has provided the required certification to avoid backup
withholding, the Depositary will withhold U.S. federal income taxes equal to
30% of the gross proceeds payable to a foreign shareholder or its agent unless
the Depositary determines that a reduced rate of withholding is available
pursuant to a tax treaty or that an exemption from withholding is applicable
because such gross proceeds are effectively connected with the conduct of a
trade or business by such foreign shareholder within the U.S. For this
purpose, a foreign shareholder is any shareholder that is not a "U.S. Holder"
as defined in Section 13. A foreign shareholder may be eligible to obtain a
refund of all or a portion of any tax withheld (i) to the extent such foreign
shareholder meets any of the "complete redemption," "substantially
disproportionate" or "not essentially equivalent to a dividend" tests
described in Section 13 or (ii) to the extent such foreign shareholder can
otherwise establish that no tax or a reduced amount of tax is due. Backup
withholding generally will not apply to amounts subject to the 30% or a
treaty-reduced rate of withholding. Foreign shareholders are urged to consult
their tax advisors regarding the application of federal income tax
withholding, including eligibility for a withholding tax reduction or
exemption, and the refund procedure. See Instruction 9 of the Letter of
Transmittal.
AMP Savings Plan. As of September 30, 1998, the AMP Savings Plan held
1,813,035 Shares, all of which were allocated to the individual accounts of
the AMP Savings Plan participants, beneficiaries of deceased participants and
alternate payees pursuant to qualified domestic relations orders (collectively
referred to as "participants"). Such Shares will, subject to the limitations
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and applicable regulations thereunder, be tendered (or not tendered) by
Vanguard, as trustee of the AMP Savings Plan, according to the instructions of
participants to Vanguard. Shares for which Vanguard has not received timely
instructions from participants will be tendered (or not tendered) by Vanguard
in its sole discretion, in accordance with the terms of the AMP Savings Plan
and the applicable trust agreements. Vanguard will make available to
participants whose individual accounts are credited with Shares all documents
furnished to shareholders generally in connection with the Offer. Each such
participant will also receive a "Direction Form" upon which the participant
may instruct Vanguard regarding the Offer. PARTICIPANTS IN THE AMP SAVINGS
PLAN MAY NOT USE THE LETTER OF TRANSMITTAL TO DIRECT THE TENDER OF THE SHARES
ATTRIBUTABLE TO THEIR INDIVIDUAL ACCOUNTS, BUT MUST USE THE AMP SAVINGS PLAN
DIRECTION FORM SENT TO THEM. PARTICIPANTS IN THE AMP SAVINGS PLAN ARE URGED TO
READ THE AMP SAVINGS PLAN DIRECTION FORM AND RELATED MATERIALS CAREFULLY.
All proceeds received by Vanguard on account of Shares purchased from the
AMP Savings Plan will, subject to the terms and conditions of such plan, be
reinvested in the Vanguard Money Market Reserves-Prime Portfolio as soon as
administratively possible and such investment will be credited to the
participant's
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individual account. Participants may contact The Vanguard Group, Inc. after
the reinvestment is complete at 1-800-523-1188 to have any proceeds of the
sale of Shares that were reinvested in the Vanguard Money Market Reserves-
Prime Portfolio invested in a different manner subject to the provisions of
the AMP Savings Plan.
M/A-COM Savings Plan. As of September 30, 1998, the M/A-COM Savings Plan
held 523,232 Shares, all of which were allocated to the individual accounts of
the M/A-COM Savings Plan participants, beneficiaries of deceased participants
and alternate payees pursuant to qualified domestic relations orders
(collectively referred to as "participants"). Such Shares will, subject to the
limitations of ERISA, and applicable regulations thereunder, be tendered (or
not tendered) by Vanguard, as trustee of the M/A-COM Savings Plan, according
to the instructions of participants to Vanguard. Shares for which Vanguard has
not received timely instructions from participants will be tendered (or not
tendered) by Vanguard, in its sole discretion. Vanguard will make available to
participants whose individual accounts are credited with Shares all documents
furnished to shareholders generally in connection with the Offer. Each such
participant will also receive a "Direction Form" upon which the participant
may instruct Vanguard regarding the Offer. PARTICIPANTS IN THE M/A-COM SAVINGS
PLAN MAY NOT USE THE LETTER OF TRANSMITTAL TO DIRECT THE TENDER OF THE SHARES
ATTRIBUTABLE TO THEIR INDIVIDUAL ACCOUNTS, BUT MUST USE THE M/A-COM SAVINGS
PLAN DIRECTION FORM SENT TO THEM. PARTICIPANTS IN THE M/A-COM SAVINGS PLAN ARE
URGED TO READ THE M/A-COM SAVINGS PLAN DIRECTION FORM AND RELATED MATERIALS
CAREFULLY.
All proceeds received by Vanguard on account of Shares purchased from the
M/A-COM Savings Plan will, subject to the terms and conditions of such plan,
be reinvested in the Vanguard Money Market Reserves-Prime Portfolio as soon as
administratively possible and such investment will be credited to the
participant's individual account. Participants may contact Vanguard after the
reinvestment is complete at 1-800-523-1188 to have any proceeds of the sale of
Shares that were reinvested in the Vanguard Money Market Reserves-Prime
Portfolio invested in a different manner subject to the provisions of the M/A-
COM Savings Plan.
Restricted Shares. Certain shareholders have been issued restricted Shares
("Restricted Shares") pursuant to the provisions of the Company's 1993 Long-
Term Equity Incentive Plan (the "Stock Plan"). Pursuant to the provisions of
the agreements setting forth the terms of such awards, such Restricted Shares
cannot be tendered in the Offer or otherwise transferred by the holder of the
Shares until the expiration of the applicable restriction period. Upon the
expiration of such applicable restriction period and pursuant to the
provisions of the Stock Plan or relevant agreement, such Restricted Shares
shall no longer be restricted and may be tendered pursuant to the Offer.
Restricted Shares as to which the applicable restriction period has expired
shall thereafter be deemed Shares. Shareholders may tender such Restricted
Shares (as to which they have been informed by the Company that the applicable
restriction period has expired) as Shares pursuant to the Offer by following
the instructions for tendering Shares set forth herein. Any questions with
respect to the status of any Restricted Shares or as to when restrictions with
respect to a particular individual's Restricted Shares expire may be directed
to Harris T. Booker at 717-592-3044. RESTRICTED SHARES AS TO WHICH THE
APPLICABLE RESTRICTION PERIOD HAS NOT EXPIRED MAY NOT BE TENDERED PURSUANT TO
THE OFFER.
Grant of Proxy. By executing the Letter of Transmittal, a tendering
shareholder (i) irrevocably appoints designees of the Company as the
shareholder's attorneys-in-fact and proxies, each with full power of
substitution, in the manner set forth in the Letter of Transmittal, to the
full extent of the shareholder's right with respect to the Shares (or, if
applicable, Rights) tendered by that shareholder and accepted for payment by
the Company (and any and all other Shares or other securities or rights issued
or issuable in respect of these Shares on or after October 9, 1998), (ii)
irrevocably revokes any prior proxies or written consents previously given,
including any written consent given with respect to any of the consent
proposals submitted or to be submitted by AlliedSignal to the Company with
respect to the Shares tendered by that shareholder and accepted for payment by
the Company and (iii) agrees to take any actions which may be necessary to
effect the foregoing. All powers of attorney and proxies effected by execution
of the Letter of Transmittal will be considered irrevocable and coupled with
an interest in the tendered Shares. This appointment is effective upon the
acceptance for payment of Shares by the Company in accordance with the terms
of the Offer. Upon acceptance for payment, all prior proxies, and any consents
given by the shareholder with respect to these Shares or other securities or
rights will, without
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further action, be revoked and no subsequent proxies may be given or written
consents executed by the shareholder (and, if given or executed, will not be
deemed effective) with respect to these Shares. The designees of the Company
will, with respect to the Shares and other securities or rights, be empowered
to exercise all voting and other rights of the shareholders as such designees,
in their sole judgment, deem proper in respect of any annual or special
meeting of the Company's shareholders, or any adjournment or postponement
thereof, or in respect of any written consent in lieu of any meeting or
revocation thereof.
Tendering Shareholder's Representation and Warranty; Company's Acceptance
Constitutes an Agreement. It is a violation of Rule 14e-4 promulgated under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), for a
person acting alone or in concert with others, directly or indirectly, to
tender Shares for such person's own account unless at the time of tender and
at the Expiration Date such person has a "net long position" equal to or
greater than the amount tendered in (a) the Shares and will deliver or cause
to be delivered such Shares for the purpose of tender to the Company within
the period specified in the Offer, or (b) other securities immediately
convertible into, exercisable for or exchangeable into Shares ("Equivalent
Securities") and, upon the acceptance of such tender, will acquire such Shares
by conversion, exchange or exercise of such Equivalent Securities to the
extent required by the terms of the Offer and will deliver or cause to be
delivered such Shares so acquired for the purpose of tender to the Company
within the period specified in the Offer. Rule 14e-4 also provides a similar
restriction applicable to the tender or guarantee of a tender on behalf of
another person. A tender of Shares made pursuant to any method of delivery set
forth herein will constitute the tendering shareholder's representation and
warranty to the Company that (a) such shareholder has a "net long position" in
Shares or Equivalent Securities being tendered within the meaning of Rule 14e-
4, and (b) such tender of Shares complies with Rule 14e-4. The Company's
acceptance for payment of Shares tendered pursuant to the Offer will
constitute a binding agreement between the tendering shareholder and the
Company upon the terms and subject to the conditions of the Offer.
Determinations of Validity; Rejection of Shares; Waiver of Defects; No
Obligation to Give Notice of Defects. All questions as to the number of Shares
to be accepted, the price to be paid therefor and the validity, form,
eligibility (including time of receipt) and acceptance for payment of any
tender of Shares will be determined by the Company, in its sole discretion,
which determination shall be final and binding on all parties. The Company
reserves the absolute right to reject any or all tenders it determines not to
be in proper form or the acceptance of or payment for which may, in the
opinion of the Company's counsel, be unlawful. The Company also reserves the
absolute right to waive any of the conditions of the Offer and any defect or
irregularity in the tender of any particular Shares or any particular
shareholder. No tender of Shares will be deemed to be properly made until all
defects or irregularities have been cured or waived. None of the Company, the
Dealer Managers, the Depositary, the Information Agent or any other person is
or will be obligated to give notice of any defects or irregularities in
tenders, and none of them will incur any liability for failure to give any
such notice.
CERTIFICATES FOR SHARES, TOGETHER WITH A PROPERLY COMPLETED LETTER OF
TRANSMITTAL AND ANY OTHER DOCUMENTS REQUIRED BY THE LETTER OF TRANSMITTAL,
MUST BE DELIVERED TO THE DEPOSITARY AND NOT TO THE COMPANY. ANY SUCH DOCUMENTS
DELIVERED TO THE COMPANY WILL NOT BE FORWARDED TO THE DEPOSITARY AND THEREFORE
WILL NOT BE DEEMED TO BE VALIDLY TENDERED.
3. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 3, tenders of Shares pursuant
to the Offer are irrevocable. Shares tendered pursuant to the Offer may be
withdrawn at any time on or prior to the Expiration Date and, unless accepted
for payment by the Company as provided in this Offer to Purchase, may also be
withdrawn after 12:00 Midnight, New York City time, on Tuesday, December 8,
1998.
For a withdrawal to be effective, the Depositary must receive (at its
address set forth on the back cover of this Offer to Purchase) a notice of
withdrawal in written, telegraphic or facsimile transmission form on a timely
basis. Such notice of withdrawal must specify the name of the person who
tendered the Shares to be withdrawn, the number of Shares tendered, the number
of Shares to be withdrawn and the name of the registered holder, if
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different from that of the person who tendered such Shares. In addition,
shareholders withdrawing Shares should specify whether any Shares to be
withdrawn are registered as DRS Shares or are held in the Dividend
Reinvestment Plan of AMP. If the certificates have been delivered or otherwise
identified to the Depositary, then, prior to the release of such certificates,
the tendering shareholder must also submit the serial numbers shown on the
particular certificates evidencing the Shares and the signature on the notice
of withdrawal must be guaranteed by an Eligible Institution (except in the
case of Shares tendered by an Eligible Institution). If Shares have been
tendered pursuant to the procedure for book-entry transfer set forth in
Section 2, the notice of withdrawal must specify the name and the number of
the account at the Book-Entry Transfer Facility to be credited with the
withdrawn Shares and otherwise comply with the procedures of such facility.
All questions as to the form and validity, including time of receipt, of
notices of withdrawal will be determined by the Company, in its sole
discretion, which determination shall be final and binding on all parties.
None of the Company, the Dealer Managers, the Depositary, the Information
Agent or any other person is or will be obligated to give any notice of any
defects or irregularities in any notice of withdrawal, and none of them will
incur any liability for failure to give any such notice. Withdrawals may not
be rescinded, and any Shares properly withdrawn will thereafter be deemed not
tendered for purposes of the Offer. However, withdrawn Shares may be re-
tendered on or prior to the Expiration Date by again following any of the
procedures described in Section 2.
If the Company extends the Offer, is delayed in its purchase of Shares or is
unable to purchase Shares pursuant to the Offer for any reason, then, without
prejudice to the Company's rights under the Offer, the Depositary may, subject
to applicable law, retain on behalf of the Company all tendered Shares, and
such Shares may not be withdrawn except to the extent tendering shareholders
are entitled to withdrawal rights as described in this Section 3.
Participants in the AMP Savings Plan and the M/A-COM Savings Plan should
disregard the foregoing procedures with respect to Shares attributable to
their individual accounts in the AMP Savings Plan and the M/A-COM Savings Plan
and should follow the procedures for withdrawal included in the applicable
letter furnished to such participants.
Withdrawal of Shares Tendered Pursuant to an AlliedSignal Tender
Offer. Shareholders who desire to tender their Shares pursuant to this Offer
but who have tendered their Shares pursuant to a tender offer made by
AlliedSignal must effect a timely withdrawal of their Shares from such offer.
Such withdrawal must comply with all of the requirements for withdrawal
enumerated in the relevant AlliedSignal offer. A Notice of Withdrawal form
which may be used by shareholders to withdraw Shares that have previously been
tendered to AlliedSignal may be obtained from the Information Agent.
4. PURCHASE OF SHARES AND PAYMENT OF PURCHASE PRICE.
The Company will, upon the terms and subject to the conditions of the Offer,
taking into account the number of Shares so tendered, pay for Shares validly
tendered and not properly withdrawn pursuant to the Offer and will accept for
payment and pay for (and thereby purchase) Shares validly tendered and not
properly withdrawn as soon as practicable after the Expiration Date. For
purposes of the Offer, the Company will be deemed to have accepted for payment
(and therefore purchased), subject to proration, Shares that are validly
tendered and not properly withdrawn when, as and if it gives oral or written
notice to the Depositary of its acceptance of such Shares for payment pursuant
to the Offer.
Upon the terms and subject to the conditions of the Offer, the Company will
purchase and pay for all of the Shares accepted for payment pursuant to the
Offer as soon as practicable after the Expiration Date. In all cases, payment
for Shares tendered and accepted for payment pursuant to the Offer will be
made promptly (subject to possible delay in the event of proration) but only
after timely receipt by the Depositary of certificates for Shares (or of a
timely Book-Entry Confirmation of such Shares into the Depositary's account at
the Book-Entry Transfer Facility), a properly completed and duly executed
Letter of Transmittal (or manually signed facsimile thereof), or, in the case
of a book-entry transfer, an Agent's Message and any other required documents.
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Payment for Shares purchased pursuant to the Offer will be made by
depositing the aggregate Purchase Price therefor with the Depositary, which
will act as agent for tendering shareholders for the purpose of receiving
payment from the Company and transmitting payment to the tendering
shareholders. In the event of proration, the Company will determine the
proration factor and pay for those tendered Shares accepted for payment as
soon as practicable after the Expiration Date. However, the Company does not
expect to be able to announce the final results of any such proration until
approximately five business days after the Expiration Date. Under no
circumstances will the Company pay interest on the Purchase Price including,
without limitation, by reason of any delay in making payment. Certificates for
all Shares not purchased, including all Shares not purchased due to proration,
will be returned (or, in the case of Shares tendered by book-entry transfer,
such Shares will be credited to the account maintained with the Book-Entry
Transfer Facility by the participant who so delivered such Shares) as promptly
as practicable following the Expiration Date or termination of the Offer
without expense to the tendering shareholder. In addition, if the Company is
unable to obtain sufficient financing or certain other events occur, the
Company may not be obligated to purchase Shares pursuant to the Offer. See
Sections 5 and 9.
The Company will pay all stock transfer taxes, if any, payable on the
transfer to it of Shares purchased pursuant to the Offer; provided, however,
that if payment of the Purchase Price is to be made to, or (in the
circumstances permitted by the Offer) if unpurchased Shares are to be
registered in the name of, any person other than the registered holder, or if
tendered certificates are registered in the name of any person other than the
person signing the Letter of Transmittal, the amount of all stock transfer
taxes, if any (whether imposed on the registered holder or such other person),
payable on account of the transfer to such person will be deducted from the
Purchase Price unless evidence satisfactory to the Company of the payment of
such taxes or exemption therefrom is submitted. See Instruction 6 of the
Letter of Transmittal.
Any tendering shareholder or other payee who fails to complete fully, sign
and return to the Depositary the Substitute Form W-9 included with the Letter
of Transmittal may be subject to required federal income tax backup
withholding of 31% of the gross proceeds paid to such shareholder or other
payee pursuant to the Offer. See Section 2. Also see Section 2 regarding
certain rules relating to withholding for federal income tax purposes of
certain amounts otherwise payable to foreign shareholders pursuant to the
Offer.
5. CERTAIN CONDITIONS OF THE OFFER.
The Offer is conditioned upon the Company's having obtained sufficient
financing for the purchase of Shares and all conditions to such financing,
other than the purchase of Shares pursuant to the Offer, being satisfied on or
prior to the Expiration Date of the Offer. This condition will not be deemed
satisfied, unless otherwise determined by the Company, upon the receipt of the
proceeds of the financing contemplated by the Commitment Letters if (i) the
availability of such proceeds requires closing under the bridge loans
contemplated therein or (ii) the overall final terms and conditions of the
senior notes and bank facilities are not satisfactory to the Company. Such
financing is subject to certain conditions, including finalization of certain
financial terms and other provisions, and that the Company shall not have had
a change in its Board of Directors resulting in less than a majority being
"disinterested directors" (as such term is defined in Section 1715(e) of the
PBCL). See Section 9. In addition, and notwithstanding any other provision of
the Offer, the Company shall not be required to accept for payment, purchase
or pay for any Shares tendered, and may terminate or amend the Offer or may
postpone the acceptance for payment of, or the purchase of and the payment for
Shares tendered, subject to Rule 13e-4(f) promulgated under the Exchange Act,
if at any time on or after September 28, 1998 and prior to the time of payment
for any such Shares (whether any Shares have theretofore been accepted for
payment, purchased or paid for pursuant to the Offer) such conditions are not
met or if any of the following events shall have occurred (or shall have been
determined by the Company to have occurred) that, in the Company's judgment in
any such case and regardless of the circumstances giving rise thereto
(including any action or omission to act by the Company), makes it inadvisable
or impracticable to proceed with the Offer or with such acceptance for payment
or payment:
(a) there shall have been any action threatened or taken, or approval
withheld, or any statute, rule or regulation proposed, sought, promulgated,
enacted, entered, amended, enforced or deemed to be applicable
12
<PAGE>
to the Offer or the Company or any of its subsidiaries, by any
governmental, regulatory or administrative authority or agency or tribunal,
domestic or foreign, which, in the Company's sole judgement, would directly
or indirectly: (i) make the acceptance for payment of, or payment for, some
or all of the Shares illegal or otherwise restrict or prohibit consummation
of the Offer, or (ii) delay or restrict the ability of the Company, or
render the Company unable, to accept for payment or pay for some or all of
the Shares pursuant to the Offer; or
(b) there shall be threatened, instituted or pending any action or
proceeding by any government or governmental authority or agency, domestic
or foreign, or by any other person, domestic or foreign, before any court
or governmental authority or agency, domestic or foreign, challenging or
seeking to, or which could, make illegal, delay or otherwise directly or
indirectly restrain or prohibit or make more costly the making of the
Offer, the acceptance for payment of, or payment for, some of or all Shares
pursuant to the Offer or the purchase of Shares pursuant to the Offer,
seeking to obtain damages in connection with the Offer, or seeking to
restrain or prohibit the consummation of the Offer or the transactions
contemplated thereby or which otherwise directly or indirectly relates to
the Offer; or
(c) a preliminary or permanent injunction or other order by any Federal
or state court which prevents the acceptance for payment of, or payment
for, some of or all the Shares pursuant to the Offer shall have been issued
and shall remain in effect; or
(d) there shall have occurred: (i) the declaration of any banking
moratorium or suspension of payments in respect of banks in the United
States; (ii) any general suspension of trading in, or limitation on prices
for, securities on any United States national securities exchange or in the
over-the-counter market; (iii) the commencement of a war, armed hostilities
or any other national or international crisis directly or indirectly
involving the United States; (iv) any limitation (whether or not mandatory)
by any governmental, regulatory or administrative agency or authority on,
or any event which, in the Company's sole judgment, might affect, the
extension of credit by banks or other lending institutions in the United
States; or (v) in the case of any of the foregoing existing at the time of
the commencement of the Offer, in the Company's sole judgment, a material
acceleration or worsening thereof; or
(e) (i) following consummation of the Second Amended AlliedSignal Offer,
AlliedSignal shall have commenced another tender offer at a price greater
than $44.50 per Share or otherwise on terms materially different than the
Second Amended AlliedSignal Offer, or (ii) any person shall publicly
disclose an acquisition or business combination proposal with respect to
the Company or any of its securities or assets, or (iii) a tender or
exchange offer for the Shares (other than by AlliedSignal or its
affiliates) shall have been commenced by any person, if such tender or
exchange offer could result in such other person and its affiliates
beneficially owning directly or indirectly more than 5% of the outstanding
Shares, or (iv) it shall have been publicly disclosed or the Company shall
have learned that any person or "group" (within the meaning of Section
13(d)(3) of the Exchange Act) (other than the Company or its affiliates or
AlliedSignal or its affiliates) shall have acquired, or proposed to
acquire, more than 5% of the outstanding Shares, other than acquisitions of
additional Shares representing not more than 2% of the outstanding Shares
by any person or group owning more than 5% of the outstanding Shares on
September 28, 1998, as disclosed in a Schedule 13D or 13G on file with the
Securities and Exchange Commission of that date; or
(f) the Company shall have entered into a definitive agreement or any
agreement in principle, or shall have announced an intention to pursue or
seek to pursue a transaction, in each instance with respect to a merger,
other business combination or acquisition proposal or disposition of assets
other than in the ordinary course of business; or
(g) all consents and approvals required to be obtained from any Federal
or state governmental agency, authority or instrumentality in connection
with the Offer shall not have been obtained or the Company shall have been
advised, or shall otherwise have reason to believe, that any such consent
or approval will be
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<PAGE>
denied or substantially delayed, or will not be given other than upon terms
or conditions which would, in the opinion of the Company, make it
impracticable to proceed with the Offer.
The foregoing conditions are for the Company's sole benefit and may be
asserted by the Company regardless of the circumstances giving rise to any
such condition (including any action or inaction by the Company) or may be
waived by the Company in whole or in part. The Company's failure at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any
such right, and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time. In certain circumstances, if the
Company waives any of the foregoing conditions, it may be required to extend
the Expiration Date of the Offer. Any determination by the Company concerning
the events described above and any related judgment or decision by the Company
regarding the inadvisability of proceeding with the purchase of or payment for
any Shares tendered will be final and binding on all parties.
6. PRICE RANGE OF SHARES; DIVIDENDS.
The Shares are listed on the NYSE and traded on the NYSE, Boston,
Cincinnati, Chicago, Pacific and Philadelphia exchanges under the symbol
"AMP." The high and low closing sales prices per Share on the NYSE Composite
Tape as compiled from published financial sources and cash dividends paid in
the periods indicated are listed below. See "Future Dividends" in Section 7.
<TABLE>
<CAPTION>
HIGH LOW DIVIDENDS
-------- ------- ---------
<S> <C> <C> <C>
1996
First Quarter....................................... $44 5/8 $37 $.25
Second Quarter...................................... 46 1/8 39 5/8 .25
Third Quarter....................................... 41 3/8 36 5/8 .25
Fourth Quarter...................................... 39 1/2 32 7/8 .25
1997
First Quarter....................................... $43 $34 3/8 $.26
Second Quarter...................................... 42 1/2 33 7/8 .26
Third Quarter....................................... 56 9/16 42 1/8 .26
Fourth Quarter...................................... 54 1/8 39 1/4 .26
1998
First Quarter....................................... $44 5/16 $37 $.27
Second Quarter...................................... 43 1/2 34 3/8 .27
Third Quarter....................................... 42 9/16 28 5/8 .27
Fourth Quarter (through October 8, 1998)............ 37 7/8 34 1/2 --
</TABLE>
The Company expects that the Board of Directors will declare a quarterly
dividend on October 28, 1998 with a record date of November 9, 1998 and
payable to shareholders on December 1, 1998. Shareholders of record on the
record date will be entitled to receive such dividend regardless of whether
their Shares are thereafter accepted for payment pursuant to the Offer.
The closing per Share sales price as reported on the NYSE Composite Tape on
September 25, 1998, the last full trading day before the announcement of the
Offer, was $39 3/16. THE COMPANY URGES SHAREHOLDERS TO OBTAIN CURRENT
QUOTATIONS OF THE MARKET PRICE OF THE SHARES.
7. BACKGROUND AND PURPOSE OF THE OFFER; CERTAIN EFFECTS OF THE OFFER.
Purpose. The purpose of the Offer is to allow shareholders to sell a portion
of their Shares at a price far in excess of the price being offered by
AlliedSignal and thereby be in a position to realize in the near term a
portion of the benefits which the Company expects to generate through the
implementation of its Profit Improvement Plan, the first elements of which
were announced in June of this year and are currently being implemented. The
Profit Improvement Plan is described in greater detail in Section 10 hereof.
In addition to authorizing this Offer, the Board of Directors on September
28, 1998 (i) reaffirmed its commitment to accelerating the implementation of,
and enhancing the steps being taken in connection with, the Profit Improvement
Plan; and (ii) authorized the creation of the Flexitrust to pre-fund employee
benefit
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<PAGE>
obligations. The Flexitrust is targeted to free operating cash flow currently
used to fund, among other things, cash benefits and compensation requirements
of approximately $1 billion over the next ten years. Formation of the
Flexitrust and issuance of the Shares to the Flexitrust will have no effect on
the Company's earnings per share calculation and will not change the number of
Shares to be issued under the Company's existing stock-based benefit plans.
The creation of the Flexitrust will add no debt to the Company's balance
sheet, will increase the Company's equity base over time and will bolster the
Company's credit position. See Section 10.
Background. In mid-1997, Mr. Lawrence A. Bossidy, Chairman of the Board and
Chief Executive Officer of AlliedSignal, telephoned a director of the Company
to inquire as to whether the Company had an interest in exploring a possible
combination of the two companies. The inquiry was referred to the Finance
Committee of the Board of Directors for consideration. Upon consideration, it
was the conclusion of the Finance Committee that such a combination did not
offer any benefits to the Company's businesses and, accordingly, that there
was no interest in pursuing such a combination. The Committee's determination
was communicated through the director by telephone to Mr. Bossidy. Until July
29, 1998, there were no further communications from Mr. Bossidy with respect
to a potential business combination.
On Wednesday, July 29, 1998, Mr. Bossidy placed a phone call to Mr. William
J. Hudson, Chief Executive Officer and President of the Company, who was out
of the country visiting some of the Company's facilities. This was followed
with a letter delivered in the afternoon of Friday, July 31, 1998. Mr. Hudson
first read the letter on Sunday, August 2, 1998, following his return to his
home.
In the letter, Mr. Bossidy expressed his belief that a business combination
made business sense and requested that a meeting be set up to discuss a
combination of the two companies. Mr. Bossidy indicated that AlliedSignal was
prepared to offer $43.50 per share in cash for all outstanding Shares, but
would consider a higher price if all or a significant portion of the
consideration were AlliedSignal's shares rather than cash.
On Monday, August 3, 1998, Mr. Hudson shared the letter with other members
of management, as well as with the Company's legal and financial advisors and
a member of the Board of Directors. A telephonic meeting of the Board of
Directors was called for Wednesday, August 5, 1998, to consider the letter.
On Tuesday, August 4, 1998, Mr. Bossidy placed another call to Mr. Hudson.
Mr. Hudson's office returned the call to let Mr. Bossidy know that Mr. Hudson
was out of the office and would be in touch on the following day. Later in the
day, a letter from Mr. Bossidy addressed to the Board of Directors of the
Company was telecopied to the Company headquarters. In the August 4th letter,
Mr. Bossidy indicated that AlliedSignal had decided to commence a tender offer
for all outstanding Shares at a price of $44.50 per share in cash. Mr. Bossidy
reiterated his belief that a combination was in the best interests of both
companies and all of their constituencies and that AlliedSignal was committed
to completing the combination. In that regard, Mr. Bossidy stated that if the
Company was unwilling to enter into negotiations, AlliedSignal would be
prepared to initiate a consent solicitation to increase the size of the
Company Board of Directors and to add a majority of directors who would be
responsive to its proposal.
At the August 5, 1998 meeting, the Board of Directors, among other things,
reviewed preliminarily the various letters sent by AlliedSignal, heard
presentations as to their fiduciary responsibilities and duties in considering
acquisition proposals such as the one set forth in those letters and were
advised as to the work to be performed by the Company's advisors to assist the
Board of Directors in its consideration of the Original AlliedSignal Offer and
the various alternatives available to the Company.
On August 10, 1998, AlliedSignal through PMA Acquisition Corporation, a
Delaware corporation and wholly owned subsidiary of AlliedSignal ("PMA"),
commenced the Original AlliedSignal Offer. Also, on August 10, 1998, Mr.
Bossidy sent Mr. Hudson another letter to request a meeting to discuss a
possible business combination and to advise the Company of AlliedSignal's
intention to file materials shortly with the Securities and Exchange
Commission with respect to its Consent Solicitation. By letter dated August
11, 1998, Mr. Hudson indicated to Mr. Bossidy that since the Board of
Directors had not yet reviewed AlliedSignal's offer or
15
<PAGE>
Mr. Bossidy's request for a meeting, it would be premature for a meeting. Mr.
Bossidy, nonetheless, called Mr. Hudson later on August 11, at which time Mr.
Hudson reiterated the essence of his letter. Also, on August 11, 1998,
AlliedSignal delivered a letter to the Company requesting the Board of
Directors set a record date for purposes of determining those shareholders
entitled to consent in connection with AlliedSignal's Consent Solicitation.
At the time of the Original AlliedSignal Offer, AlliedSignal announced its
intention to solicit consents, among other things, to amend the Company's By-
laws to increase the size of the Board of Directors from 11 to 28 and to elect
17 persons, all of whom are directors and/or executive officers of
AlliedSignal, to the Company's Board of Directors. A record date of October 15,
1998 has been established in connection with this consent solicitation.
On August 12, 1998, the Board of Directors held a meeting at which the Board
of Directors reviewed with the Company management and CSFB, Skadden, Arps,
Slate, Meagher & Flom LLP ("Skadden, Arps") and other legal advisors, the
Original AlliedSignal Offer and its terms and conditions. The Board of
Directors also received and considered, among other things, a review and update
by the Company's management of the Company's business strategy and the steps
being taken by the Company to revitalize and reshape its businesses, a
presentation by Pennsylvania counsel as to fiduciary duties and
responsibilities and a preliminary report from CSFB regarding its analysis
relating to the Original AlliedSignal Offer and various alternatives. On August
12, 1998, AlliedSignal filed with the Securities and Exchange Commission
preliminary copies of its Consent Solicitation materials. On August 13, 1998,
the Company filed with the Securities and Exchange Commission preliminary
copies of its consent revocation materials.
On August 18, 1998, Mr. Bossidy contacted two of the Company's directors and
communicated to them his desire to proceed on a "non-hostile" basis and
AlliedSignal's willingness to include AlliedSignal's stock as part of the
consideration.
On August 20, 1998, the Board of Directors held a meeting at which the Board
of Directors again reviewed the tender offer by PMA Acquisition Corporation, a
Delaware corporation and wholly owned subsidiary of AlliedSignal, disclosed in
a Tender Offer Statement on Schedule 14D-1, dated August 10, 1998 (the
"Schedule 14D-1"), under which PMA Acquisition Corporation offered to purchase
all Shares at a price of $44.50 per Share, net to the seller in cash, upon the
terms and subject to the conditions set forth in the Original AlliedSignal
Offer, and its terms and conditions with the Company management, CFSB, Skadden,
Arps and other legal advisors. At such meeting, CSFB presented its financial
analysis of the Original AlliedSignal Offer and reviewed various alternatives
available to the Company. The Company's senior management also reviewed the
potential impact of the Original AlliedSignal Offer on the Company's various
constituencies including its shareholders, employees, customers, suppliers and
the communities served by it. After lengthy discussions, and the presentations
from CSFB, Skadden, Arps, and other legal advisors, and the Company's senior
management, the Board of Directors determined that the best course of action
under all prevailing circumstances was for the Company to continue aggressively
to pursue its strategic initiatives and business plans as an independent public
company. The Board of Directors unanimously concluded that, given the values
inherent in the Company's businesses and the steps being taken to reshape and
revitalize these businesses, the Original AlliedSignal Offer was not in the
best interests of the Company and its relevant constituencies. In particular,
the Board of Directors determined that the Company's current strategic
initiatives and business plans offer the potential for greater benefits for the
Company's various constituencies, including its shareholders, than the Original
AlliedSignal Offer.
Effective as of August 20, 1998, the Board of Directors of the Company
appointed Robert Ripp as Chairman and Chief Executive Officer to lead the
Company in its efforts aggressively to implement the Company's Profit
Improvement Plan on a timely and successful basis. On August 26, 1998, the
Company retained Donaldson, Lufkin & Jenrette to assist in the Company's
evaluation of the Original AlliedSignal Offer and various alternatives thereto.
The Company announced in September that it was exploring ways to increase value
further in the nearer term (by way of share repurchase, special dividend or
other means), and in connection therewith, expected to engage in discussions
and/or negotiations with various parties which may provide financing, on a debt
and/or equity basis, for such a transaction or transactions.
16
<PAGE>
On September 14, 1998, AlliedSignal amended its offer to reduce to
40,000,000 the number of Shares sought. The Amended AlliedSignal Offer had an
initial expiration date of September 25, 1998. AlliedSignal also announced its
intention to commence another offer, following the expiration of the Amended
AlliedSignal Offer, to purchase any Shares not purchased in the Amended
AlliedSignal Offer at a price of $44.50 per share in cash. According to
AlliedSignal, the Second Offer would be made upon essentially the same terms
and subject to the same conditions set forth in the Original AlliedSignal
Offer. AlliedSignal has also stated that depending on circumstances prevailing
at the time of the Second Offer, including then prevailing interest rates,
stock market, financial and other economic conditions and the Company's
business and financial condition, including any actions taken by the Company,
the price per Share in the Second Offer could be higher or lower and the other
terms and conditions of the Second Offer may be amended.
At the time of the Amended AlliedSignal Offer, AlliedSignal also announced
its intention to solicit consents for the Rights Plan Proposal which would
amend the Company's By-laws to remove from the Board of Directors and vest in
persons designated by AlliedSignal and identified in the amendment to the By-
laws the power to make decisions under the Rights Agreement.
On September 17, 1998, the Board of Directors rejected the Amended
AlliedSignal Offer and determined to amend the Rights Agreement to reduce the
threshold percentage at which the Rights become exercisable from 20% to 10%
(for any person which has made an unsolicited acquisition proposal) and to
make the Rights nonredeemable and the Rights Agreement nonamendable if the
Rights Plan Proposal is adopted.
On September 18, 1998, AlliedSignal announced that it was amending its offer
to reduce to 20,000,000 the number of Shares sought. The Second Amended
AlliedSignal Offer expired on October 8, 1998 and AlliedSignal announced that
it was purchasing Shares pursuant to the Second Amended AlliedSignal Offer. At
a meeting of the Board of Directors held on September 22, 1998, the Board of
Directors fixed a record date for the Rights Plan Proposal of November 16,
1998.
At a meeting of the Board of Directors held on September 22, 1998, the Board
of Directors fixed a record date of November 16, 1998 for the Rights Plan
Proposal.
At a meeting held on September 28, 1998 the Board of Directors authorized
the Offer and the creation of the Flexitrust.
The Company believes that the purchase of Shares is consistent with its
long-term goals and that, after the Offer and related financing are completed,
the Company will have sufficient cash flow and other resources to fund its
anticipated working capital needs, allow the Board of Directors to continue to
declare a dividend at the current rate and implement the Profit Improvement
Plan. See "Future Dividends." The Offer provides shareholders who are
considering a sale of all or a portion of their Shares the opportunity to sell
a substantial portion of their Shares at a price which represents a premium to
the current market price of the Shares and is far in excess of the price
offered by AlliedSignal. Shareholders who determine not to accept the Offer
will increase their proportionate interest in the Company's equity, and
therefore in the Company's future earnings and assets, subject to the
Company's right to issue additional Shares and other equity securities in the
future.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MAKING OF
THE OFFER. HOWEVER, SHAREHOLDERS MUST MAKE THEIR OWN DECISIONS WHETHER TO
TENDER SHARES AND, IF SO, HOW MANY SHARES TO TENDER. NEITHER THE COMPANY NOR
ITS BOARD OF DIRECTORS MAKES ANY RECOMMENDATION TO ANY SHAREHOLDER AS TO
WHETHER TO TENDER OR REFRAIN FROM TENDERING SHARES AND NEITHER THE COMPANY NOR
ITS BOARD OF DIRECTORS HAS AUTHORIZED ANY PERSON TO MAKE ANY SUCH
RECOMMENDATION.
Shares that the Company acquires pursuant to the Offer will become issued
but not outstanding Shares unless the Board of Directors restores them to the
status of authorized but unissued Shares and will be available for issuance by
the Company without further shareholder action (except as may be required by
applicable law or the rules of the securities exchanges on which the Shares
are listed) for purposes including, but not limited to, the acquisition of
other businesses, raising of additional capital for use in the Company's
businesses, and satisfaction of obligations under existing or future employee
benefit plans. The Company has no current plan for issuance of Shares
repurchased pursuant to the Offer.
17
<PAGE>
Except as disclosed in this Offer to Purchase, the Company currently has no
plans or proposals that relate to or would result in (a) the acquisition by
any person of additional securities of the Company or the disposition of
securities of the Company; (b) an extraordinary corporate transaction, such as
a merger, reorganization or liquidation, involving the Company or any or all
of its subsidiaries; (c) a sale or transfer of a material amount of assets of
the Company or any of its subsidiaries; (d) any change in the present Board of
Directors or management of the Company; (e) any material change in the present
dividend rate or policy, or indebtedness or capitalization of the Company; (f)
any other material change in the Company's corporate structure or business;
(g) any change in the Company's Certificate of Incorporation or By-Laws or any
actions which may impede the acquisition of control of the Company by any
person; (h) a class of equity security of the Company being delisted from a
national securities exchange; (i) a class of equity security of the Company
becoming eligible for termination of registration pursuant to Section 12(g)(4)
of the Exchange Act; or (j) the suspension of the Company's obligation to file
reports pursuant to Section 15(d) of the Exchange Act.
Litigation. On August 4, 1998, AlliedSignal filed a complaint against the
Company in the United States District Court for the Eastern District of
Pennsylvania (AlliedSignal Corporation v. AMP Incorporated, Civil Action No.
98-CV-4058). In its initial complaint, AlliedSignal sought a declaratory
judgment as to, among other things, the applicability and/or validity of the
continuing director provisions contained at the time in the Rights Agreement
and the constitutionality of certain provisions of the Pennsylvania Business
Corporation Law under the Commerce Clause and Supremacy Clause of the United
States Constitution. AlliedSignal also sought to enjoin the Company from
setting a record date for the AlliedSignal Consent Solicitation more than ten
days after the date AlliedSignal sent written notice to the Company requesting
that a record date be set.
Four purported shareholder class action lawsuits were filed by the Company
shareholders against the Company and its Board of Directors in the United
States District Court for the Eastern District of Pennsylvania on or about
August 6 and 7, 1998 (Blum v. William J. Hudson, Jr. et al, Civil Action No.
98-CV- 4109; Silver v. AMP, Incorporated et al, Civil Action No. 98-CV-4120;
Goldstein v. AMP, Incorporated, et al, Civil Action No. 98-CV-4127; Margolis
Partnership v. AMP, Incorporated, et al, Civil Action No. 98-CV-4187). These
complaints alleged similar acts of misconduct, i.e., that AMP and its
directors improperly refused to consider the Original AlliedSignal Offer and
wrongfully relied upon provisions of AMP's Rights Agreement and the PBCL to
block the Original AlliedSignal Offer. Plaintiffs in these suits sought, among
other things, a declaratory judgment that (i) the continuing director
provisions contained in AMP's Rights Agreement violate Pennsylvania law and
the Board of Director's fiduciary duties; (ii) certain provisions of the PBCL
are unconstitutional under the Commerce, Supremacy and Due Process Clauses of
the United States Constitution; and (iii) an order establishing a record date
for the AlliedSignal Consent Solicitation. By Order dated August 19, 1998, the
Court consolidated the class action complaints filed by these purported
shareholder groups against the Company under the caption In Re AMP
Shareholders Litigation, 98-CV-4109 and coordinated the shareholder litigation
with the AlliedSignal action.
On August 21, 1998, the Company filed a complaint in the United States
District Court for the Eastern District of Pennsylvania against AlliedSignal
and PMA (AMP Incorporated v. AlliedSignal Corporation, et al., Civil Action
No. 98-CV-4405). The complaint seeks declaratory and injunctive relief to
prevent AlliedSignal from pursuing its attempt to pack the Company Board of
Directors with AlliedSignal executive officers and directors who would have an
irreconcilable conflict of interest were they to serve as directors of the
Company. The complaint alleges that the Schedule 14D-1 filed by AlliedSignal
and PMA with the Securities and Exchange Commission is false and misleading
because it fails to disclose that AlliedSignal's representatives on the
Company Board of Directors would have a conflict of interest and how
AlliedSignal would propose to deal with such conflict, and that AlliedSignal's
attempt to pack the Board of Directors would prevent the current members of
the Board of Directors from fulfilling their fiduciary duties to the Company
under Pennsylvania law.
On August 24, 1998, AMP filed its answer to the complaint filed by
AlliedSignal on August 4, 1998 in the United States District Court for the
Eastern District of Pennsylvania. In its answer, AMP denied that AlliedSignal
is entitled to any relief under its complaint and raised several affirmative
defenses.
18
<PAGE>
On September 11, 1998, the Company filed a motion for summary judgment on
the Second Claim for Relief of its complaint against AlliedSignal and PMA. The
Second Claim for Relief is based upon the fact that AlliedSignal's attempt to
pack the Company Board of Directors with AlliedSignal's directors and senior
management would create pervasive, irreconcilable conflicts of interest. The
AlliedSignal Nominees have an undivided duty of loyalty to AlliedSignal that
would conflict with their ability to fulfill their fiduciary duties to the
Company under Pennsylvania law. The Company's motion seeks an order declaring
that the AlliedSignal Consent Solicitation proposals are in violation of
Pennsylvania law.
On September 14, 1998, AlliedSignal filed a motion to amend its complaint.
The proposed amended complaint seeks (i) declaratory and injunctive relief
declaring Amendment No. 3 to the Rights Agreement, approved by the Board of
Directors on August 20, 1998, to be invalid under Pennsylvania law; or to the
extent that Amendment No. 3 is permitted under Pennsylvania law, declaring the
law as so applied unconstitutional under the Supremacy and Commerce Clauses of
the United States Constitution and (ii) declaratory and injunctive relief
prohibiting the Board of Directors from taking any further action which might
interfere with the Amended AlliedSignal Offer or the Consent Solicitation. The
Company did not oppose AlliedSignal's motion to amend the complaint. On the
same day, AlliedSignal also filed a motion for (1) partial summary judgment
and declaratory judgment that Amendment No. 3 is invalid, or, in the
alternative, for a preliminary injunction restraining enforcement of Amendment
No. 3; and (2) a preliminary injunction prohibiting the Board of Directors
from taking any action that would make the shareholder vote on the Consent
Solicitation invalid.
On September 18, 1998, AlliedSignal filed a cross-motion for summary
judgment seeking the dismissal, as a matter of law, of the claim in the
complaint filed by the Company against AlliedSignal and PMA alleging an
improper board packing scheme.
On September 22, 1998, AlliedSignal filed a motion for leave to file a
second amended complaint in its action against the Company and leave was
granted. The proposed second amended complaint broadens AlliedSignal's claim
regarding the Company's Amendment No. 3 to the Rights Agreement to incorporate
a challenge to the Company's Amendment No. 4 to the Rights Agreement. Among
other things, it seeks (i) a declaratory judgment that certain provisions of
Amendment No. 4 which make the Shareholder Rights Plan nonamendable are in
violation of Pennsylvania law, (ii) a declaratory judgment that, to the extent
that Pennsylvania law authorizes the amendment, such law is unconstitutional
under the Supremacy Clause of the United States Constitution because it
violates the Commerce Clause and the Williams Act, (iii) an order enjoining
the enforcement of Amendment No. 4 and (iv) an order enjoining the Company and
all persons acting on the Company's behalf from taking action to interfere
with the Consent Solicitation. AlliedSignal is also seeking summary judgment
with respect to its expanded claim regarding the Company's amendments to the
Rights Plan.
On September 22, 1998, the Company filed an amended complaint against
AlliedSignal in the United States District Court for the Eastern District of
Pennsylvania. The amended complaint broadens the claims asserted by the
Company in its initial complaint. It seeks, among other things, (i) an order
declaring that the Pennsylvania Control-Share Acquisitions statute bars
AlliedSignal from voting any Shares it may acquire pursuant to the Second
Amended AlliedSignal Offer and (ii) a declaratory judgment that AlliedSignal's
effort, pursuant to a recent addition to the Consent Solicitation, to delegate
to non-directors authority relating to the Shareholder Rights Plan violates
Pennsylvania law. In addition to seeking to enjoin the AlliedSignal board
packing plan referenced in the initial Complaint, the amended complaint also
alleges violations of certain requirements of the federal securities laws
relating to tender offers and consent solicitations.
College Retirement Equities Fund and the shareholders group plaintiffs filed
amicus curiae motions and briefs in support of AlliedSignal's Motion for
Declaratory and Injunctive Relief on September 25, 1998.
On September 25, 1998, AlliedSignal filed a motion for leave to file a third
amended complaint, which was granted by 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
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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.
On September 28, 1998, the shareholder plaintiffs filed their First
Consolidated Class Action Complaint. The consolidated amended complaint names
as defendants AMP, all but one of the individual members of AMP's Board of
Directors and eighteen of AMP's officers. The complaint alleges (i) violations
of the Securities Exchange Act of 1934, as amended, for failure to set forth
an adequate explanation of the reasons for recommending rejection of
AlliedSignal's tender offer in AMP's Solicitation/Recommendation Statement on
Schedule 14D-9 filed by AMP in connection with AlliedSignal's tender offer and
for failing to disclose material information regarding the reasons for
rejection; (ii) that Amendments Nos. 3 and 4 to the Rights Agreement are
illegal under the PBCL; and (iii) that if Amendments No. 3 and 4 to the Rights
Agreement are not illegal under the PBCL, then that statute violates the
Commerce, Supremacy and Due Process clauses of the United States Constitution.
The plaintiffs seek, among other things, a declaratory judgment that certain
provisions of the PBCL are unconstitutional; that Amendments Nos. 3 and 4 to
the Rights Agreement violate the PBCL and should be enjoined; that the
individual defendants have infringed the voting rights of AMP shareholders;
and that the individual defendants have violated their fiduciary duties to
AMP. Plaintiffs also seek to enjoin the defendants from entrenching themselves
in office and from impairing the shareholders' rights to vote on certain
matters, and ask the Court to order defendants to disclose all material facts
relating to AMP's and AlliedSignal's solicitations.
The Court heard arguments on the Company's and AlliedSignal's motions on
September 28, 1998 and the Court denied AlliedSignal's motion challenging the
November 16, 1998 record date for the Rights Plan Proposal.
On October 8, 1998, the Court entered an Order and Memorandum Opinion in the
above-referenced actions. The Court granted in part AMP's motion for partial
summary judgment in the nature of a declaratory judgment regarding the Second
Claim for Relief of AMP's complaint that AlliedSignal's consent solicitation
plans are unlawful. The Court enjoined AlliedSignal's board-packing consent
proposals, "until [AlliedSignal] states unequivocally that its director
nominees have a fiduciary duty solely to AMP under Pennsylvania law and
includes a statement from each nominee affirmatively committing personally to
that duty."
The Court denied AlliedSignal's motions for summary judgment, preliminary
injunction and declaratory judgment with respect to the Rights Plan in their
entirety. The Court held that "AMP's actions in amending its shareholder
rights plan cannot be enjoined as ultra vires acts or breaches of fiduciary
duty." In addition, the Court declared that AlliedSignal's consent proposal to
amend AMP's By-laws in order to place the Board of Directors' authority over
the shareholder rights plan in the hands of persons not on the Board is
unlawful.
The Court further held that shareholders participating in the shareholders'
litigation against AMP, In re: AMP Shareholder Litigation, do not have
standing to seek an injunction against the actions of the AMP Board for not
acceding to AlliedSignal's merger proposal.
The foregoing description of litigation is qualified in its entirety by
reference to the various complaints and/or decisions which have been or will
be filed as exhibits to the Schedule 13E-4 and are incorporated herein by
reference.
Certain Effects of the Offer.
Financial Condition and Results of Operations. On a pro forma basis,
assuming the consummation of the Offer at June 30, 1998, the Offer and related
borrowings would have increased the Company's total indebtedness from
approximately $610.8 million to approximately $2,360.8 million, reduced the
Company's common shareholders' equity from approximately $2,898.5 million to
approximately $1,243.4 million and reduced the Company's book value per common
share from approximately $13.25 to approximately $6.59. In addition, following
consummation of the Offer, the Company will require substantial amounts of
cash to meet principal and interest payments on the debt incurred in
connection with the Offer.
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The Company has been informed on a preliminary basis that, following the
Offer, the Company's indebtedness will continue to maintain investment grade
ratings. In addition, while the consummation of the Offer will significantly
increase the leverage of the Company, subject the Company to a number of
restrictive covenants and increase the Company's fixed charges, the Company
believes that the consummation of the Offer will not affect its ability to
pursue its Profit Improvement Plan and grow its business. See "Historical
Financial Information" and "Pro Forma Financial Information" in Section 10 for
additional information concerning the pro forma financial effects of the Offer.
Future Dividends. The Company does not currently anticipate any reduction
after the Offer in the current annual dividend on the Shares of $1.08 per Share
(a quarterly rate of $.27 per Share). While the financing as arranged in
connection with the Offer will contain restrictions on certain payments,
including dividends, if certain tests to be set forth in the instruments
relating to the financing are not met, the Company believes that achievement of
its financial plan, including implementation of its Profit Improvement Plan,
will more than satisfy these tests. However, the level of any future dividends
will remain in the discretion of the Board of Directors and will depend upon,
among other things, the Company's future earnings and cash flow and its
business and prospects. See Section 9.
8. INTERESTS OF DIRECTORS AND EXECUTIVE OFFICERS; TRANSACTIONS AND ARRANGEMENTS
CONCERNING THE SHARES.
As of October 7, 1998, there were 218,775,377 Shares outstanding and there
presently are 2,263,783 Shares issuable upon the exercise of all outstanding
Options. As of October 7, 1998, the Company's directors and executive officers
as a group (23 persons) beneficially owned 2,825,113 Shares (including 633,700
Shares issuable upon the exercise of Options exercisable within 60 days of such
date), which constituted approximately 1.29% of the outstanding Shares
(including Shares issuable if Options held by the Company's directors and
executive officers exercisable within 60 days of such date were exercised) at
such time. The foregoing does not include the 25,000,000 Shares issued to the
Flexitrust. If the Company purchases 30,000,000 Shares pursuant to the Offer
(approximately 13.57% of the outstanding Shares as of October 7, 1998 including
Shares issuable if Options held by the Company's directors and executive
officers exercisable within 60 days of such date were exercised but excluding
Shares issuable to the Flexitrust), then after the purchase of Shares pursuant
to the Offer, the Company's directors and executive officers as a group would
beneficially own approximately 1.5% of the outstanding Shares (including Shares
issuable if Options held by the Company's directors and executive officers
exercisable within 60 days of such date were exercised but excluding Shares
issuable to the Flexitrust). However, each director and executive officer
intends to consider the Offer and make his or her own decision as to whether or
not to accept the Offer. A description of the Shares owned by each director and
executive officer is filed as an exhibit to the Schedule 13E-4 and is
incorporated herein by reference.
Except as set forth in Section 7 hereof or in Schedule I hereto, based on the
Company's records and information provided to the Company by its directors,
executive officers, associates and subsidiaries, neither the Company nor any of
its associates or subsidiaries or persons controlling the Company nor, to the
best of the Company's knowledge, any of the directors or executive officers of
the Company or any of its subsidiaries, nor any associates or subsidiaries of
any of the foregoing, has effected any transactions in the Shares during the
40 business days prior to the date hereof.
Except as set forth in this Offer to Purchase, neither the Company or any
person controlling the Company nor, to the Company's knowledge, any of its
directors or executive officers, is a party to any contract, arrangement,
understanding or relationship with any other person relating, directly or
indirectly, to the Offer with respect to any securities of the Company
(including, but not limited to, any contract, arrangement, understanding or
relationship concerning the transfer or the voting of any such securities,
joint ventures, loan or option arrangements, puts or calls, guarantees of
loans, guarantees against loss or the giving or withholding of proxies,
consents or authorizations).
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9. SOURCE AND AMOUNT OF FUNDS.
Financing the Offer. The Company estimates that the total funds required to
purchase 30,000,000 Shares pursuant to the Offer and to pay related fees and
expenses will be approximately $1.7 billion. The Company intends to obtain
such funds, as well as any funds required to refinance any of the Company's
existing indebtedness which may be repaid in connection with the Offer, by
means of (a) proceeds of borrowings under a senior secured bank facility
(consisting of $1,750 million of term loans and a $750 million revolving
credit facility (collectively, the "Senior Bank Facility Commitment")) (the
"Senior Bank Facility") pursuant to a commitment letter, dated September 27,
1998, (the "Bank Commitment Letter") from Credit Suisse First Boston, New York
branch, an affiliate of CSFB, and DLJ Capital Funding, Inc. (collectively the
"Lenders") and (b) (i) proceeds obtained from the issuance of up to $750
million of senior notes of the Company (the "Senior Notes") through a private
placement offering and/or (ii) to the extent that the Senior Notes are not
sold prior to the purchase of the Shares, a bridge loan (the "Bridge Loan") of
up to $750 million (the "Bridge Loan Commitment") from Credit Suisse First
Boston, New York branch, an affiliate of CSFB, 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 Company expects to repay indebtedness
incurred as a result of the Offer through cash flow from operations or through
refinancing of such indebtedness at a later date.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THE COMPANY'S HAVING
OBTAINED SUFFICIENT FINANCING FOR THE PURCHASE OF SHARES AND ALL CONDITIONS TO
SUCH FINANCING, OTHER THAN THE PURCHASE OF SHARES PURSUANT TO THE OFFER, BEING
SATISFIED ON OR PRIOR TO THE EXPIRATION DATE OF THE OFFER. SEE SECTION 5.
The terms of the Senior Notes, the Bridge Loan and the Senior Bank Facility
(together with the Bridge Loan and the Senior Notes, the "Financing
Instruments") have not yet been finalized and are still being negotiated.
Moreover, the documentation evidencing the Financing Instruments has not yet
been finalized. Accordingly, the description below of the Financing
Instruments is preliminary and necessarily incomplete. In addition, the terms
and provisions of the Financing Instruments, to the extent described, are
subject to change if the terms of the Offer change. In any event, the ultimate
Financing Instruments might contain terms that are more or less onerous than
those currently contemplated.
Senior Bank Facility
As set forth above under "Financing the Offer," the Lenders have delivered
the Bank Commitment Letter. Pursuant to the Bank Commitment Letter, the
Lenders have committed to provide the Senior Bank Facility on a senior secured
basis, such Facility to include a sublimit for the issuance of letters of
credit, all upon the terms and subject to the conditions set forth in the Bank
Commitment Letter, including the execution of definitive financing documents
and that a Change of Control (as defined below) shall not have occurred. A
"Change of Control" will have occurred if, among other things, the Second
Offer is consummated or the Company shall have had a change in its Board of
Directors resulting in less than a majority of the directors being
"disinterested directors" (as such term is defined in Section 1715(e) the
PBCL), which will occur if the AlliedSignal Nominees are elected to the Board
of Directors.
The Bank Commitment Letter provides that the commitments of the Lenders will
terminate unless definitive financing documents with respect thereto shall
have been executed and delivered on or prior to December 18, 1998.
Funding pursuant to the Bank Commitment Letter is subject to certain
conditions precedent, including but not limited to (i) the negotiation,
execution and delivery of definitive documents reasonably satisfactory to the
Lenders, (ii) the completion of the Offer, (iii) no material adverse change in
the banking or capital markets that could materially impair the syndication of
bank facilities or consummation of securities offerings, (iv) the Company's
achieving a minimum EBITDA (operating income plus taxes, depreciation and
amortization) for the fiscal quarter ending September 30, 1998, (v) the
Company's having received investment grade ratings on its
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long term unsecured senior indebtedness from both Standard and Poor's
Corporation and Moody's Investor Service and (vi) no occurrence of any event
or events, adverse condition or change in or affecting the Borrower that,
individually or in the aggregate, could reasonably be expected to have a
material adverse effect on (x) the business, results of operations, property,
condition (financial or otherwise) or prospects of the Company and its
subsidiaries, taken as a whole, or (y) the validity or enforceability of any
documents entered into in connection with the Offer or the Senior Bank
Facility, the other transactions contemplated by the Offer or the Senior Bank
Facility, or the rights, remedies and benefits available to the parties
thereunder. The Lenders are also entitled to change the structure, terms or
pricing of the Senior Bank Facility if the syndication has not been completed
and if the Lenders determine that such changes are advisable in order to
insure a successful syndication of the Senior Bank Facility; provided,
however, that the total amount of the Senior Bank Facility shall remain
unchanged.
The Senior Bank Facility will be provided pursuant to the terms and
conditions of the Credit Agreement to be entered into by the Company and the
Lenders.
Pursuant to the Bank Commitment Letter, the Senior Bank Facility is expected
to consist (i) of a five year revolving credit and working capital facility
available to the Company in a maximum principal amount not to exceed $750
million, a portion of which may be comprised of letters of credit (the
"Letters of Credit") and (ii) term loans in a maximum principal amount not to
exceed $1.75 billion of which $1 billion is Tranche A which will mature in
five years and $750 million is Tranche B which will mature in seven years.
Both Tranche A and Tranche B will amortize quarterly. Annual scheduled
repayments under Tranche A will amount to $125 million
in the second year following the initial funding, $225 million in the third
year, $275 million in the fourth year and $375 million in the fifth year.
Annual scheduled repayments in Tranche B will aggregate $37.5 million in the
second through sixth years following the initial funding and $712.5 million in
the seventh year. The availability of the Senior Bank Facility will be reduced
by the aggregate amount of certain indebtedness of the Company that remains
outstanding after giving effect to the Offer and the financing contemplated by
the Bank Commitment Letter and the Bridge Commitment Letter.
All existing and hereafter acquired subsidiaries of the Company will
unconditionally guarantee the obligations arising under the Senior Bank
Facility (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 Company). The Senior Bank Facility, and the guarantee
obligations in respect thereof, will be secured by a security interest in
substantially all the assets of the Company and its domestic (and, to the
extent no adverse tax consequences would result, foreign) subsidiaries.
The Senior Bank Facility will be required to be prepaid with (subject to
certain exceptions): (i) the net proceeds from the issuance of any debt or
equity securities of the Company or any of its subsidiaries or (ii) the net
proceeds from non-ordinary course asset sales or (iii) a certain percentage of
excess cash flow. Voluntary prepayment of the Senior Bank Facility, in whole
or in part, is permitted at any time. Indebtedness outstanding under Tranche A
and the revolving line of credit of the Senior Bank Facility will bear an
initial interest rate, computed on a per annum basis, equal to either the
Alternate Base Rate (as defined below) plus 1.0% or LIBOR plus 2.0%.
Indebtedness outstanding under Tranche B of the Senior Bank Facility will bear
an initial interest rate, computed on a per annum basis equal to either the
Alternate Base Rate plus 1.75% or LIBOR plus 2.75%. The LIBOR and Alternate
Base Rate margins will be subject to performance pricing step-downs to be
determined.
"Alternate Base Rate" shall mean the higher of (i) the Administrative
Agent's prime rate and (ii) the Federal Funds rate plus 0.5%.
Fees payable in respect of letters of credit shall be in an amount equal to
the interest rate margin on LIBOR based loans then in effect, due quarterly in
arrears. The issuer of a letter of credit shall be paid a per annum fronting
fee of .25% on the face amount of all letters of credit, due quarterly in
arrears. Additionally, the Company shall pay the issuer of a letter of credit
its customary letter of credit charges as in effect from time to time.
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The Senior Bank Facility will contain certain representations and
warranties, certain negative and affirmative financial covenants, certain
conditions and events of default which are customarily required for similar
financings. Representations and warranties will probably apply to the Company
and its subsidiaries. Such covenants will include restrictions and limitations
on dividends and stock redemptions, capital expenditures, leases, incurrence
of debt, transactions with affiliates, investments and acquisitions, and
mergers, consolidations and asset sales. Furthermore, the Company will be
required to maintain compliance with certain financial covenants such as a
Maximum Leverage Ratio, an Interest Coverage Ratio, a Fixed Charge Coverage
Ratio and Minimum Net Worth (as such terms will be defined in the Credit
Agreement).
Senior Note Private Placement
The Company intends to issue up to $750 million aggregate principal amount
of Senior Notes to be sold in a private placement with a maturity date of
approximately ten years from the date of issuance at a fixed interest rate to
be determined. The Senior Notes will be senior unsecured obligations and will
rank senior in right of payment to all existing and future indebtedness of the
Company that is subordinated to the Senior Notes and will rank pari passu in
right of payment with all other existing and future senior indebtedness of the
Company. Loans under the Senior Bank Facility will be secured by substantially
all of the Company's assets and, accordingly, the Senior Notes will be
effectively subordinated to the loans outstanding under the Senior Bank
Facility to the extent of the value of the assets securing such loans.
The Senior Notes and the Indenture are expected to contain certain
covenants, events of default and other provisions, which provisions will be
negotiated by the Company.
Bridge Loan
In the event that the Company is not able to successfully complete the
private placement of Senior Notes prior to consummation of the Offer, the
Company may fund the Offer with the proceeds of the Bridge Loan.
Pursuant to the Bridge Commitment Letter, the Bridge Lenders have committed
that either they and/or one or more of their respective affiliates will
purchase $750 million in aggregate principal amount of the Bridge Loan. The
Bridge Loan will be a senior unsecured obligation of the Company, guaranteed
on an unsecured basis by all existing and hereafter acquired subsidiaries that
guarantee the Senior Bank Facility. The Bridge Lenders have committed to make
such loan upon terms and subject to the conditions set forth in the Bridge
Commitment Letter, including the execution of definitive financing documents
and that a Change of Control of AMP shall not have occurred. A change of
control ("Change of Control") will have occurred if, among other things, the
Second Offer is consummated or the Company shall have had a change in its
Board of Directors resulting in less than a majority of the directors being
"disinterested directors" (as such term is defined in Section 1715(e) of the
PBCL), which will occur if the AlliedSignal Nominees are elected to the Board
of Directors.
The Bridge Commitment Letter provides that the commitments of the Bridge
Lenders will terminate on December 18, 1998, unless the funding of the Bridge
Loan has occurred prior to such time.
Funding pursuant to the Bridge Commitment Letter is subject to certain
conditions precedent, including but not limited to (i) the negotiation,
execution and delivery of definitive documents reasonably satisfactory to the
Bridge Lenders, (ii) the completion of the Offer, (iii) no material adverse
change in the banking or capital markets that could materially impair the
syndication of bank facilities or consummation of securities offerings, (iv)
the Company's achieving a minimum EBITDA (operating income plus taxes,
depreciation and amortization) for the fiscal quarter ending September 30,
1998, (v) the Company's having received investment grade ratings on its long
term unsecured senior indebtedness from both Standard and Poor's Corporation
and Moody's Investor Service and (vi) no occurrence of any event or events,
adverse condition or change in or affecting the Borrower that, individually or
in the aggregate, could reasonably be expected to have a material adverse
effect on (x) the business, results of operations, property, condition
(financial or otherwise) or prospects of the Company and its subsidiaries,
taken as a whole, or (y) the validity or enforceability of any documents
entered into in connection
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with the Offer or the Bridge Loan, the other transactions contemplated by the
Offer or the Bridge Loan, or the rights, remedies and benefits available to
the parties thereunder.
The Bridge Loan shall mature 364 days after the closing thereof (the "Bridge
Loan Maturity Date"). If prior to such time the Bridge Loan has not been
repaid in full for cash, the principal of the Bridge Loan then outstanding
may, subject to certain conditions precedent, be satisfied, at the option of
each Bridge Lender, through the delivery of senior unsecured Exchange Notes
(the "Exchange Notes").
The Bridge Loan can be repaid up to the Bridge Note Maturity Date, in whole
or in part, at the Company's option at any time at par plus accrued interest
to the date of repayment. Mandatory repayment will be required with (subject
to certain agreed upon exceptions): (i) the net proceeds from the issuance of
any debt or equity securities of the Company or any of its subsidiaries, (ii)
the net proceeds from non-ordinary course asset sales or (iii) a certain
percentage of excess cash flow.
Interest shall be payable at the greater of (i) the London Interbank Offer
Rate ("LIBOR") plus the Applicable Margin or (ii) the Treasury Rate plus the
Treasury Spread. The "Applicable Margin" shall initially be 4%, increasing by
an additional 0.5% at the end of each subsequent three-month period for as
long as the Bridge Loans are outstanding, provided that such rate shall not
exceed the highest rate permitted by law. The "Treasury Spread" shall
initially be 4.75%, increasing by an additional 0.5% at the end of each
subsequent three-month period for as long as the Bridge Loans are outstanding,
provided that such rate shall not exceed the highest rate permitted by law.
The Bridge Loan will contain certain representations and warranties, certain
negative and affirmative covenants, certain conditions and events of default
which are customarily required for similar financings. Such covenants will
include restrictions and limitations on dividends and stock redemptions,
capital expenditures, leases, incurrence of debt, transactions with
affiliates, investments and acquisitions, and mergers, consolidations and
asset sales.
The foregoing description is qualified in its entirety by reference to the
(i) Bank Commitment Letter and (ii) the Bridge Commitment Letter, copies of
which are filed as exhibits to the Schedule 13E-4 (as hereinafter defined) and
are incorporated herein by reference.
Fees Associated with Financings. The Company has agreed to pay certain
commitment, ticking and funding fees to the Lenders and the Bridge Lenders in
connection with the Senior Bank Facility and the Bridge Loan. Such fees will
aggregate at least $29.75 million. In the event that at the consummation of
the Offer (i) all amounts are drawn under the Senior Bank Facility and (ii)
(x) the Company sells $750 million aggregate principal amount of Senior Notes
or (y) all amounts are drawn under the Bridge Commitment Letter, the fees will
aggregate approximately $67.0 million (including ticking fees through that
date, but excluding any costs associated with refinancing or converting any
Bridge Loan). If the Company loses its investment grade rating on its long
term unsecured indebtedness, the aggregate fees will be increased.
10. CERTAIN INFORMATION ABOUT THE COMPANY.
The Company designs, manufactures and markets a broad range of electronic,
electrical and electro-optic connection devices and an expanding number of
interconnection systems and connector-intensive assemblies. The Company's
products have potential uses wherever an electronic, electrical, computer or
telecommunications system is involved, and are becoming increasingly critical
to the performance of these systems as voice, data and video communications
converge. The Company's customers are as diverse as the products themselves,
and include such differing types of accounts as original equipment
manufacturers (OEMs) and their subcontractors, utilities, government agencies,
distributors, value-added resellers, and customers who install, maintain and
repair equipment. The industries covered by these accounts include Automotive,
Power Technology, Personal Computer, Communications, and Consumer/Industrial.
The Company markets its products worldwide primarily through its own direct
sales force, but also through distributors and value-added resellers to
respond to customer
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buying preferences. In 1997, 84% of product was sold through direct channels
to market and 16% through distribution. The Company has established more than
330 facilities located in 53 countries to serve customers in the current and
emerging markets throughout the world. The Company is positioning itself to be
a market-driven, "GLOBE-ABLE" organization.
The principal executive office of the Company is P.O. Box 3608, Harrisburg,
PA 17105-3608.
In June of this year, the Company announced the first element of the Profit
Improvement Plan which is described in greater detail below.
Profit Improvement Plan. The Profit Improvement Plan reflects AMP's
commitment to improve significantly its operating margins and financial
performance. The Profit Improvement Plan was commenced in June of this year
and is currently being implemented. In particular, AMP expects the Profit
Improvement Plan to result in the elimination of costs and expenses of more
than $350 million per year beginning in the year 2000 and generate operating
margins of at least 13.5% in 1999 and at least 16.5% in 2000. In addition,
after giving effect to the Offer and additional savings from acceleration and
expansion of the Profit Improvement Plan, the Company expects earnings per
share of approximately $2.30 in 1999 and approximately $3.00 in 2000. This
enhanced operating performance, taken together with a higher price/earnings
multiple which was historically afforded to the Company, should, in the
judgment of the Board of Directors, significantly enhance shareholder value.
Key elements of the Profit Improvement Plan include:
. Reducing costs through reductions in support staff and support functions
AMP had announced that its support staff would be reduced on a net basis
(gross reductions less new hires) by at least 3,500 worldwide through a
combination of early retirement, attrition and layoffs. As part of this
program, AMP will outsource certain support activities to allow the
Company to focus resources on core businesses and provide flexibility to
respond to fluctuations in product demand. As of October 1, 1998, the
Company has exceeded its objectives and identified in excess of 3,800
support staff reductions worldwide. Approximately 1,500 of the support
staff reductions are from international subsidiaries. In addition,
temporary and contract employees have also been reduced.
. Reshaping AMP's manufacturing into a "global manufacturing competency"
through plant closings, consolidations and other activities
The streamlining and consolidation of the Terminal and Connector
operation, which represents the majority of AMP's sales, will result in
the closing of five plants in 1998. Additional sites have been announced
for consolidation and/or closing, including AMP's manufacturing
facilities in Harlow, Great Britain and in Hsin-Chu, Taiwan.
Additionally, AMP is stepping up activities to support the fast growing
marketplace outside the United States by shifting production closer to
customers, thereby reducing transportation and other costs, and relying
on simpler, manual operations in each region for high-volume, quick
turnaround orders.
. Simplifying AMP's operating structure and providing for greater
accountability
Robert Ripp was appointed Chairman and CEO with overall responsibility
for implementing the plan. Direct reports have been cut in half from 22
to 11 and each of a limited number of executives has been charged with
the responsibility of achieving a specified portion of the expected cost
savings.
. AMP's focus on customer service and pricing policies to enhance its
competitiveness in the marketplace and responsiveness to customer demands
New customer-focused programs are being launched to make the ordering,
pricing, and delivery systems simpler and more responsive to customers.
The programs, which have begun in the United States, will be replicated
in other regions of the world. These include 24-hour customer service and
shipment on more than 10,000 widely used part numbers, simplified pricing
and a larger sales force to improve account coverage and presence at
customer facilities.
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The Profit Improvement Plan is designed to provide AMP with a more
simplified, results-oriented structure focused on enhancing performance and
creating value. The Company is committed to accelerating the implementation
of, and enhancing the steps being taken in connection with, the Profit
Improvement Plan.
Management Financial Plan. The above estimates of earnings for 1999 and 2000
are based on management's financial plan, after giving effect to the reduction
of costs and expenses associated with the Profit Improvement Plan, the
repurchase of Shares pursuant to the Offer, including the interest expense
associated with additional debt of $1.75 billion and the incremental Shares
issued as a result of the use of the Flexitrust.
The Profit Improvement Plan has assumed that revenues will grow 3% in
constant dollars in 1999 over the current estimate of 1998 revenue and grow 7%
in constant dollars in 2000 over the 1999 planned revenue.
Management's plan for 1999 and 2000 was first disclosed publicly in August
of 1998. Since that time, the impact of certain key events has been added to
the assumptions; however, the estimated earnings have remained consistent.
These events include: (i) financing of $1.75 billion to fund the Offer
resulting in $143 million ($.44 per share) in incremental interest expense,
including amortization of deferred financing fees, in 1999 and 2000, (ii)
additional cost savings identified for 1999 of approximately $50 million ($.15
per share), (iii) the reduction in Shares outstanding of 30,000,000 due to the
purchase of such Shares pursuant to the Offer offset in 1999 by 2,500,000
Shares issued pursuant to the Flexitrust and offset in 2000 by 5,000,000
Shares issued pursuant to the Flexitrust. The impact of the reduction in
Shares outstanding increases earnings by $.29 per share and $.34 per share in
1999 and 2000, respectively.
The incremental cost saving identified in 1999 relates to additional support
staff personnel identified for elimination, inclusion of several additional
facilities in the Company's consolidation plans and the divestiture of certain
non-Terminal and Connector operations. The incremental cost savings in 2000
includes additional savings related to the expiration of extensions for
various key support staff positions and additional savings for facility
consolidations and divestitures.
The Company does not as a matter of course publicly disclose projections or
estimates as to future revenues or earnings. The Company's projections were
prepared in conjunction with the development of the Company's Profit
Improvement Plan and assume that the revenue growth described above and the
cost savings anticipated to be realized from the Profit Improvement Plan will
be realized. The projections, while presented with numerical specificity, are
based upon a variety of estimates and assumptions (including estimates and
assumptions utilized in developing the Profit Improvement Plan), and, as such,
actual results may differ from the projections. See "Forward-Looking
Statements."
Creation of Flexitrust. On September 28, 1998, the Board authorized AMP
management to enter into a Flexitrust Agreement (the "Flexitrust Agreement")
to establish the Flexitrust, a grantor trust, to hold shares of Common Stock.
The Flexitrust 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
Flexitrust will not affect AMP's employee benefit and compensation plans.
Pursuant to the terms of the Flexitrust, the shares will periodically be
released from the Flexitrust, 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 Flexitrust 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 "Flexitrust Committee"). Assets of the
Flexitrust remain subject to the claims of AMP's creditors.
In connection with the establishment of the Flexitrust, AMP expects,
pursuant to a Stock Purchase Agreement, to sell to the Flexitrust on or prior
to the consummation of the Offer, 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 Flexitrust will issue to AMP, as payment for the
Trust Shares, a 10-year note payable to AMP in the principal amount of
27
<PAGE>
approximately $980 million. AMP will make future contributions to the
Flexitrust which, together with dividends paid in respect of the Trust Shares,
will be sufficient to allow the Flexitrust to make principal and interest
payments due on such note. Cash paid or contributed to the Flexitrust by AMP
is not expected to be retained by the Flexitrust but rather returned to the
Company as described in the preceding sentence. As principal payments are made
on such note, a proportionate number of Trust Shares will become available for
use by the Flexitrust in satisfaction of certain benefit and compensation
obligations of AMP.
Generally, Trust Shares held by the Flexitrust 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 Flexitrust Committee. The Flexitrust
Committee is expected to instruct the trustee of the Flexitrust not to tender
the Trust Shares pursuant to the Offer or the Second Amended Allied Signal
Offer. Accordingly, after taking into account the repurchase of Shares
pursuant to the AMP Self Tender Offer, the Flexitrust is expected to hold
approximately 11.7% of the outstanding Shares. The formation of the Flexitrust
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. Until the note is paid down and Trust Shares
become available for use by the Flexitrust, the Trust Shares are not treated
as outstanding for purposes of earnings per share calculations. Creation of
the Flexitrust 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
Flexitrust Agreement and Stock Purchase Agreement are filed as exhibits to the
Schedule 13E-4 and are incorporated herein by reference.
Historical Financial Information. The following table sets forth summary
historical consolidated financial information of the Company and its
subsidiaries. The historical financial information for fiscal years 1996 and
1997 has been derived from, and should be read in conjunction with, the
audited consolidated financial statements of the Company as reported in the
Company's Annual Reports on Form 10-K for the fiscal year ended December 31,
1997 and is hereby incorporated herein by reference. The historical financial
information presented for the six months ended June 30, 1997 and 1998 is
unaudited. Such historical financial information has been derived from, and
should be read in conjunction with, the unaudited consolidated financial
statements of the Company as reported in the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1998 and is hereby incorporated
herein by reference. Copies of reports may be inspected or obtained from the
Commission in the manner specified in "Additional Information" below.
28
<PAGE>
SUMMARY HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
(In Thousands, Except Ratios and Per Share Amounts)
<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED ENDED
------------------------- ---------------------
DECEMBER 31, DECEMBER 31, JUNE 30, JUNE 30,
1996 1997 1997 1998
------------ ------------ ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C>
STATEMENT OF INCOME DATA
Net sales........................ $5,468,028 $5,745,235 $2,860,872 $2,747,651
Gross income..................... 1,565,295 1,768,629 894,292 810,496
SG&A............................. 964,589 1,022,856 544,340 560,036
Restructuring charge (Credit).... 98,000 (21,338) -- --
---------- ---------- ---------- ----------
Income from operations........... 502,706 767,111 349,952 250,460
Income before income taxes and
cumulative effect of
accounting changes........... 438,308 677,985 309,067 233,148
Net income before cumulative ef-
fect
of accounting changes........ 286,984 457,640 208,621 157,373
Cumulative effect of accounting
changes...................... -- 15,450 15,450 --
---------- ---------- ---------- ----------
Net income....................... $ 286,984 $ 473,090 $ 224,071 $ 157,373
========== ========== ========== ==========
BASIC EARNINGS PER SHARE
EPS before cumulative effect of
accounting changes........... $ 1.31 $ 2.08 $ 0.95 $ 0.72
Cumulative effect of accounting
changes...................... -- 0.07 0.07 --
Earnings per share............... $ 1.31 $ 2.15 $ 1.02 $ 0.72
Average shares outstanding ba-
sic.......................... 219,200 219,800 219,600 219,400
DILUTED EARNINGS PER SHARE
EPS before cumulative effect of
accounting changes........... $ 1.31 $ 2.08 $ 0.95 $ 0.72
Cumulative effect of accounting
changes...................... -- 0.07 0.07 --
Earnings per share............... $ 1.31 $ 2.15 $ 1.02 $ 0.72
Average shares outstanding dilut-
ed........................... 219,600 220,400 219,900 219,800
Ratio of earnings to fixed
charges
(unaudited).................. 8.7 12.6 11.2 9.3
BALANCE SHEET DATA
Working capital.................. $ 911,285 $1,204,504 $1,028,853 $1,169,439
Total assets..................... 4,685,705 4,848,103 4,814,467 4,669,640
Total long-term debt............. 181,599 159,695 185,567 168,010
Shareholders' equity............. 2,789,898 2,951,535 2,851,352 2,898,482
Book value per common share (un-
audited)........................ $ 12.71 $ 13.42 $ 12.98 $ 13.25
</TABLE>
29
<PAGE>
Pro Forma Financial Information. The following summary unaudited
consolidated pro forma financial statements give effect to the following
transactions: (i) the consummation of the Offer and the purchase thereunder of
30,000,000 Shares at a price of $55 per Share, (ii) the execution of
commitments related to the Senior Bank Facility and Bridge Loan and borrowings
under the Senior Bank Facility, and (iii) the establishment of the Flexitrust,
a grantor trust, to hold newly issued shares to fund employee benefits and
compensation programs. The cost savings anticipated to be realized as a result
of the Company's Profit Improvement Plan are not reflected in the pro forma
adjustments. The summary unaudited consolidated pro forma financial statements
should be read in conjunction with the accompanying notes and the summary
consolidated historical financial information. The summary unaudited
consolidated pro forma financial statements have been prepared, as if the
transactions referred to above had taken place (i) at the beginning of 1997
for income statement purposes, and (ii) at the end of the periods presented
for balance sheet purposes, but, in each case, such information does not
purport to be indicative of the results that would actually have been achieved
had the preceding transactions been completed on the dates indicated or that
may be achieved in the future.
The Senior Bank Facility contemplated by the Bank Commitment Letter
presently provides for term loans in the aggregate amount of $1.75 billion to
be drawn upon consummation of the Offer. This is in addition to $750 million
to be made available under a revolving credit facility. The Company also may
raise up to $750 million in connection with the private placement of Senior
Notes. The total proceeds potentially available to the Company exceed the
total funds presently anticipated to be required in connection with the Offer.
Over the next several weeks, the Company presently intends to review its
need, if any, to refinance existing indebtedness, as well as its future need
for funds for working capital and other purposes. Depending upon the results
of this review, the Company may seek to adjust the total funds to be made
available under the Senior Bank Facility or pursuant to a sale of the Senior
Notes and to do so in a manner which the Company, at the time, believes best
suits its present and future capital needs. In light of the fact that this
review has not been completed, the pro forma financial statements have been
prepared assuming that the Company has drawn the full $1.75 billion in term
loans under the Senior Bank Facility as required under the Bank Commitment
Letter, that all existing indebtedness shall remain outstanding and that no
proceeds are received upon the sale of Senior Notes. Should any existing
indebtedness require refinancing, the Company may be required to obtain
additional funds from the revolving credit facility and/or the sale of Senior
Notes, which would increase the Company's overall interest expense. The
increase in interest expense will be dependent on the amount of existing
indebtedness, if any, to be refinanced and the source of indebtedness to be
incurred for such refinancing. See Section 9.
Once third quarter financial results are published towards the end of
October, the Company intends to prepare and disseminate revised pro forma
financial statements which reflect, among other things, the financial results
for the third quarter and updated information concerning the Company's
anticipated financing for the Offer and related transactions. Shareholders
should review the revised pro forma financial information disseminated at the
end of October in connection with any decision made with respect to the Offer.
30
<PAGE>
SUMMARY UNAUDITED CONSOLIDATED PRO FORMA STATEMENTS OF INCOME
(In Thousands, Except Ratios and Per Share Amounts)
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1997 JUNE 30, 1998
------------------------------------- -------------------------------------
PRO FORMA PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net sales... $5,745,235 $ -- $5,745,235 $2,747,651 $ -- $2,747,651
Cost of
sales...... 3,976,606 -- 3,976,606 1,937,155 -- 1,937,155
---------- --------- ---------- ---------- -------- ----------
Gross in-
come....... 1,768,629 -- 1,768,629 810,496 -- 810,496
SG&A ex-
penses..... 1,022,856 -- 1,022,856 560,036 -- 560,036
Restructuring
charge
(credit)... (21,338) -- (21,338) -- -- --
---------- --------- ---------- ---------- -------- ----------
Income from
operations.. 767,111 -- 767,111 250,460 -- 250,460
Interest ex-
pense...... (31,843) (20,100)(1) (186,643) (14,976) (6,000)(1) (88,326)
(134,700)(2) (67,350)(2)
Other deduc-
tions,
net........ (57,283) -- (57,283) (2,336) -- (2,336)
---------- --------- ---------- ---------- -------- ----------
Income before
income tax-
es......... 677,985 (154,800)(3) 523,185 233,148 (73,350)(3) 159,798
Income tax-
es......... 220,345 (50,310)(4) 170,035 75,775 (23,839)(4) 51,936
---------- --------- ---------- ---------- -------- ----------
Net income
before ac-
counting
changes.... $ 457,640 $(104,490)(5) $ 353,150 $ 157,373 $(49,511)(5) $ 107,862
========== ========= ========== ========== ======== ==========
Basic
shares..... 219,770 (30,000)(6) 189,770 219,401 (30,000)(6) 189,401
Basic EPS... $ 2.08 -- $ 1.86 $ 0.72 -- $ 0.57
Diluted
shares..... 220,375 (30,000)(6) 190,375 219,778 (30,000)(6) 189,778
Diluted
EPS........ $ 2.08 -- $ 1.86 $ 0.72 -- $ 0.57
Ratio of
earnings to
fixed
charges.... 12.6x 3.5x 9.3x 2.6x
</TABLE>
NOTES TO THE SUMMARY UNAUDITED CONSOLIDATED PRO FORMA STATEMENTS OF INCOME
(1) Represents bank fees expensed or amortized.
(2) Represents periodic interest expense on the new debt facilities of $134.7
million and $67.35 million for the year ended December 31, 1997 and the
six months ended June 30, 1998, respectively. Interest expense on the new
outstanding facilities is calculated based on the current LIBOR rate of 5
3/8% plus 2.3% on the term loan under the Senior Bank Facility. A 1/8%
increase in the LIBOR rate results in approximately $2.2 million and $1.1
million additional interest expense in 1997 and in the six months ended
June 30, 1998, respectively.
(3) Represents the pretax impact of the pro forma adjustments to income
before income taxes for the period.
(4) Represents the tax benefit derived from the impact of the pro forma
adjustments for the period.
(5) Represents the impact on net income before accounting changes (net income
for the six months ended June 30, 1998) related to impact of the pro
forma adjustments for the period.
(6) Represents the reduction in shares outstanding as a result of the
purchase of 30 million Shares pursuant to the Offer.
31
<PAGE>
SUMMARY UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(In Thousands)
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1997 JUNE 30, 1998
--------------------------------------- ---------------------------------------
PRO FORMA PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash & cash equiva-
lents............... $ 350,320 $ 55,200(1) $ 405,520 $ 221,443 $ 55,200(1) $ 276,643
Securities available
for sale............ 79,350 -- 79,350 80,618 -- 80,618
Other current as-
sets................ 2,220,130 -- 2,220,130 2,173,778 -- 2,173,778
---------- ----------- ----------- ---------- ----------- -----------
Total current as-
sets............... 2,649,800 55,200 2,705,000 2,475,839 55,200 2,531,039
Property, plant &
equipment, net...... 1,915,985 -- 1,915,985 1,897,468 -- 1,897,468
Investments and other
assets.............. 282,318 37,300 (2) 319,618 296,333 37,300 (2) 333,633
---------- ----------- ----------- ---------- ----------- -----------
Total Assets......... $4,848,103 $ 92,500 $ 4,940,603 $4,669,640 $ 92,500 $ 4,762,140
========== =========== =========== ========== =========== ===========
LIABILITIES &
SHAREHOLDERS' EQUITY
Current Liabilities:
Short-term debt...... $ 465,233 $ -- $ 465,233 $ 442,793 $ -- $ 442,793
Other current liabili-
ties................ 980,063 (2,438)(3) 977,625 863,607 (2,438)(3) 861,169
---------- ----------- ----------- ---------- ----------- -----------
Total current liabil-
ities.............. 1,445,296 (2,438) 1,442,858 1,306,400 (2,438) 1,303,962
Long-term debt....... 159,695 1,750,000 (4) 1,909,695 168,010 1,750,000 (4) 1,918,010
Other liabilities.... 291,577 -- 291,577 296,748 -- 296,748
---------- ----------- ----------- ---------- ----------- -----------
Total Liabilities... 1,896,568 1,747,562 3,644,130 1,771,158 1,747,562 3,518,720
Shareholders' Equity:
Common stock......... 81,670 979,688 (5) 1,061,358 81,727 979,688 (5) 1,061,415
Other capital........ 91,575 -- 91,575 91,505 -- 91,505
Deferred compensa-
tion................ (11,169) -- (11,169) (9,274) -- (9,274)
CTA.................. 27,079 -- 27,079 (22,758) -- (22,758)
Net unrealized invest-
ment loss........... (373) -- (373) (2,186) -- (2,186)
Retained earnings.... 2,940,488 (5,062)(6) 2,935,426 2,979,490 (5,062)(6) 2,974,428
Shares held in
flexitrust.......... -- (979,688)(5) (979,688) -- (979,688)(5) (979,688)
Treasury stock....... (177,735) (1,650,000)(7) (1,827,735) (220,022) (1,650,000)(7) (1,870,022)
---------- ----------- ----------- ---------- ----------- -----------
Total Shareholders'
Equity............. 2,951,535 (1,655,062) 1,296,473 2,898,482 (1,655,062) 1,243,420
---------- ----------- ----------- ---------- ----------- -----------
Total Liabilities and
Shareholders' Equi-
ty.................. $4,848,103 $ 92,500 $ 4,940,603 $4,669,640 $ 92,500 $ 4,762,140
========== =========== =========== ========== =========== ===========
</TABLE>
NOTES TO THE SUMMARY UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(1) Reflects the increase in cash resulting from the proceeds from the term
loan under the Senior Bank Facility payment offset by loan fees.
(2) Represents financing fees paid and capitalized under the Senior Bank
Facility.
(3) Represents the tax benefit related to the commitment fees expensed upon
payment.
(4) Represents the increase in indebtedness resulting from borrowings under
the Senior Bank Facility.
(5) Reflects the formation of the Flexitrust through issuance of 25 million
Shares by the Company to the Flexitrust in exchange for a note payable
over 10 years. As the note is amortized, Shares are released from the
Flexitrust to fund existing employee benefit programs and compensation
plans. Shares held by the Flexitrust are excluded from basic and diluted
per share calculations.
(6) Represents the impact of the commitment fees expensed upon payment net of
the tax benefit in Note 3.
(7) Reflects the purchase of 30 million Shares at $55 per Share pursuant to
the Offer.
32
<PAGE>
The Rights. Each Right issued pursuant to the Rights Agreement entitles the
holder thereof to purchase from the Company one Share at an exercise price of
$87.50 per share, subject to adjustment in accordance with the terms of the
Rights Agreement. Upon the earliest of (i) the close of business on the tenth
business day following a public announcement that a person (an "Acquiring
Person") has become an "interested shareholder" as defined in Section 2553 of
the PBCL (i.e., has acquired, or obtained the right to acquire, beneficial
ownership of 20% (or 10% for any person which has made an unsolicited
acquisition proposal) or more of the outstanding Shares) other than pursuant
to a Qualifying Offer (as defined below), (ii) the close of business on the
tenth business day (or such later date as may be determined by the Board of
Directors) following the commencement of a tender offer or exchange offer that
would result in a person becoming an Acquiring Person or (iii) a merger or
other business combination transaction (the earliest of such dates being the
"Distribution Date"), the Rights become exercisable and trade separately from
the Shares. A Qualifying Offer is an acquisition of Shares pursuant to a
tender offer or an exchange offer for all outstanding Shares at a price and on
terms determined by at least a majority of the members of the Board of
Directors who are not officers of the Company and who are not representatives,
nominees, or affiliates or associates of any person making the offer, after
receiving advice from one or more investment banking firms, to be fair to the
shareholders and otherwise in the best interest of the Company and its
shareholders, provided such offer is consummated at a time when the Rights are
redeemable.
In the event that a person becomes an Acquiring Person, each holder of a
Right (other than Rights held by an Acquiring Person which are voided) will
thereafter have the right to receive, upon exercise, Shares (and, in certain
circumstances other consideration) having a value equal to two times the
exercise price of the Right. In addition, in the event that, (i) the Company
is acquired in a merger or other business combination transaction in which the
Company is not the surviving corporation, (ii) the Company is a party to a
merger in which the Company is the surviving company, but its shares are
exchanged for other consideration or remain outstanding, but constitute less
than 50% of the shares outstanding immediately following consummation of the
merger (other than, with respect to clause (i) or (ii), a merger which follows
a Qualifying Offer), or (iii) more than 50% of the Company's assets or earning
power is sold or transferred, each holder of a Right (except Rights that
previously have been voided as set forth above) shall thereafter have the
right to receive, upon exercise, common stock of the acquiring company having
a value equal to two times the exercise price of the Right.
No Person shall become an Acquiring Person solely as a result of the Company
repurchasing Shares. Accordingly, if AlliedSignal purchases 9% of the
outstanding Shares pursuant to the Second Amended AlliedSignal Offer and prior
to the purchase of Shares hereunder, AlliedSignal will not become an Acquiring
Person after the purchase of Shares hereunder unless and until it purchases
Additional Shares representing 1% or more of the then outstanding Shares.
The Rights may be redeemed until ten business days following the day on
which any person becomes an Acquiring Person, provided, however, that the
Rights shall become nonredeemable until November 6, 1999 (when the Rights
Agreement will expire in accordance with its terms) if there is a change in
the Board of Directors occurring at any time following receipt of an
unsolicited acquisition proposal such that the "disinterested directors" (as
such term is defined in Section 1715(e) of the PBCL) in office prior to the
first such unsolicited acquisition proposal, together with their successors as
may be approved by the Board of Directors prior to their election, no longer
constitutes a majority of the Board of Directors or upon the adoption of a By-
law intended to limit the authority of the Board of Directors and/or confer
authority on any person other than the Board of Directors to take action with
respect to the Rights Agreement and the Rights issued thereunder.
At a meeting held on August 12, 1998, the Board of Directors of the Company
resolved that the Distribution Date shall not occur until the earlier of (i)
the day immediately prior to the date on which an Acquiring Person becomes
such and (ii) such date as may be determined by action of the Board of
Directors prior to the time any person or group becomes an Acquiring Person.
As a result of such action, the commencement of the Original AlliedSignal
Offer did not, in and of itself, result in the occurrence of a Distribution
Date. Consummation of the Second Amended AlliedSignal Offer will not, in and
of itself, result in the occurrence of a Distribution Date.
33
<PAGE>
The Board of Directors also authorized Amendment No. 2 to the Rights
Agreement, which ratified the appointment of ChaseMellon Shareholder Services
L.L.C., the Company's transfer agent, as the successor Rights Agent.
At a meeting held on August 20, 1998, the Board of Directors approved
Amendment No. 3 to the Rights Agreement (which is reflected in the summary
description set forth above) to provide that (i) unless the Rights are
redeemed prior thereto, a merger or other business combination transaction
will be a triggering event, irrespective of whether other events have
previously occurred to cause the Rights Certificates to have been distributed,
(ii) that the Rights shall become nonredeemable if there is a change in the
Board of Directors occurring at any time following receipt of an unsolicited
acquisition proposal such that the "disinterested directors" (as such term is
defined in Section 1715(e) of the PBCL) in office prior to the first such
unsolicited acquisition proposal, together with their successors as may be
approved by the Board of Directors prior to their election, no longer
constitutes a majority of the Board of Directors, (iii) the Qualifying Offer
exception shall be applicable unless and until the Rights become nonredeemable
under clause (ii) above, and (iv) the Rights Agreement generally may not be
amended when the Rights are not redeemable.
At the same meeting, the Board of Directors also adopted a resolution
providing that, following the expiration of the Rights Agreement on November
6, 1999, and for a period of 6 months thereafter, the Company shall neither
adopt nor have in place a shareholder rights plan.
At a meeting held on September 17, 1998, the Board of Directors approved
Amendment No. 4 to the Rights Agreement (which is reflected in the summary
description set forth above) which amends the definition of the term
"Acquiring Person" to reduce from 20% to 10% the threshold at which a person
who has made an unsolicited acquisition proposal may become an Acquiring
Person and thereby trigger a number of the provisions of the Rights Agreement.
Amendment No. 4 also provides that the Rights Agreement shall not be
amendable, the Rights shall not be redeemable and the Board of Directors will
not be entitled to exercise certain discretionary authority otherwise
available or take certain other actions, upon the adoption of a By-law
intended to limit the authority of the Board of Directors and/or confer
authority on any person other than the Board of Directors to take action with
respect to the Rights Agreement and the Rights issued thereunder. Amendment
No. 4 did not become effective until September 24, 1998, provided that, once
effective, Amendment No. 4 applied to all actions which shall have occurred on
or after September 17, 1998 (the date of the amendment). For a description of
certain litigation relating to the Rights Agreement, see Section 7.
The amendments to the Rights Agreement contained in Amendment No. 3 were
adopted to enhance AMP's ability to implement the Profit Improvement Plan
through November 6, 1999, the expiration date of the Rights Agreement, and
thereby protect the value expected to be generated by the Profit Improvement
Plan for AMP and its relevant constituencies, including its shareholders.
These amendments seek to accomplish this by making the rights nonredeemable
if, following receipt of an unsolicited acquisition proposal (such as the
AlliedSignal offer), there is a change in the Board of Directors of AMP, such
that directors who qualify as "disinterested directors" (as defined in Section
1715(e) of the PBCL) at the time of receipt of such a proposal, together with
their successors as may be approved by the Board of Directors in advance, no
longer constitute a majority of the Board of Directors. Prior to the adoption
of these amendments, the Rights could have been redeemed, even if there were a
change in a majority of the directors, with the concurrence of a majority of
the "continuing" directors. As a result, if the 17 AlliedSignal Nominees are
elected to the AMP Board of Directors, the Rights Agreement will become
nonredeemable and, as an ongoing agreement, will result in the conditions to
the Second Offer relating to the Rights Agreement not being satisfied prior to
November 6, 1999.
Based on the Board's confidence in management's ability to implement the
Profit Improvement Plan, the Board of Directors has determined that AMP would
not have a shareholder rights plan at any time during the six-month period
following November 6, 1999. This was intended to provide assurance to AMP
shareholders that once a substantial portion of the benefits of the Profit
Improvement Plan have been realized, the condition relating to the Rights
Agreement contained in the Second Amended AlliedSignal Offer or in the Second
Offer or any similar condition contained in any other offer which may be made
will be satisfied at such time.
34
<PAGE>
Amendment No. 4 to the Rights Agreement was adopted by the Board of
Directors in response to the Amended AlliedSignal Offer and the Rights Plan
Proposal, which the Board of Directors believes were intended to "end-run" the
amendments to the Rights Agreement previously adopted by the Board of
Directors at its August 20, 1998 meeting and reflected in Amendment No. 3. As
previously described, one of the proposals for which AlliedSignal intends to
seek consents is the Rights Plan Proposal, a proposal which would have the
effect of stripping the Board of Directors of all authority, rights and duties
with respect to the Rights Agreement and vest such authority, rights and
duties in individuals hand picked by AlliedSignal. By reducing the threshold
at which the Rights will be triggered and by making the Rights nonredeemable
and limiting the discretionary authority of directors if the Rights Plan
Proposal is adopted, Amendment No. 4, like Amendment No. 3, is intended to
enhance AMP's ability to implement the Profit Improvement Plan through
November 6, 1999, the expiration date of the Rights Agreement, and thereby
protect the value expected to be generated by the Profit Improvement Plan for
AMP and its relevant constituencies, including its shareholders.
The Board of Directors believes, based on the opinion of Pennsylvania
counsel, that the Rights Agreement, including Amendment No. 3 and Amendment
No. 4 described above, is valid under Pennsylvania law. In this regard, the
Board of Directors recognized that such actions were likely to be challenged
by AlliedSignal or others and that the ultimate validity of such amendments
may be reviewed and decided by a court. See Section 7.
The Rights are not currently exercisable and trade together with the Shares
associated therewith. Absent circumstances causing the Rights to become
exercisable or separately tradeable prior to the Expiration Date, the tender
of any Shares pursuant to the Offer will include the tender of the associated
Rights. No separate consideration will be paid for such Rights. Upon the
purchase of Shares by the Company pursuant to the Offer, the sellers of the
Shares so purchased will no longer own the Rights associated with such Shares.
The foregoing description of the Rights does not purport to be complete and
is qualified in its entirety by reference to the Rights Agreement and
Amendment No. 1 thereto, which are filed, respectively, as exhibits to the
Company's Annual Report on Form 10-K for the year ended December 31, 1994 and
the Company's Annual Report on Form 10-K for the year ended December 31, 1997,
each as filed with the Securities and Exchange Commission, and to Amendment
No. 2, Amendment No. 3 and Amendment No. 4 to the Rights Agreement which are
filed as Exhibits 12, 13 and 51, respectively, to the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 filed by the Company
in connection with the Original AlliedSignal Offer, the Amended AlliedSignal
Offer and the Second Amended AlliedSignal Offer, and are incorporated herein
by reference.
Additional Information. The Company is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is obligated to
file reports, proxy statements and other information with the Commission
relating to its business, financial condition and other matters. Such reports,
proxy statements and other information can be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549; at its regional offices located at
500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511; and 7 World
Trade Center, 13th Floor, New York, New York 10048. Copies of such material
may also be obtained by mail, upon payment of the Commission's customary
charges, from the Public Reference Section of the Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission also
maintains a Web site on the World Wide Web at http://www.sec.gov that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission. Such reports, proxy
statements and other information concerning the Company also can be inspected
at the offices of the NYSE, 20 Broad Street, New York, New York 10005, on
which the Shares are listed.
11. EFFECTS OF THE OFFER ON THE MARKET FOR SHARES; REGISTRATION UNDER THE
EXCHANGE ACT.
The Company's purchase of Shares pursuant to the Offer will reduce the
number of Shares that might otherwise trade publicly and is likely to reduce
the number of shareholders. Nonetheless, the Company believes that there will
still be a sufficient number of Shares outstanding and publicly traded
following the Offer to ensure
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a continued trading market in the Shares. Based on the published guidelines of
the NYSE, the Company does not believe that its purchase of Shares pursuant to
the Offer will cause its remaining Shares to be delisted from any such
exchange.
The Shares are currently "margin securities" under the rules of the Federal
Reserve Board. This has the effect, among other things, of allowing brokers to
extend credit on the collateral of the Shares. The Company believes that,
following the purchase of Shares pursuant to the Offer, the Shares will
continue to be "margin securities" for purposes of the Federal Reserve Board's
margin regulations.
The Shares are registered under the Exchange Act, which requires, among
other things, that the Company furnish certain information to its shareholders
and to the Commission and comply with the Commission's proxy rules in
connection with meetings of the Company's shareholders. The Company believes
that its purchase of Shares pursuant to the Offer will not result in the
Shares becoming subject to deregistration under the Exchange Act.
12. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS.
The Company is not aware of any license or regulatory permit material to its
business that might be adversely affected by its acquisition of Shares as
contemplated in the Offer or of any approval or other action by any government
or governmental, administrative or regulatory authority or agency, domestic or
foreign, that would be required for the Company's acquisition or ownership of
Shares as contemplated by the Offer. Should any such approval or other action
be required, the Company currently contemplates that it will seek such
approval or other action. The Company cannot predict whether it may determine
that it is required to delay the acceptance for payment of, or payment for,
Shares tendered pursuant to the Offer pending the outcome of any such matter.
There can be no assurance that any such approval or other action, if needed,
would be obtained or would be obtained without substantial conditions or that
the failure to obtain any such approval or other action might not result in
adverse consequences to the Company's business. The Company's obligations
under the Offer to accept for payment and pay for Shares are subject to
certain conditions. See Section 5.
See Section 7 for description of certain litigation relating to
AlliedSignal's tender offers and the Consent Solicitation and see Section 10
for certain information relating to the Rights Agreement.
13. CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES.
The following summary describes certain U.S. federal income tax consequences
relating to the Offer to holders of Shares that are U.S. Holders (as defined
below). The discussion contained in this summary is based upon the Internal
Revenue Code of 1986, as amended (the "Code"), Treasury regulations
promulgated thereunder, administrative pronouncements and judicial decisions,
all as in effect as of the date hereof and all of which are subject to change
(possibly with retroactive effect). This summary discusses only Shares held as
capital assets within the meaning of Section 1221 of the Code and does not
address all of the tax consequences that may be relevant to particular
shareholders in light of their personal circumstances or to certain types of
shareholders subject to special treatment under the Code (including, without
limitation, certain financial institutions, dealers in securities or
commodities, insurance companies, tax-exempt organizations, persons who hold
Shares as a position in a "straddle" or as a part of a "hedging" or
"conversion" transaction for U.S. federal income tax purposes or persons who
received their Shares through the exercise of employee stock options or
otherwise as compensation). In particular, the discussion of the consequences
of the Offer applies only to a U.S. Holder. For purposes of this summary, a
"U.S. Holder" is a holder of Shares that is (a) a citizen or resident of the
U.S., (b) a corporation, partnership or other entity created or organized in
or under the laws of the U.S., any state or any political subdivision thereof,
(c) an estate the income of which is subject to U.S. federal income taxation
regardless of its source, or (d) a trust whose administration is subject to
the primary supervision of a U.S. court and which has one or more U.S. persons
who have the authority to control all substantial decisions of the trust. Non-
U.S. Holders should consult their tax advisors regarding the U.S. federal
income tax consequences and any applicable foreign tax consequences of the
Offer and should also see Section 2 for a discussion of the
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applicable U.S. withholding rules and the potential for obtaining a refund of
all or a portion of any tax withheld. The summary also does not address the
state, local or foreign tax consequences of participating in the Offer. EACH
SHAREHOLDER SHOULD CONSULT ITS TAX ADVISOR AS TO THE PARTICULAR CONSEQUENCES
TO SUCH SHAREHOLDER OF PARTICIPATING IN THE OFFER.
U.S. Holders Who Receive Cash Pursuant to the Offer. The purchase of a U.S.
Holder's Shares by the Company pursuant to the Offer will be a taxable
transaction for U.S. federal income tax purposes. As a consequence of such
purchase, a U.S. Holder will, depending on such U.S. Holder's particular
circumstances, be treated either as having sold such U.S. Holder's Shares or
as having received a dividend distribution from the Company, with the tax
consequences described below.
Under Section 302 of the Code, a U.S. Holder whose Shares are purchased by
the Company pursuant to the Offer will be treated as having sold such U.S.
Holder's Shares, and thus will recognize capital gain or loss if such purchase
(a) results in a "complete redemption" of such U.S. Holder's equity interest
in the Company, (b) results in a "substantially disproportionate" redemption
with respect to such U.S. Holder or (c) is "not essentially equivalent to a
dividend" with respect to such U.S. Holder, each as discussed below. In
applying each of the Section 302 tests, U.S. Holders must take into account
not only Shares that they actually own but also Shares they are deemed to own
under the constructive ownership rules of Section 318 of the Code. Pursuant to
the constructive ownership rules, a U.S. Holder is deemed to own any Shares
that are owned (actually and in some cases constructively) by certain related
individuals and entities as well as Shares that the U.S. Holder has the right
to acquire by exercise of an option or by conversion or exchange of a
security. Due to the factual nature of the Section 302 tests described below,
U.S. Holders should consult their tax advisors to determine whether the
Company's purchase of such U.S. Holder's Shares pursuant to the Offer
qualifies for sale treatment in their particular circumstances.
If a U.S. Holder sells Shares to persons other than the Company at or about
the time such U.S. Holder also sells Shares to the Company pursuant to the
Offer, and such sales effected by such U.S. Holder are part of an overall plan
to reduce or terminate such U.S. Holder's proportionate interest in the
Company, then such sales to persons other than the Company may, for U.S.
federal income tax purposes, be integrated with such U.S. Holder's sale of
Shares pursuant to the Offer and, if integrated, should be taken into account
in determining whether such U.S. Holder satisfies any of the Section 302 tests
described below. U.S. Holders should consult their tax advisors regarding the
treatment of other sales of Shares which may be integrated with the purchase
of such U.S. Holders' Shares by the Company pursuant to the Offer.
The purchase of a U.S. Holder's Shares by the Company pursuant to the Offer
will result in a "complete redemption" of such U.S. Holder's equity interest
in the Company if all of the Shares (a) actually owned by such U.S. Holder are
sold pursuant to the Offer and (b) constructively owned by such U.S. Holder
are sold pursuant to the Offer or, with respect to Shares owned by certain
related individuals, such U.S. Holder effectively waives, in accordance with
Section 302(c) of the Code, attribution of such Shares which otherwise would
be considered to be constructively owned by such U.S. Holder. U.S. Holders
wishing to satisfy the "complete redemption" test through waiver of such
constructive ownership rules should consult their tax advisors.
The purchase of a U.S. Holder's Shares by the Company pursuant to the Offer
will result in a "substantially disproportionate" redemption with respect to
such U.S. Holder if, among other things, the percentage of the then
outstanding Shares (which for these purposes will not include any Shares owned
by the Flexitrust) owned by such U.S. Holder immediately after such purchase
is less than 80% of the percentage of the Shares owned by such U.S. Holder
immediately before such purchase (treating as outstanding all Shares purchased
pursuant to the Offer).
The purchase of a U.S. Holder's Shares by the Company pursuant to the Offer
will be treated as "not essentially equivalent to a dividend" if the reduction
in such U.S. Holder's proportionate interest in the Company as a result of
such purchase constitutes a "meaningful reduction" given such U.S. Holder's
particular facts and circumstances. In certain circumstances, even a small
reduction in a U.S. Holder's proportionate interest may satisfy this test.
Based on a published Internal Revenue Service ruling the Company believes that
any reduction
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in the percentage interest of a U.S. Holder whose relative stock interest in a
publicly held corporation is minimal (e.g., an interest of less than 1%) and
who exercises no control over corporate affairs should constitute a
"meaningful reduction." U.S. Holders should consult their tax advisors as to
the application of this test in their particular circumstances.
If a U.S. Holder meets any of the tests described above, such U.S. Holder
will be treated as if it sold its Shares to the Company and will recognize
capital gain or loss equal to the difference between the amount of cash
received pursuant to the Offer and such U.S. Holder's adjusted tax basis in
the Shares surrendered in exchange therefor. Such gain or loss will be long-
term capital gain or loss if the U.S. Holder's holding period for such Shares
exceeds one year as of the date of purchase by the Company pursuant to the
Offer. In the case of U.S. Holders that are individuals and certain trusts,
long-term capital gains will be subject to a maximum regular U.S. federal
income tax rate of 20%. Certain limitations apply to the deductibility of
capital losses by U.S. Holders. Gain or loss must be determined separately for
each block of Shares (i.e., Shares acquired at the same cost in a single
transaction) that is purchased by the Company from a U.S. Holder pursuant to
the Offer. A U.S. Holder may be able to designate (generally through its
broker) which blocks of Shares are tendered pursuant to the Offer if less than
all of such U.S. Holder's Shares are tendered pursuant to the Offer, and the
order in which different blocks would be purchased by the Company in the event
of proration pursuant to the Offer. U.S. Holders should consult their tax
advisors concerning the mechanics and desirability of such a designation.
If a U.S. Holder does not satisfy any of the Section 302 tests described
above, the purchase of a U.S. Holder's Shares by the Company pursuant to the
Offer will not be treated as a sale under Section 302 of the Code with respect
to such U.S. Holder. Instead, amounts received by a U.S. Holder with respect
to the purchase of its Shares by the Company pursuant to the Offer will be
treated as a dividend distribution to such U.S. Holder with respect to its
Shares under Section 301 of the Code, taxable at ordinary income tax rates, to
the extent of such U.S. Holder's share of the Company's current and
accumulated earnings and profits (as defined for U.S. federal income tax
purposes). To the extent such amounts exceed such U.S. Holder's share of the
Company's current and accumulated earnings and profits, the excess first will
be treated as a tax-free return of capital to the extent of such U.S. Holder's
adjusted tax basis in its Shares and any remainder will be treated as capital
gain (which will be long-term capital gain if such U.S. Holder's holding
period in its purchased Shares exceeds one year as of the date of purchase by
the Company pursuant to the Offer). The Company anticipates that its current
and accumulated earnings and profits should be sufficient to cover the amount
of any payment made by the Company to a U.S. Holder to purchase such U.S.
Holder's Shares pursuant to the Offer. To the extent that a purchase of a U.S.
Holder's Shares by the Company pursuant to the Offer is treated as the receipt
by such U.S. Holder of a dividend, such U.S. Holder's adjusted tax basis in
the purchased Shares will be added to any Shares retained by the U.S. Holder
(and may be lost if such U.S. Holder does not actually retain any stock
ownership in the Company).
In the case of a corporate U.S. Holder, to the extent that any amounts
received pursuant to the Offer are treated as a dividend (and taxable as
ordinary income), such dividend income may be eligible for the dividends-
received deduction. The dividends-received deduction is subject to certain
limitations and may not be available if a corporate U.S. Holder does not
satisfy certain holding period requirements with respect to its Shares or if
its Shares are treated as "debt financed portfolio stock" within the meaning
of Section 246A of the Code. Additionally, if a dividends-received deduction
is available, the dividend may be treated as an "extraordinary dividend"
within the meaning of section 1059 of the Code. Corporate U.S. Holders should
consult their tax advisors regarding the tax consequences of dividend
treatment in their particular circumstances.
The Company cannot predict whether or the extent to which the Offer will be
oversubscribed. If the Offer is oversubscribed, proration of tenders pursuant
to the Offer will cause the Company to accept fewer Shares than are tendered.
Therefore, no assurance can be given that the Company will purchase a
sufficient number of a U.S. Holder's Shares pursuant to the Offer to ensure
that such U.S. Holder receives sale treatment, rather than dividend treatment,
for U.S. federal income tax purposes pursuant to the rules discussed above.
Shareholders Who Do Not Receive Cash Pursuant to the Offer. Shareholders
whose Shares are not purchased by the Company pursuant to the Offer will not
incur any tax liability as a result of the consummation of the Offer.
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THE TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY.
EACH SHAREHOLDER IS URGED TO CONSULT ITS TAX ADVISOR TO DETERMINE THE
PARTICULAR TAX CONSEQUENCES TO IT OF THE OFFER, INCLUDING THE APPLICABILITY
AND EFFECT OF STATE, LOCAL AND FOREIGN TAX LAWS.
14. EXTENSION OF THE OFFER; TERMINATION; AMENDMENTS.
The Company expressly reserves the right, in its sole discretion, at any
time and from time to time, and regardless of whether or not any of the events
set forth in Section 5 shall have occurred or shall be deemed by the Company
to have occurred, to extend the period of time during which the Offer is open
and thereby delay acceptance for payment of, and payment for, any Shares by
giving oral or written notice of such extension to the Depositary and making a
public announcement thereof. The Company also expressly reserves the right, in
its sole discretion, to terminate the Offer and not accept for payment or pay
for any Shares not theretofore accepted for payment or paid for or, subject to
applicable law, to postpone payment for Shares upon the occurrence of any of
the conditions specified in Section 5 hereof by giving oral or written notice
of such termination or postponement to the Depositary and making a public
announcement thereof. Additionally, in certain circumstances, if the Company
waives any of the conditions of the Offer set forth in Section 5, it may be
required to extend the Expiration Date of the Offer. The Company's reservation
of the right to delay payment for Shares that it has accepted for payment is
limited by Rule l3e-4(f)(5) promulgated under the Exchange Act, which requires
that the Company must pay the consideration offered or return the Shares
tendered promptly after termination or withdrawal of a tender offer. Subject
to compliance with applicable law, the Company further reserves the right, in
its sole discretion, and regardless of whether any of the events set forth in
Section 5 shall have occurred or shall be deemed by the Company to have
occurred, to amend the Offer in any respect (including, without limitation, by
decreasing or increasing the consideration offered in the Offer to holders of
Shares or by decreasing or increasing the number of Shares being sought in the
Offer). Amendments to the Offer may be made at any time and from time to time
effected by public announcement thereof, such announcement, in the case of an
extension, to be issued no later than 9:00 a.m., New York City time, on the
next business day after the last previously scheduled or announced Expiration
Date. Any public announcement made pursuant to the Offer will be disseminated
promptly to shareholders in a manner reasonably designed to inform
shareholders of such change. Without limiting the manner in which the Company
may choose to make any public announcement, except as provided by applicable
law (including Rule l3e-4(e)(2) promulgated under the Exchange Act), the
Company shall have no obligation to publish, advertise or otherwise
communicate any such public announcement other than by making a release to the
Dow Jones News Service.
If the Company makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, the Company will extend the Offer to the extent required by Rules 13e-
4(d)(2) and 13e-4(e)(2) promulgated under the Exchange Act, which require that
the minimum period during which an offer must remain open following material
changes in the terms of the offer or information concerning the offer (other
than a change in price or a change in percentage of securities sought) will
depend upon the facts and circumstances, including the relative materiality of
such terms or information. If (i) the Company increases or decreases the price
to be paid for Shares, the Company increases the number of Shares being sought
and such increase in the number of Shares being sought exceeds 2% of the
outstanding Shares, or the Company decreases the number of Shares being
sought, and (ii) the Offer is scheduled to expire at any time earlier than the
expiration of a period ending on the tenth business day from, and including,
the date that notice of such increase or decrease is first published, sent or
given, the Offer will be extended until the expiration of such period of ten
business days.
15. FEES AND EXPENSES.
The Company has retained CSFB and DLJ to act as the Dealer Managers in
connection with the Offer. As described below, each of CSFB and DLJ has been
retained by the Company to advise with respect to AlliedSignal's tender offer.
Each of CSFB and DLJ will receive a separate fee of $175,000 and $75,000,
respectively, which fees will be credited against any fees payable pursuant to
the CSFB Engagement Letter (as defined below) and the DLJ Engagement Letter
(as defined below), respectively, for its services as a Dealer
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Manager. The Company has also agreed to reimburse CSFB and DLJ for certain
expenses incurred in connection with the Offer, including out-of-pocket
expenses and reasonable attorney's fees and disbursements, and to indemnify
CSFB and DLJ against certain liabilities in connection with the Offer,
including certain liabilities under the federal securities laws. The Company
also has retained Innisfree M&A Incorporated as Information Agent and
ChaseMellon Shareholder Services L.L.C. as Depositary in connection with the
Offer. The Information Agent and the Depositary will receive reasonable and
customary compensation for their services. The Company will also reimburse the
Information Agent and the Depositary for out-of-pocket expenses, including
reasonable attorneys' fees, and has agreed to indemnify the Information Agent
and the Depositary against certain liabilities in connection with the Offer,
including certain liabilities under the federal securities laws. The Dealer
Managers and Information Agent may contact shareholders by mail, telephone,
telex, telegraph and personal interviews, and may request brokers, dealers and
other nominee shareholders to forward materials relating to the Offer to
beneficial owners. Neither the Information Agent nor the Depositary has been
retained to make solicitations or recommendations in connection with the
Offer.
The Company will not pay fees or commissions to any broker, dealer,
commercial bank, trust company or other person (other than the Dealer
Managers) for soliciting any Shares pursuant to the Offer. The Company will,
however, on request, reimburse such persons for customary handling and mailing
expenses incurred in forwarding materials in respect of the Offer to the
beneficial owners for which they act as nominees. No such broker, dealer,
commercial bank or trust company has been authorized to act as the Company's
agent for purposes of the Offer. The Company will pay (or cause to be paid)
any stock transfer taxes on its purchase of Shares, except as otherwise
provided in Instruction 7 of the Letter of Transmittal.
AMP had retained CSFB to act as its financial advisor with respect to
AlliedSignal's tender offer pursuant to a letter agreement, dated August 5,
1998 (the "CSFB Engagement Letter"), between CSFB and AMP. The CSFB Engagement
Letter provides for the payment to CSFB of an initial advisory fee of
$2,500,000, payable upon execution of the CSFB Engagement Letter (the "Initial
Advisory Fee"), plus a fee of $5,000,000, payable every 90 calendar days (not
to exceed $20,000,000 in the aggregate), provided that AlliedSignal does not
acquire more than 50% of the outstanding voting securities of AMP during such
90 day period, with the first payment payable 90 days after the date of the
CSFB Engagement Letter (the "Quarterly Advisory Fees"). In addition, if during
the term of the CSFB Engagement Letter or within two years after termination
of the CSFB Engagement Letter by AMP, AMP or substantially all of its assets
are acquired by AlliedSignal or any third party or AMP enters into an
agreement providing for such an acquisition, a transaction fee equal to 0.3%
of the Aggregate Consideration (as defined below) involved in the sale (the
"Transaction Fee") shall be payable to CSFB. If during the term of the CSFB
Engagement Letter or within two years after termination of the CSFB Engagement
Letter by AMP, in response to AlliedSignal's tender offer another transaction
is consummated, a customary transaction fee shall be payable to CSFB as
determined by mutual agreement between CSFB and AMP (the "Alternate
Transaction Fee") based on the Aggregate Consideration of the transaction. The
CSFB Engagement Letter also provides for the payment to CSFB of a fee of
$2,500,000 upon CSFB rendering, whether in oral or written form, an opinion as
to the adequacy from a financial point of view of the consideration offered in
AlliedSignal's tender offer (the "Opinion Fee"). The Initial Advisory Fee and
the Opinion Fee will be credited (to the extent paid) against any fees payable
pursuant to the Quarterly Advisor Fees; the Initial Advisory Fee, the Opinion
Fee and the Quarterly Advisory Fees will be credited (to the extent paid)
against any fees payable pursuant to the Transaction Fee; and the Initial
Advisory Fee will be credited (to the extent paid) against any fees payable
pursuant to the Alternate Transaction Fee. All fees and expenses payable to
CSFB pursuant to the CSFB Engagement Letter shall be net of any applicable
withholding and similar taxes. "Aggregate Consideration" is defined in the
CSFB Engagement Letter to mean the total fair market value (on the date of
payment) of all consideration (including cash, securities, property, all debt
remaining on AMP's financial statements and other indebtedness and obligations
assumed and any other form of consideration) received or receivable, directly
or indirectly, by AMP or its shareholders in connection with the sale.
In addition to the fees described above, AMP has agreed to reimburse CSFB
for CSFB's out-of-pocket expenses, including fees and expenses of CSFB's legal
counsel, if any, and any other advisor retained by CSFB
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(which, except in the case of legal counsel, shall only be retained with the
prior approval of AMP), resulting from or arising out of the CSFB Engagement
Letter. AMP has also agreed to indemnify CSFB and its affiliates against
certain liabilities incurred in connection with its performance under the CSFB
Engagement Letter.
In addition to the services to be provided by CSFB pursuant to the CSFB
Engagement Letter, AMP has agreed to (i) offer CSFB the role of lead arranger
or principal counterparty, as applicable, in connection with any external
financing, foreign exchange or derivatives transaction undertaken by AMP in
connection with services provided by CSFB pursuant to the CSFB Engagement
Letter; (ii) offer CSFB the role of lead managing underwriter or exclusive
placement agent, as the case may be, in connection with an offering of
securities to the public or a private placement of securities during the term
of the CSFB Engagement Letter; and (iii) continue to retain CSFB as its share
repurchase agent. The fees and terms applicable to the performance of any such
additional services by CSFB shall be set forth in separate letter agreements
containing terms and provisions mutually agreed upon by CSFB and AMP.
AMP had retained DLJ to act as its financial advisor for a period of twelve
months with respect to AlliedSignal's tender offer and the Consent
Solicitation pursuant to a letter agreement, dated August 26, 1998 (the "DLJ
Engagement Letter"), between DLJ and AMP. The DLJ Engagement Letter provides
for the payment to DLJ of an initial advisory fee of $750,000, payable upon
execution of the DLJ Engagement Letter (the "DLJ Initial Advisory Fee"), plus
a fee of $1,500,000, payable every 90 calendar days (not to exceed $6,000,000
in the aggregate) with the first payment payable 90 days after the date of the
DLJ Engagement Letter (the "DLJ Quarterly Advisory Fees"); provided, however,
that no additional DLJ Quarterly Advisory Fees shall be payable after a
Transaction (as defined below) has been consummated. In addition, if during
the term of the DLJ Engagement Letter or within two years after expiration or
termination of the DLJ Engagement Letter AMP consummates a sale, merger,
consolidation or any other business combination with AlliedSignal or any third
party, in one or a series of transactions, involving all or a substantial
amount of the business, securities or assets of AMP (a "Transaction") or
enters into an agreement providing for a Transaction which is subsequently
consummated, a transaction fee equal to 0.09% of the Transaction Consideration
(as defined below) involved in the Transaction (the "DLJ Transaction Fee")
shall be payable to DLJ. The DLJ Initial Advisory Fee will be credited (to the
extent paid) against any fees payable pursuant to the DLJ Quarterly Advisory
Fees; and the DLJ Initial Advisory Fee and the DLJ Quarterly Advisory Fees
will be credited (to the extent paid) against any fees payable pursuant to the
DLJ Transaction Fee. The term "Transaction Consideration" is defined in the
DLJ Engagement Letter to mean the total fair market value (on the date of
payment) of all consideration (including cash, securities, property, all debt
remaining on AMP's financial statements and other indebtedness and obligations
assumed and any other form of consideration) received or receivable, directly
or indirectly, by AMP or its shareholders in connection with a Transaction.
If during the term of the DLJ Engagement Letter or within two years after
the expiration or termination of the DLJ Engagement Letter, in response to
AlliedSignal's tender offer, AMP shall (i) conduct a repurchase of a
significant amount of its securities, a recapitalization or a spin-off, split-
off or other extraordinary dividend of cash, securities or other assets to its
shareholders or (ii) acquire all or a substantial amount of the business,
securities or assets of another company, in one or a series of transactions,
by purchase, merger, consolidation or any other business combination, a
customary transaction fee shall be payable to DLJ as shall be determined by
mutual agreement between DLJ and AMP based on the total consideration paid or
payable in such transaction and such other factors as AMP and DLJ shall
mutually agree.
In the event of a change in the composition of the Board of Directors such
that a majority or more of the members of the Board of Directors holding such
position were not nominated by the directors in office as of the date of the
DLJ Engagement Letter, all remaining unpaid DLJ Quarterly Advisory Fees shall
immediately become due and payable. In such event, DLJ shall continue to be
entitled to a DLJ Transaction Fee.
In addition to the fees described above, AMP has agreed to reimburse DLJ for
DLJ's out-of-pocket expenses (including fees and expenses of counsel) incurred
by DLJ in connection with its engagement under the DLJ Engagement Letter. AMP
has also agreed to indemnify DLJ and its affiliates against certain
liabilities incurred in connection with its performance under the DLJ
Engagement Letter.
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In addition, AMP has agreed to (i) offer DLJ the role of co-arranger or
counterparty, as applicable, in connection with any external financing,
foreign exchange or derivatives transactions undertaken by AMP in connection
with services provided by DLJ pursuant to the DLJ Engagement Letter; and (ii)
offer DLJ the role of co-managing underwriter, co-placement agent, co-initial
purchaser or co-dealer manager, as the case may be, in connection with any
offering of debt or equity securities to the public, any private placement of
debt or equity securities or any tender offer or exchange offer for debt or
equity securities during the term of the DLJ Engagement Letter. DLJ is not
obligated, however, to accept such role. The fees and terms applicable to the
performance of any such additional services by DLJ shall be set forth in
separate letter agreements containing terms and provisions mutually agreed
upon by DLJ and AMP. Certain additional fees are payable to affiliates of CSFB
and DLJ in connection with the Financing.
16. MISCELLANEOUS.
The Company is not aware of any jurisdiction where the making of the Offer
is not in compliance with applicable law. If the Company becomes aware of any
jurisdiction where the making of the Offer is not in compliance with any valid
applicable law, the Company will make a good faith effort to comply with such
law. If, after such good faith effort, the Company cannot comply with such
law, the Offer will not be made to (nor will tenders be accepted from or on
behalf of) the holders of Shares residing in such jurisdiction. In any
jurisdiction the securities or blue sky laws of which require the Offer to be
made by a licensed broker or dealer, the Offer is being made on the Company's
behalf by the Dealer Managers or one or more registered brokers or dealers
licensed under the laws of such jurisdiction.
Pursuant to Rule 13e-4 promulgated under the Exchange Act, the Company has
filed with the Commission an Issuer Tender Offer Statement on Schedule 13E-4
(the "Schedule 13E-4") which contains additional information with respect to
the Offer. The Schedule 13E-4, including the exhibits and any amendments
thereto, may be examined, and copies may be obtained, at the same places and
in the same manner as is set forth in Section 10 with respect to information
concerning the Company.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF THE COMPANY OR THE DEALER MANAGERS IN CONNECTION
WITH THE OFFER OTHER THAN THOSE CONTAINED IN THIS OFFER TO PURCHASE OR IN THE
RELATED LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR THE DEALER MANAGERS.
AMP Incorporated
October 9, 1998
42
<PAGE>
SCHEDULE I
CERTAIN TRANSACTIONS INVOLVING SHARES
Except as set forth below, based upon the Company's records and upon
information provided to the Company by its directors, executive officers,
associates and subsidiaries, neither the Company nor any of its associates or
subsidiaries or persons controlling the Company (of which the Company believes
there are none) nor, to the best of the Company's knowledge, any of the
directors or executive officers of the Company, nor any associates or
subsidiaries of such directors or executive officers, has effected any
transactions in the Shares during the 40 business days prior to October 9,
1998.
I. SALES BY THE COMPANY.
Pursuant to a stock purchase agreement, AMP is selling to the Flexitrust on
or about the commencement date of the Offer an aggregate of 25 million
authorized but unissued shares of Common Stock.
II. OPEN MARKET TRANSACTIONS.
Set forth below is a list of open market transactions in Shares conducted by
executive officers and directors of AMP within the past 40 business days:
1. Barbara Hackman Franklin purchased 10.26 Shares on September 1, 1998,
through AMP's Dividend Reinvestment Plan, at a price of $37.09 per share.
2. Takeo Shiina purchased .75 Shares on September 1, 1998, through AMP's
Dividend Reinvestment Plan, at a price of $37.09 per share.
3. Thomas DiClemente purchased 5.125 Shares on September 1, 1998, through
AMP's Dividend Reinvestment Plan, at a price of $37.09 per share.
4. Rudolf Gassner purchased 15.01 Shares on September 1, 1998, through
AMP's Dividend Reinvestment Plan, at a price of $37.09 per share.
5. John E. Gurski, as Custodian for his son Kevin, purchased .6699 Shares
on September 1, 1998, through AMP's Dividend Reinvestment Plan, at a price
of $37.09 per share.
6. David Henschel purchased 23.30 Shares on September 1, 1998, through
AMP's Dividend Reinvestment Plan, at a price of $37.09 per share.
7. John H. Kegel purchased 34.72 Shares on September 1, 1998, through
AMP's Dividend Reinvestment Plan, at a price of $37.09 per share.
8. Mark E. Lang purchased 172.0436 Shares on August 8, 1998, pursuant to
a voluntary cash payment through AMP's Dividend Reinvestment Plan, at a
price of $29.0625 per share. Mark E. Lang purchased .0075 Shares on
September 1, 1998, through AMP's Dividend Reinvestment Plan, at a price of
$37.09 per share.
9. Nazario Proietto purchased 30.13 Shares on September 1, 1998, through
AMP's Dividend Reinvestment Plan, at a price of $37.09 per share.
10. William S. Urkiel purchased 77.8889 Shares on September 1, 1998,
through AMP's Dividend Reinvestment Plan, at a price of $37.09 per share.
III. 401(K) FUNDING.
Set forth below are the aggregate number of Shares, as of the date
indicated, which were purchased through periodic payments to the Company's
401(k) plan for executive officers and directors of AMP:
1. As of August 31, 1998, the aggregate number of Shares purchased
through periodic payments to the Company's 401(k) plan for William J.
Hudson, Jr. was 1,940.31.
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2. As of August 31, 1998, the aggregate number of Shares purchased
through periodic payments to the Company's 401(k) plan for Robert Ripp was
17.09.
3. As of August 31, 1998, the aggregate number of Shares purchased
through periodic payments to the Company's 401(k) plan for Richard P. Clark
was 3,565.60.
4. As of August 31, 1998, the aggregate number of Shares purchased
through periodic payments to the Company's 401(k) plan for Herbert M. Cole
was 17.09.
5. As of August 31, 1998, the aggregate number of Shares purchased
through periodic payments to the Company's 401(k) plan for Thomas J.
DiClemente was 242.68.
6. As of August 31, 1998, the aggregate number of Shares purchased
through periodic payments to the Company's 401(k) plan for Rudolf Gassner
was 17.09.
7. As of August 31, 1998, the aggregate number of Shares purchased
through periodic payments to the Company's 401(k) plan for Charles W.
Goonrey was 17.09.
8. As of August 31, 1998, the aggregate number of Shares purchased
through periodic payments to the Company's 401(k) plan for John E. Gurski
was 703.74.
9. As of August 31, 1998, the aggregate number of Shares purchased
through periodic payments to the Company's 401(k) plan for David F.
Henschel was 2,058.47.
10. As of August 31, 1998, the aggregate number of Shares purchased
through periodic payments to the Company's 401(k) plan for John H. Kegel
was 2,076.73.
11. As of August 31, 1998, the aggregate number of Shares purchased
through periodic payments to the Company's 401(k) plan for Mark E. Lang was
1,713.20.
12. As of August 31, 1998, the aggregate number of Shares purchased
through periodic payments to the Company's 401(k) plan for Philippe
Lemaitre was 245.49.
13. As of August 31, 1998, the aggregate number of Shares purchased
through periodic payments to the Company's 401(k) plan for Joseph C.
Overbaugh was 1,289.19.
14. As of August 31, 1998, the aggregate number of Shares purchased
through periodic payments to the Company's 401(k) plan for Nazario Proietto
was 17.09.
15. As of August 31, 1998, the aggregate number of Shares purchased
through periodic payments to the Company's 401(k) plan for William S.
Urkiel was 17.09.
IV. DEFERRED COMPENSATION PLANS.
The following are transactions in phantom shares (which have no voting or
tendering rights) effected through AMP's deferred compensation plans by
directors and executive officers within the past 40 business days.
1. Ralph DeNunzio purchased 23.3 Shares on September 1, 1998 pursuant to
a dividend reinvestment under the Deferred Accumulation Plan at a price of
$37.00 per share.
2. Barbara Hackman Franklin purchased 13.8 Shares on September 1, 1998,
pursuant to a dividend reinvestment under the Deferred Accumulation Plan at
a price of $37.00 per share.
3. Joseph Hixon purchased 109.2 Shares on August 24, 1998, at a price of
$38.1563 per share and 107.2 Shares on September 22, 1998 at a price of
38.875. Joseph Hixon purchased 38.8 Shares on September 1, 1998, pursuant
to a dividend reinvestment at a price of $37.00, and 23.2 Shares on
September 1, 1998, pursuant to a dividend reinvestment under the Deferred
Accumulation Plan at a price of $37.00 per share.
4. William J. Hudson, Jr. purchased 4.5 Shares on August 15, 1998, at a
price of $39.3125 per share, 4.97 Shares on August 31, 1998, at a price of
$35.6875, 4.2 Shares on September 15, 1998 at a price of $42.125 per share,
and 4.7 Shares on September 30, 1998 at a price of $37.75. On September 1,
1998, William J. Hudson purchased 231.6 shares at a price of $38.00 per
share pursuant to a dividend reinvestment and 638.5 Shares at a price of
$38.00 per share pursuant to a dividend reinvestment in Performance
Restricted Shares.
S-2
<PAGE>
5. Joseph Magliochetti purchased 56.8 Shares on August 24, 1998, at a
price of $38.1563, and 55.7 Shares on September 22, 1998, at a price of
$38.875. On September 1, 1998, Joseph Magliochetti purchased 9.6 Shares at
a price of $37.00 pursuant to a dividend reinvestment, and 6.8 Shares at a
price of $37.00 under the Deferred Accumulation Plan.
6. Jerome J. Meyer purchased 135.4 Shares on August 24, 1998, at a price
of $38.1563, and 158.6 Shares on September 22, 1998 at a price of $38.875.
On September 1, 1998, Jerome J. Meyer purchased 17.2 Shares at a price of
$37.00 pursuant to a dividend reinvestment and 6.8 Shares at a price of
$37.00 under the Deferred Accumulation Plan.
7. John C. Morley purchased 135.4 Shares on August 24, 1998 at a price of
$38.1563 and 132.9 Shares on September 22, 1998 at a price of $38.875. On
September 1, 1998, John C. Morley purchased 34.0 Shares at a price of
$37.00 pursuant to a dividend reinvestment and 18.5 Shares at a price of
$37.00 pursuant to a dividend reinvestment under the Deferred Accumulation
Plan.
8. Takeo Shiina purchased 54.6 Shares on August 24, 1998 at a price of
$38.1563 and 53.6 Shares on September 22, 1998 at a price of $38.875. Takeo
Shiina purchased 11.9 Shares at a price of $37.00 pursuant to a dividend
reinvestment and 9.1 Shares at a price of $37.00 pursuant to a dividend
reinvestment under the Deferred Accumulation Plan.
9. Richard P. Clark purchased 22.6 Shares on August 15, 1998 at a price
of $39.3125 per share, 24.9 Shares on August 31, 1998 at a price of
$35.6875 per share, 21.1 Shares on September 15, 1998 at a price of $42.125
per share, and 23.51 Shares on September 30, 1998 at a price of $37.75 per
share. On September 1, 1998, Richard P. Clark purchased 17.5 Shares at a
price of $38.00 pursuant to a dividend reinvestment and 81.1 Shares at a
price of $38.00 pursuant to a dividend reinvestment in Performance
Restricted Shares.
10. Herbert M. Cole purchased 1.5 Shares on August 15, 1998 at a price of
$39.3125 per share, 1.7 Shares on August 31, 1998 at a price of $35.6875
per share, 1.7 Shares on September 15, 1998 at a price of $42.125 per
share, and 1.9 Shares on September 30, 1998 at a price of $37.75 per share.
On September 1, 1998, Herbert M. Cole purchased 101.6 Shares at a price of
$38.00 pursuant to a dividend reinvestment and 340.7 Shares at a price of
$38.00 pursuant to a dividend reinvestment in Performance Restricted
Shares.
11. Thomas J. DiClemente purchased 0.9 Shares on August 15, 1998 at a
price of $39.3125 per share, 0.99 Shares on August 31, 1998 at a price of
$35.6875 per share, 0.8 Shares on September 15, 1998 at a price of $42.125
per share, and 0.9 Shares on September 30, 1998 at a price of $37.75 per
share. On September 1, 1998, Thomas J. DiClemente purchased 52.5 Shares at
a price of $38.00 pursuant to a dividend reinvestment and 110.5 Shares at a
price of $38.00 pursuant to a dividend reinvestment in Performance
Restricted Shares.
12. Rudolf Gassner purchased 0.9 Shares on August 15, 1998 at a price of
$39.3125 per share, 1.0 Shares on August 31, 1998 at a price of $35.6875
per share, 0.9 Shares on September 15, 1998 at a price of $42.125 per
share, and 1.0 Shares on September 30, 1998 at a price of $37.75 per share.
On September 1, 1998, Rudolf Gassner purchased 26.2 Shares at a price of
$38.00 pursuant to a dividend reinvestment and 105.4 Shares at a price of
$38.00 pursuant to a dividend reinvestment in Performance Restricted
Shares.
13. Charles W. Goonrey purchased 21.96 Shares on August 15, 1998 at a
price of $39.3125 per share, 24.2 Shares on August 31, 1998 at a price of
$35.6875 per share, 20.5 Shares on September 15, 1998 at a price of $42.125
per share, and 22.87 Shares on September 30, 1998 at a price of $37.75 per
share. On September 1, 1998, Charles W. Goonrey purchased 18.8 Shares at a
price of $38.00 pursuant to a dividend reinvestment.
14. Juergen W. Gromer purchased 152.3 shares on September 1, 1998
pursuant to a dividend reinvestment in Performance Restricted Shares.
15. John E. Gurski purchased 38.4 Shares on August 15, 1998 at a price of
$39.3125 per share, 42.3 Shares on August 31, 1998 at a price of $35.6875
per share, 35.8 Shares on September 15, 1998 at a price of $42.125 per
share, and 39.97 Shares on September 30, 1998 at a price of $37.75 per
share. On September 1, 1998, John E. Gurski purchased 83.5 Shares at a
price of $38.00 pursuant to a dividend reinvestment and 337.3 Shares at a
price of $38.00 pursuant to a dividend reinvestment in Performance
Restricted Shares.
S-3
<PAGE>
16. David F. Henschel purchased 7.5 Shares on September 1, 1998 at a
price of $38.00 pursuant to a dividend reinvestment.
17. John H. Kegel purchased 50.4 Shares on September 1, 1998 at a price
of $38.00 pursuant to a dividend reinvestment in Performance Restricted
Shares.
18. Mark E. Lang purchased 0.1 Shares on August 15, 1998 at a price of
$39.3125 per share, 0.1 Shares on August 31, 1998 at a price of $35.6875
per share, 0.1 Shares on September 15, 1998 at a price of $42.125 per
share, and 0.1 Shares on September 30, 1998 at a price of $37.75 per share.
On September 1, 1998, Mark E. Lang purchased 0.01 Shares at a price of
$38.00 pursuant to a dividend reinvestment.
19. Philippe Lemaitre purchased 147.5 Shares on August 15, 1998 at a
price of $39.3125 per share, 162.5 Shares on August 31, 1998 at a price of
$35.6875 per share, 137.6 Shares on September 15, 1998 at a price of
$42.125 per share, and 153.59 Shares on September 30, 1998 at a price of
$37.75 per share. On September 1, 1998, Philippe Lemaitre purchased 46.5
Shares at a price of $38.00 pursuant to a dividend reinvestment and 116.1
Shares at a price of $38.00 pursuant to a dividend reinvestment in
Performance Restricted Shares.
20. Joseph C. Overbaugh purchased 9.9 Shares on August 15, 1998 at a
price of $39.3125 per share, 10.9 Shares on August 31, 1998 at a price of
$35.6875 per share, 9.2 Shares on September 15, 1998 at a price of $42.125
per share, and 10.29 Shares on September 30, 1998 at a price of $37.75 per
share. On September 1, 1998, Joseph C. Overbaugh purchased 12.6 Shares at a
price of $38.00 pursuant to a dividend reinvestment.
21. Nazario Proietto purchased 12.9 Shares on August 15, 1998 at a price
of $39.3125 per share, 14.2 Shares on August 31, 1998 at a price of
$35.6875 per share, 12.1 Shares on September 15, 1998 at a price of $42.125
per share, and 13.47 Shares on September 30, 1998 at a price of $37.75 per
share. On September 1, 1998, Nazario Proietto purchased 3.6 Shares at a
price of $38.00 pursuant to a dividend reinvestment and 94.5 Shares at a
price of $38.00 pursuant to a dividend reinvestment in Performance
Restricted Shares.
22. Robert Ripp purchased 2 Shares on August 15, 1998 at a price of
$39.3125 per share, 2.2 Shares on August 31, 1998 at a price of $35.6875
per share, 2.6 Shares on September 15, 1998 at a price of $42.125 per share
and 9.2 Shares on September 30, 1998 at a price of $37.75 per share. On
September 1, 1998, Robert Ripp purchased 107.5 Shares at a price of $38.00
pursuant to a dividend reinvestment and 429.7 Shares at a price of $38.00
pursuant to a dividend reinvestment in Performance Restricted Shares.
23. William S. Urkiel purchased 54.6 Shares on August 15, 1998 at a price
of $39.3125 per share, 60.2 Shares on August 31, 1998 at a price of
$35.6875 per share, 56.8 Shares on September 15, 1998 at a price of $42.125
per share and 63.42 Shares on September 30, 1998 at a price of $37.75 per
share. On September 1, 1998, William S. Urkiel purchased 45.9 Shares at a
price of $38.00 pursuant to a dividend reinvestment and 88.1 Shares at a
price of $38.00 pursuant to a dividend reinvestment in Performance
Restricted Shares.
V. TIME RESTRICTED SHARES.
1. On August 20, 1998, AMP awarded to Robert Ripp 25,000 restricted
shares.
VI. STOCK OPTION.
1. On August 20, 1998, AMP awarded to Robert Ripp 60,000 Shares in Stock
Options.
VII. EMPLOYEE STOCK PURCHASE PLAN.
1. On October 2, 1998, John E. Gurski acquired 167.87 Shares through
contributions to the Employee Stock Purchase Plan at a discounted purchase
price of $29.2187.
S-4
<PAGE>
2. On October 2, 1998, John H. Kegel acquired 103.95 Shares through
contributions to the Employee Stock Purchase Plan at a discounted purchase
price of $29.2187.
3. On October 2, 1998, Mark E. Lang acquired 231.02 Shares through
contributions to the Employee Stock Purchase Plan at a discounted purchase
price of $29.2187.
4. On October 2, 1998, Philippe Lemaitre acquired 411.98 Shares through
contributions to the Employee Stock Purchase Plan at a discounted purchase
price of $29.2187.
5. On October 2, 1998, Joseph C. Overbaugh acquired 15.83 Shares through
contributions to the Employee Stock Purchase Plan at a discounted purchase
price of $29.2187.
6. On October 2, 1998, William S. Urkiel acquired 397.86 Shares through
contributions to the Employee Stock Purchase Plan at a discounted purchase
price of $29.2187.
S-5
<PAGE>
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal and certificates for the Shares and any
other required documents should be sent or delivered by each shareholder or
such shareholder's broker, dealer, commercial bank, trust company or other
nominee to the Depositary at its address set forth below:
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES L.L.C.
By Mail: By Hand: By Overnight:
Reorganization Reorganization Reorganization Department
Department Department 85 Challenger Road, Mail
P.O. Box 3301 120 Broadway Drop-Reorg
South Hackensack, NJ 13th Floor Ridgefield Park, NJ 07660
07606 New York, NY 10271
BY FACSIMILE TRANSMISSION
(for eligible institutions only):
(201) 296-4293
CONFIRM FACSIMILE TRANSMISSION
BY TELEPHONE ONLY:
(201) 296-4860
Any questions or requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal or the Notice of Guaranteed
Delivery may be directed to the Information Agent or the Dealer Managers at
their telephone numbers and addresses set forth below. Shareholders may also
contact their broker, dealer, commercial bank or trust company for assistance
concerning the Offer.
The Information Agent for the Offer is:
INNISFREE M&A INCORPORATED
501 Madison Avenue, 20th Floor
New York, New York 10022
Call Toll Free: (888) 750-5834
Banks & Brokers Call Collect: (212) 750-5833
The Dealer Managers for the Offer are:
CREDIT SUISSE FIRST BOSTON CORPORATION DONALDSON, LUFKIN & JENRETTE
Eleven Madison Avenue 277 Park Avenue
New York, NY 10010-3629 New York, NY 10172
(800) 881-8320 (toll free) (877) 893-0576 (toll free)
<PAGE>
Exhibit (a)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED COMMON STOCK PURCHASE RIGHTS)
OF
AMP INCORPORATED
PURSUANT TO THE OFFER TO PURCHASE DATED OCTOBER 9, 1998
- -------------------------------------------------------------------------------
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, NOVEMBER 20, 1998, UNLESS THE OFFER
IS EXTENDED.
- -------------------------------------------------------------------------------
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES L.L.C.
By Mail: By Hand: By Overnight:
Reorganization Department Reorganization Department Reorganization Department
P.O. Box 3301 120 Broadway 85 Challenger Road,
South Hackensack, NJ 13th Floor Mail Drop--Reorg
07606 New York, NY 10271 Ridgefield Park, NJ 07660
By Facsimile Transmission Confirm Facsimile Transmission
(for eligible institutions only): By Telephone Only:
(201) 296-4293 (201) 296-4860
<TABLE><CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
(SEE INSTRUCTIONS 2 AND 3)
- ------------------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) SHARES TENDERED
(PLEASE FILL IN EXACTLY AS NAME(S) APPEAR(S) ON CERTIFICATE(S)) (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TOTAL NUMBER
OF SHARES NUMBER
CERTIFICATE REPRESENTED BY OF SHARES
NUMBER(S)(1) CERTIFICATE(S) TENDERED(2)
----------------------------------------------------------------
----------------------------------------------------------------
----------------------------------------------------------------
----------------------------------------------------------------
TOTAL SHARES:
- ------------------------------------------------------------------------------------------------------------------------------------
Indicate in this box the order (by certificate number) in which Shares are to be purchased in the event of proration.(3) (Attach
additional signed list if necessary.) See Instruction 13.
1st: __ 2nd: __ 3rd: __ 4th: __ 5th: __
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Need not be completed by shareholders tendering Shares by book-entry
transfer.
(2) Unless otherwise indicated, it will be assumed that all Shares represented
by each Share certificate delivered to the Depositary are being tendered
hereby. All Shares tendered include the associated common stock purchase
rights. See Instruction 4.
(3) If you do not designate an order, then in the event less than all Shares
tendered are purchased due to proration, Shares will be selected for
purchase by the Depositary. See Instruction 13.
<PAGE>
- -----------------------------------------------------------------------------
If you hold your Shares through the Direct Registration System, check the
appropriate box below to tender your DRS Shares:
[_] Tender all Shares held through DRS.
[_] Tender only _____________ Shares held through DRS.
(# of Shares)
- -----------------------------------------------------------------------------
If you are a participant in the Dividend Reinvestment Plan of AMP, check the
appropriate box below to tender your Dividend Reinvestment Shares only:
[_] Tender all Shares in my Dividend Reinvestment Account.
[_] Tender only _____________ Shares in my Dividend Reinvestment Account.
(# of Shares)
- -----------------------------------------------------------------------------
PLEASE COMPLETE THE BOX ENTITLED "DESCRIPTION OF SHARES TENDERED" ABOVE TO
TENDER ANY CERTIFICATED SHARES YOU OWN.
- -----------------------------------------------------------------------------
If you are a participant in AMP's Dividend Reinvestment Plan and you have
tendered to AlliedSignal any of your Shares held in your Dividend
Reinvestment Account, check the following box to withdraw such Shares from
the AlliedSignal tender offer. [_] See Instruction 14.
- -----------------------------------------------------------------------------
Shares returned due to proration or a partial tender will not be returned by
delivery of certificates representing such Shares but instead will be
reissued as Direct Registration System Shares unless you check the following
box to indicate that you prefer to receive certificated Shares. [_] See
Instruction 15.
- -----------------------------------------------------------------------------
IF YOUR SHARES ARE LOST OR MUTILATED, CHECK THIS BOX. [_] SEE INSTRUCTION 16.
TO EXPEDITE REPLACEMENT OF LOST OR MUTILATED SHARES CONTACT CHASEMELLON
SHAREHOLDER SERVICES L.L.C. AT ONE OF THE ADDRESSES LISTED ABOVE.
NOTE: DELIVERY OF THIS LETTER OF TRANSMITTAL MUST BE MADE TO THE DEPOSITARY.
SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE INSTRUCTIONS SET
FORTH IN THIS LETTER OF TRANSMITTAL CAREFULLY.
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE WILL
NOT CONSTITUTE A VALID DELIVERY. DELIVERIES TO THE COMPANY WILL NOT BE
FORWARDED TO THE DEPOSITARY AND THEREFORE WILL NOT CONSTITUTE VALID DELIVERY.
DELIVERIES TO BOOK-ENTRY TRANSFER FACILITIES WILL NOT CONSTITUTE VALID
DELIVERY TO THE DEPOSITARY.
This Letter of Transmittal is to be used only if certificates are to be
forwarded herewith or if delivery of Shares (as defined below) is to be made
by book-entry transfer to the Depositary's account at The Depository Trust
Company ("DTC") (hereinafter referred to as the "Book-Entry Transfer
Facility") pursuant to the procedures set forth in Section 2 of the Offer to
Purchase (as defined below) or delivery of Shares is to be made using DRS (as
defined below). THIS LETTER OF TRANSMITTAL MAY NOT BE USED FOR SHARES
REFLECTING INTERESTS IN THE COMPANY'S EMPLOYEE SAVINGS AND THRIFT PLAN, AS
AMENDED (THE "AMP SAVINGS PLAN"), OR THE MERIT PLAN OF BENEFITS (THE "M/A-COM
SAVINGS PLAN"). SEE INSTRUCTION 12.
Shareholders who cannot deliver their Share certificates and any other
required documents to the Depositary by the Expiration Date (as defined in the
Offer to Purchase) must tender their Shares using the guaranteed delivery
procedure set forth in Section 2 of the Offer to Purchase. See Instruction 2.
2
<PAGE>
(BOXES BELOW FOR USE BY ELIGIBLE INSTITUTIONS ONLY)
[_] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE
THE FOLLOWING:
Name of Tendering Institution _________________________________________________
Account No. ___________________________________________________________________
Transaction Code No. __________________________________________________________
[_] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Holder(s) _______________________________________________
Date of Execution of Notice of Guaranteed Delivery ____________________________
Name of Institution that Guaranteed Delivery __________________________________
IF DELIVERY IS BY BOOK-ENTRY TRANSFER:
Name of Tendering Institution _________________________________________________
Account No. __________________ at DTC
Transaction Code No. __________________________________________________________
3
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to AMP Incorporated, a Pennsylvania
corporation (the "Company"), the above-described Shares of its common stock,
without par value (including the associated common stock purchase rights) (the
"Shares"), at a price of $55 per Share, net to the seller in cash, upon the
terms and subject to the conditions set forth in the Offer to Purchase, dated
October 9, 1998 (the "Offer to Purchase"), receipt of which is hereby
acknowledged, and in this Letter of Transmittal (which, as amended from time
to time, together constitute the "Offer").
Subject to, and effective upon, acceptance for payment of and payment for
the Shares tendered herewith in accordance with the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of any such extension or amendment), the undersigned
hereby sells, assigns and transfers to, or upon the order of, the Company all
right, title and interest in and to all the Shares that are being tendered
hereby or orders the registration of such Shares tendered by book-entry
transfer that are purchased pursuant to the Offer to or upon the order of the
Company and hereby irrevocably constitutes and appoints the Depositary the
true and lawful agent and attorney-in-fact of the undersigned with respect to
such Shares, with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to:
(i) deliver certificates for such Shares, or transfer ownership of such
Shares on the account books maintained by the Book-Entry Transfer Facility,
together, in any such case, with all accompanying evidences of transfer and
authenticity, to or upon the order of the Company upon receipt by the
Depositary, as the undersigned's agent, of the Purchase Price (as defined
below) with respect to such Shares;
(ii) in the case of participants in the Direct Registration System
("DRS"), to place a stop against the Shares held under DRS and, following
expiration of the Offer, to instruct the transfer agent to transfer such
Shares;
(iii) present certificates for such Shares for cancellation and transfer
on the books of the Company; and
(iv) receive all benefits and otherwise exercise all rights of beneficial
ownership of such Shares, all in accordance with the terms of the Offer.
The undersigned hereby represents and warrants to the Company that the
undersigned has full power and authority to tender, sell, assign and transfer
the Shares tendered hereby and that, when and to the extent the same are
accepted for payment by the Company, the Company will acquire good, marketable
and unencumbered title thereto, free and clear of all liens, restrictions,
charges, encumbrances, conditional sales agreements or other obligations
relating to the sale or transfer thereof, and the same will not be subject to
any adverse claims. The undersigned will, upon request, execute and deliver
any additional documents deemed by the Depositary or the Company to be
necessary or desirable to complete the sale, assignment and transfer of the
Shares tendered hereby.
The undersigned represents and warrants to the Company that the undersigned
has read and agrees to all of the terms of the Offer. All authority herein
conferred or agreed to be conferred shall not be affected by, and shall
survive the death or incapacity of the undersigned, and any obligation of the
undersigned hereunder shall be binding upon the heirs, personal
representatives, successors and assigns of the undersigned. Except as stated
in the Offer, this tender is irrevocable.
The undersigned hereby (i) irrevocably appoints Robert Ripp, David F.
Henschel and William S. Urkiel, and each of them, and any other designees of
the Company (such persons and other designees collectively, the "Proxy
Designees"), the attorneys-in-fact and proxies of the undersigned, each with
full power of substitution, to the full extent of the undersigned's right with
respect to the Shares (or, if applicable, Rights) tendered by the undersigned
and accepted for payment by the Company (and any and all other Shares or other
securities or rights issued or issuable in respect of such Shares on or after
October 9, 1998), (ii) irrevocably revokes any prior proxies or written
consents previously given, including any written consent given with respect to
any of the consent proposals submitted or to be submitted by AlliedSignal to
the Company with respect to the Shares tendered by the undersigned and
accepted for payment by the Company and (iii) agrees to take any actions which
may be necessary to effect the foregoing. All powers of attorney and proxies
effected by execution of this Letter of Transmittal will be considered
irrevocable and coupled with an interest in the tendered Shares. This
4
<PAGE>
appointment is effective upon the acceptance for payment of Shares by the
Company in accordance with the terms of the Offer to Purchase. Upon acceptance
for payment, all prior proxies, and any consents given by the undersigned with
respect to these Shares or other securities or rights will, without further
action, be revoked and no subsequent proxies may be given or written consents
executed by the undersigned (and, if given or executed, will not be deemed
effective) with respect to these Shares or other securities or rights. The
Proxy Designees will, with respect to the Shares and other securities or
rights, be empowered to exercise all voting and other rights of the
undersigned as such persons, in their sole judgment, deem proper in respect of
any annual or special meeting of the Company's shareholders, or any
adjournment or postponement thereof, or in respect of any written consent in
lieu of any meeting or revocation thereof.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 2 of the Offer to Purchase and in the
Instructions will constitute the undersigned's acceptance of the terms and
conditions of the Offer, including the undersigned's representation and
warranty to the Company that (i) the undersigned has a net long position in
the Shares or equivalent securities being tendered within the meaning of Rule
14e-4 promulgated under the Securities Exchange Act of 1934, as amended, and
(ii) the tender of such Shares complies with Rule 14e-4. The Company's
acceptance for payment of Shares tendered pursuant to the Offer will
constitute a binding agreement between the undersigned and the Company upon
the terms and subject to the conditions of the Offer.
The names and addresses of the registered holders should be printed, if they
are not already printed above, exactly as they appear on the certificates
representing Shares tendered hereby. The certificate numbers, the number of
Shares represented by such certificates, the number of Shares that the
undersigned wishes to tender and the purchase price at which such Shares are
being tendered should be indicated in the appropriate boxes on this Letter of
Transmittal.
The undersigned understands that upon the terms and conditions of the Offer,
including its proration provisions, the Company will pay $55 net per Share,
without interest (the "Purchase Price"), for Shares validly tendered and not
properly withdrawn pursuant to the Offer, taking into account the number of
Shares so tendered. The undersigned understands that all Shares validly
tendered and not properly withdrawn will be purchased at the Purchase Price
upon the terms and subject to the conditions of the Offer, including its
proration provisions, and that the Company will return all other Shares,
including Shares not purchased because of proration.
The undersigned recognizes that, under certain circumstances set forth in
the Offer to Purchase, the Company may terminate or amend the Offer or may
postpone the acceptance for payment of, or the payment for, Shares tendered or
may not be required to purchase any of the Shares tendered hereby or may
accept for payment fewer than all of the Shares tendered hereby.
Unless otherwise indicated under "Special Payment Instructions," please
issue the check for the Purchase Price of any Shares purchased, and/or return
any Shares not tendered or not purchased, in the name(s) of the undersigned
(and, in the case of Shares tendered by book-entry transfer, by credit to the
account at the Book-Entry Transfer Facility). Similarly, unless otherwise
indicated under "Special Delivery Instructions," please mail the check for the
Purchase Price of any Shares purchased and/or any certificates for Shares not
tendered or not purchased (and accompanying documents, as appropriate) to the
undersigned at the address shown below the undersigned's signature(s). In the
event that both "Special Payment Instructions" and "Special Delivery
Instructions" are completed, please issue the check for the Purchase Price
less any expenses including stock transfer taxes of any Shares purchased
and/or return any Shares not tendered or not purchased in the name(s) of, and
mail such check and/or any certificates to, the person(s) so indicated. The
undersigned recognizes that the Company has no obligation, pursuant to the
"Special Payment Instructions," to transfer any Shares from the name of the
registered holder(s) thereof if the Company does not accept for payment any of
the Shares so tendered.
The undersigned understands that a tender of Shares pursuant to the Offer
will include a tender of the associated common stock purchase rights (the
"Rights") and that no separate consideration will be paid for such Rights. For
a description of the Rights, see Section 10 of the Offer to Purchase.
The undersigned understands that acceptance of Shares by the Company for
payment will constitute a binding agreement between the undersigned and the
Company upon the terms and subject to the conditions of the Offer.
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<PAGE>
__________________________________ ___________________________________
SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7) (SEE INSTRUCTIONS 5 AND 7)
To be completed ONLY if the To be completed ONLY if the
check for the aggregate Purchase check for the Purchase Price of
Price of Shares purchased and/or Shares purchased and/or
certificates for Shares not certificates for Shares not
tendered or not purchased are to tendered or not purchased are to
be issued in the name of someone be mailed to someone other than
other than the undersigned. the undersigned or to the
undersigned at an address other
Issue [_] check than that shown below the
and/or [_] certificate(s) to: undersigned's signature(s).
Name ______________________________ Mail [_] check
and/or [_] certificates to:
___________________________________
(PLEASE PRINT) Name ______________________________
Address ___________________________ ___________________________________
(PLEASE PRINT)
___________________________________
(INCLUDE ZIP CODE) Address ___________________________
___________________________________ ___________________________________
(TAXPAYER IDENTIFICATION OR SOCIAL (INCLUDE ZIP CODE)
SECURITY NO.)
(SEE SUBSTITUTE FORM W-9 ON
REVERSE SIDE)
___________________________________ ____________________________________
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<PAGE>
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL SHAREHOLDERS)
___________________________________________________________________________
SIGNATURE(S) OF OWNER(S)
Dated _________________________, 199
Name(s) ___________________________________________________________________
(PLEASE PRINT)
Capacity (full title) _____________________________________________________
Address ___________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone No. _______________________________________________
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
Share certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or
other person acting in a fiduciary or representative capacity, please set
forth full title and see Instruction 5.)
If a participant in the Direct Registration System ("DRS"), the person(s)
signing above hereby directs the Transfer Agent to place a stop against
the aforementioned number of Shares held through DRS pending expiration of
the Offer. Upon expiration of the Offer, the Transfer Agent is further
directed to follow the directions for delivery to the Depositary.
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Name of Firm ______________________________________________________________
Authorized Signature ______________________________________________________
Name ______________________________________________________________________
(PLEASE PRINT)
Title _____________________________________________________________________
Address ___________________________________________________________________
(INCLUDE ZIP CODE)
Area Code and Telephone No. _______________________________________________
Dated _________________________, 199_
___________________________________________________________________________
7
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a firm that is
a recognized member of an Eligible Institution (as defined in the Offer to
Purchase), unless (i) this Letter of Transmittal is signed by the registered
holder(s) of the Shares (which term, for purposes of this document, shall
include any participant in a Book-Entry Transfer Facility whose name appears
on a security position listing as the owner of Shares) tendered herewith and
such holder(s) have not completed the box entitled "Special Payment
Instructions" or the box entitled "Special Delivery Instructions" on this
Letter of Transmittal, or (ii) such Shares are tendered for the account of an
Eligible Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARE CERTIFICATES; GUARANTEED
DELIVERY PROCEDURES. This Letter of Transmittal is to be used either if Share
certificates are to be forwarded herewith or if delivery of Shares is to be
made by book-entry transfer pursuant to the procedures set forth in Section 2
of the Offer to Purchase or if delivery of Shares is to be made pursuant to
DRS. Certificates for all physically delivered Shares, or a confirmation of a
book-entry transfer into the Depositary's account at the Book-Entry Transfer
Facility of all Shares delivered electronically, as well as a properly
completed and duly executed Letter of Transmittal (or manually signed
facsimile thereof), with any required signature guarantees, or, in the case of
a book-entry transfer, an Agent's Message (as defined in the Offer to
Purchase), and any other documents required by this Letter of Transmittal,
must be received by the Depositary at one of its addresses set forth on the
front page of this Letter of Transmittal prior to the Expiration Date. If
certificates are forwarded to the Depositary in multiple deliveries, a
properly completed and duly executed Letter of Transmittal must accompany each
such delivery.
Shareholders whose Share certificates are not immediately available, who
cannot deliver their Shares and all other required documents to the Depositary
or who cannot complete the procedure for delivery by book-entry transfer prior
to the Expiration Date may tender their Shares pursuant to the guaranteed
delivery procedure set forth in Section 2 of the Offer to Purchase. Pursuant
to such procedure: (i) such tender must be made by or through an Eligible
Institution, (ii) a properly completed and duly executed Notice of Guaranteed
Delivery substantially in the form provided by the Company (with any required
signature guarantees) must be received by the Depositary prior to the
Expiration Date, and (iii) the certificates for all physically delivered
Shares in proper form for transfer by delivery, or a confirmation of a book-
entry transfer into the Depositary's account at the Book-Entry Transfer
Facility of all Shares delivered electronically, in each case together with a
properly completed and duly executed Letter of Transmittal (or manually signed
facsimile thereof) and any other documents required by this Letter of
Transmittal, must be received by the Depositary within three New York Stock
Exchange, Inc. trading days after the date the Depositary receives such Notice
of Guaranteed Delivery, all as provided in Section 2 of the Offer to Purchase.
THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING SHARE CERTIFICATES, THE
LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS, IS AT THE ELECTION AND
RISK OF THE TENDERING SHAREHOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY
WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY MAIL, REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL
CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative or contingent tenders will be accepted. By executing this
Letter of Transmittal (or facsimile thereof), the tendering shareholder waives
any right to receive any notice of the acceptance for payment of the Shares.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
signed schedule and attached to this Letter of Transmittal.
4. PARTIAL TENDERS (NOT APPLICABLE TO SHAREHOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER). If fewer than all the Shares represented by any certificate
delivered to the Depositary are to be tendered, fill in the number of Shares
that are to be tendered in the box entitled "Number of Shares Tendered." In
such case, the remainder of the Shares will be reissued as Direct Registration
System Shares. See Instruction 15. All Shares represented by certificates
delivered to the Depositary will be deemed to have been tendered unless
otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signatures(s) must
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<PAGE>
correspond with the name(s) as written on the face of the certificates without
alteration, enlargement or any change whatsoever.
If any of the Shares tendered hereby are held of record by two or more
persons, all such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in different names on
different certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal (or facsimiles thereof) as there are
different registrations of certificates.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of certificates or separate stock
powers are required unless payment of the Purchase Price is to be made to, or
Shares not tendered or not purchased are to be registered in the name of, any
person other than the registered holder(s), in which case the certificate(s)
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on such certificates. Signatures on any such
certificates or stock powers must be guaranteed by an Eligible Institution.
See Instruction 1.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, certificates evidencing
the Shares tendered hereby must be endorsed or accompanied by appropriate
stock powers, in either case, signed exactly as the name(s) of the registered
holder(s) appear(s) on such certificate(s). Signature(s) on any such
certificates or stock powers must be guaranteed by an Eligible Institution.
See Instruction 1.
If this Letter of Transmittal or any certificate or stock power is signed by
a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person should so indicate when signing, and proper evidence satisfactory
to the Company of the authority of such person so to act must be submitted.
6. STOCK TRANSFER TAXES. The Company will pay or cause to be paid any stock
transfer taxes with respect to the sale and transfer of any Shares to it or
its order pursuant to the Offer. If, however, payment of the aggregate
Purchase Price is to be made to, or Shares not tendered or not purchased are
to be registered in the name of, any person other than the registered
holder(s), or if tendered Shares are registered in the name of any person
other than the person(s) signing this Letter of Transmittal, the amount of any
stock transfer taxes (whether imposed on the registered holder(s), such other
person or otherwise) payable on account of the transfer to such person will be
deducted from the Purchase Price unless satisfactory evidence of the payment
of such taxes, or exemption therefrom, is submitted. See Section 4 of the
Offer to Purchase. Except as provided in this Instruction 6, it will not be
necessary to affix transfer tax stamps to the certificates representing Shares
tendered hereby.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the Purchase
Price of any Shares tendered hereby is to be issued in the name of, and/or any
Shares not tendered or not purchased are to be returned to, a person other
than the person(s) signing this Letter of Transmittal, or if the check and/or
any certificates for Shares not tendered or not purchased are to be mailed to
someone other than the person(s) signing this Letter of Transmittal or to an
address other than that shown above in the box captioned "Description of
Shares Tendered," then the boxes captioned "Special Payment Instructions"
and/or "Special Delivery Instructions" on this Letter of Transmittal should be
completed. Shareholders tendering Shares by book-entry transfer will have any
Shares not accepted for payment returned by crediting the account maintained
by such shareholder at the Book-Entry Transfer Facility.
8. BACKUP WITHHOLDING AND SUBSTITUTE IRS FORM W-9 AND IRS FORM W-8. To
prevent federal income tax backup withholding equal to 31% of the gross
proceeds payable to shareholders for Shares purchased by the Company pursuant
to the Offer, each shareholder who does not otherwise establish an exemption
from such withholding must provide the Depositary with the shareholder's
correct taxpayer identification number (or certify that such taxpayer is
awaiting a taxpayer identification number) and provide certain other
information by completing, under penalties of perjury, the Substitute Internal
Revenue Service ("IRS") Form W-9 included with this Letter of Transmittal.
Certain shareholders (including all corporations and certain foreign
shareholders) are exempt from backup withholding. In order for a foreign
shareholder to qualify as an exempt recipient, that shareholder must submit an
IRS Form W-8 signed under penalties of perjury, attesting to that person's
exempt status. An IRS Form W-8 can be obtained from the Depositary.
9. WITHHOLDING ON FOREIGN SHAREHOLDERS. Even if a foreign shareholder has
provided the required certification to avoid backup withholding, the
Depositary will withhold United States federal income taxes
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<PAGE>
equal to 30% of the gross proceeds payable to a foreign shareholder or its
agent unless the Depositary determines that an exemption from or a reduced
rate of withholding is available pursuant to a tax treaty or that an exemption
from withholding is applicable because such gross proceeds are effectively
connected with the conduct of a trade or business in the United States. For
this purpose, a foreign shareholder is a shareholder that is not (i) a citizen
or resident of the United States, (ii) a corporation, partnership or other
entity created or organized in or under the laws of the United States, or any
State or any political subdivision thereof, (iii) an estate the income of
which is subject to United States federal income taxation regardless of source
or (iv) a trust if a United States court is able to exercise primary
supervision over the administration of such trust and one or more United
States persons have the authority to control all substantial decisions of such
trust. In order to obtain a reduced rate of withholding pursuant to a tax
treaty, a foreign shareholder must deliver to the Depositary a properly
completed and executed IRS Form 1001. In order to obtain an exemption from
withholding on the grounds that the gross proceeds paid pursuant to the Offer
are effectively connected with the conduct of a trade or business within the
United States, a foreign shareholder must deliver to the Depositary a properly
completed and executed IRS Form 4224. The Depositary will determine a
shareholder's status as a foreign shareholder and eligibility for a reduced
rate of, or an exemption from, withholding by reference to outstanding
certificates or statements concerning eligibility for a reduced rate of, or
exemption from, withholding (e.g., IRS Form 1001 or IRS Form 4224) unless
facts and circumstances indicate that such reliance is not warranted.
A foreign shareholder may be eligible to obtain a refund of all or a portion
of any tax withheld if such shareholder meets the "complete redemption,"
"substantially disproportionate" or "not essentially equivalent to a dividend"
test described in Section 13 of the Offer to Purchase or is otherwise able to
establish that no tax or a reduced amount of tax is due. Backup withholding
generally will not apply to amounts subject to the 30% or treaty-reduced rate
of withholding. Foreign shareholders are urged to consult their tax advisors
regarding the application of United States federal income tax withholding,
including eligibility for a withholding tax reduction or exemption and refund
procedures.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Any questions or requests
for assistance may be directed to the Information Agent or the Dealer Managers
at their respective telephone numbers and addresses listed below. Requests for
additional copies of the Offer to Purchase, this Letter of Transmittal or
other tender offer materials may be directed to the Information Agent or the
Dealer Managers, and such copies will be furnished promptly at the Company's
expense. Shareholders may also contact their local broker, dealer, commercial
bank or trust company for documents relating to, or assistance concerning, the
Offer.
11. IRREGULARITIES. All questions as to the number of Shares to be accepted,
the price to be paid therefor and the validity, form, eligibility (including
time of receipt) and acceptance for payment of any tender of Shares will be
determined by the Company, in its sole discretion, which determination shall
be final and binding on all parties. The Company reserves the absolute right
to reject any or all tenders it determines not to be in proper form or the
acceptance of or payment for which may, in the opinion of the Company's
counsel, be unlawful. The Company also reserves the absolute right to waive
any of the conditions of the Offer and any defect or irregularity in the
tender of any particular Shares or any particular shareholder. No tender of
Shares will be deemed to be validly made until all defects or irregularities
have been cured or waived. None of the Company, the Dealer Managers, the
Depositary, the Information Agent or any other person is or will be obligated
to give notice of any defects or irregularities in tenders, and none of them
will incur any liability for failure to give any such notice.
12. SAVINGS PLAN; RESTRICTED SHARES. Participants in either the AMP Savings
Plan or the M/A-COM Savings Plan may not use this Letter of Transmittal to
direct the tender of Shares attributable to their individual accounts, but
must use the Direction Form sent to them. Participants in the AMP Savings Plan
and the M/A-COM Savings Plan are urged to carefully read the Direction Form
and related materials sent to them. Restricted Shares (as defined in the Offer
to Purchase) may not be tendered pursuant to the Offer until the applicable
restriction period has expired. See Section 2 of the Offer to Purchase.
13. ORDER OF PURCHASE IN EVENT OF PRORATION. As described in Section 1 of
the Offer to Purchase, shareholders may designate the order in which their
Shares are to be purchased in the event of proration. The order of purchase
may have an effect on whether any capital gain or loss recognized on the
Shares purchased is long-term or short-term (depending on the holding period
for the Shares purchased) and the amount of gain or loss recognized for
federal income tax purposes. See Sections 1 and 13 of the Offer to Purchase.
14. WITHDRAWAL OF SHARES TENDERED PURSUANT TO AN ALLIEDSIGNAL TENDER
OFFER. Shareholders who desire to tender their Shares pursuant to this Offer
but who have tendered their Shares pursuant to a tender offer made by
AlliedSignal must effect a timely withdrawal of their Shares from such offer.
Such
10
<PAGE>
withdrawal must comply with all of the requirements for withdrawal enumerated
in the relevant AlliedSignal offer. A Notice of Withdrawal form which may be
used by shareholders to withdraw Shares that have previously been tendered to
AlliedSignal may be obtained from the Information Agent.
15. DIRECT REGISTRATION SYSTEM SHARES. Unless the person signing this Letter
of Transmittal indicates a preference to receive certificated Shares by
checking the appropriate box on this Letter of Transmittal, any Shares
tendered pursuant to the Offer but returned due to proration will not be
returned by delivery of certificates representing such Shares but instead will
be registered to the shareholder as Direct Registration System Shares. Direct
Registration System Shares are Shares which are registered to the shareholder
by the Company's transfer agent in book-entry form without issuing Share
certificates to the shareholder. Shareholders holding Shares through the
Direct Registration System will receive an advice form indicating the number
of Shares registered to the shareholder by the Company's transfer agent in
book-entry form. Shareholders may transfer Direct Registration System Shares
by contacting the Company's transfer agent. Shareholders may also contact the
Company's transfer agent to have Direct Registration System Shares reissued to
the shareholder in certificated form.
16. LOST OR MUTILATED SHARES. If you have lost or mutilated Shares you may
have to execute an affidavit of loss and post a bond of indemnity. Please
contact ChaseMellon Shareholder Services L.L.C. at any of the addresses listed
on the front page of this Letter of Transmittal for additional instructions
for replacing such Shares. In order to make a valid tender, Shares must be
delivered to the Depositary.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A MANUALLY SIGNED FACSIMILE
THEREOF) TOGETHER WITH SHARE CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY
TRANSFER AND ALL OTHER REQUIRED DOCUMENTS MUST BE RECEIVED BY THE DEPOSITARY,
OR THE NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY, PRIOR
TO THE EXPIRATION DATE. SHAREHOLDERS ARE ENCOURAGED TO RETURN A COMPLETED
SUBSTITUTE FORM W-9 WITH THEIR LETTER OF TRANSMITTAL.
PAYOR'S NAME: CHASEMELLON SHAREHOLDERS SERVICES L.L.C.
- -------------------------------------------------------------------------------
PART 1: PLEASE PROVIDE YOUR Social Security
TIN IN THE BOX AT RIGHT AND Number or Employer
CERTIFY BY SIGNING AND Identification Number
DATING BELOW. -----------------------
SUBSTITUTE ------------------------------------------------------
FORM W-9 PART 2: For Payees exempt from backup PART 3:
withholding, see the enclosed Awaiting
Guidelines for Certification of TIN [_]
Taxpayer Identification Number on
Substitute Form W-9 and complete as
instructed therein.
DEPARTMENT OF ------------------------------------------------------
THE TREASURY CERTIFICATION--Under the penalties of perjury, I
INTERNAL certify that (i) the number shown on this form is
REVENUE my correct Taxpayer Identification Number (or I am
SERVICE waiting for a number to be issued to me) and either
(a) I have mailed or delivered an application to
PAYOR'S REQUEST FOR receive a taxpayer identification number to the ap-
TAXPAYER propriate IRS center or Social Security Administra-
IDENTIFICATION NUMBER tion office or (b) I intend to mail or deliver an
(TIN) application in the near future) and (ii) I am not
subject to backup withholding because: (a) I am ex-
empt from backup withholding; or (b) I have not
been notified by the IRS that I am subject to
backup withholding as a result of a failure to re-
port all interest or dividends; or (c) the IRS has
notified me that I am no longer subject to backup
withholding. Certification instructions--You must
cross out Item (ii) above if you have been notified
by the IRS that you are currently subject to backup
withholding because of underreporting interest or
dividends on your tax return.
SIGNATURE __________________________________________
DATE _______________________________________________
NAME _______________________________________________
(PLEASE PRINT)
ADDRESS ____________________________________________
____________________________________________________
(INCLUDE ZIP CODE)
FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF
31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THIS OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
11
<PAGE>
The Information Agent for the Offer is:
INNISFREE M&A INCORPORATED
501 MADISON AVENUE, 20TH FLOOR
NEW YORK, NEW YORK 10022
CALL TOLL FREE: (888) 750-5834
BANKS & BROKERS CALL COLLECT: (212) 750-5833
The Dealer Managers for the Offer are:
CREDIT SUISSE FIRST BOSTON CORPORATION DONALDSON, LUFKIN & JENRETTE
Eleven Madison Avenue 277 Park Avenue
New York, NY 10010 New York, NY 10172
(800) 881-8320 (toll free) (877) 893-0576 (toll free)
12
