Commitment Letter - AlliedSignal Inc., Salomon Smith Barney Inc., Banque Nationale de Paris, Barclays Bank PLC, Deutsche Bank Securities Inc., J.P. Morgan Securities Inc. and NationsBanc Montgomery Securities LLC


     [EXECUTION COPY]






                                                          October 9, 1998

AlliedSignal Inc.
101 Columbia Road
Morristown, NJ  07962-1219

Attention: John W. Gamble, Jr., Assistant Treasurer

                             ALLIEDSIGNAL INC.
              US$900,000,000 364-DAY REVOLVING CREDIT FACILITY
             US$7,000,000,000 364-DAY REVOLVING CREDIT FACILITY
            US$2,250,000,000 FIVE YEAR REVOLVING CREDIT FACILITY
                             COMMITMENT LETTER
                             -----------------

Ladies and Gentlemen:

          You have advised us of your proposed acquisition of a controlling
interest in AMP Inc., a Pennsylvania corporation (the "TARGET"). As we
understand the transaction, you have offered to acquire up to 20,000,000
shares of the Target's outstanding common stock, without par value (the
"TARGET STOCK"), on or after October 2, 1998 for $44.50 net per common
share for up to an aggregate of $890,000,000 in cash. This acquisition of
the Target's common shares will initially be funded through the issuance of
your commercial paper. Thereafter, you will promptly offer to purchase
through a tender offer (the "TENDER OFFER"), subject to removal of the
Target's poison pill, the inapplicability of anti-takeover statutes and
other customary conditions, all shares of Target Stock. The Tender Offer,
the acquisition of the Target and the certain financings contemplated by
the foregoing are collectively referred to as the "TRANSACTION".

          You have requested that Salomon Smith Barney Inc., ("SSB"),
Banque Nationale de Paris ("BNP"), Barclays Capital, the investment banking
division of Barclays Bank PLC ("BARCLAYS CAPITAL"), Deutsche Bank
Securities Inc. ("DBSI"), J.P. Morgan Securities Inc. ("MORGAN") and
NationsBanc Montgomery Securities LLC ("NMS") arrange $9,250,000,000 of
Senior Facilities (as hereinafter defined) described in this letter and in
the attached summaries of terms and conditions (the "ANNEXES" and, together
with this letter, the "COMMITMENT LETTER"). Based on our discussions
concerning the Transaction, (a) SSB is pleased to agree to act as book
runner in connection with the Senior Facilities, (b) Citibank, N.A.
("CITIBANK") is pleased to provide you with financing commitments for a
portion of, and to agree to act as administrative agent (the
"ADMINISTRATIVE AGENT") in connection with, the Senior Facilities, (c) each
of the other Initial Lenders (as hereinafter defined) is pleased to provide
you with financing commitments for a portion of the Senior Facilities and
(d) each of SSB, BNP, Barclays, DBSI, Morgan and NMS, as arrangers, is
pleased to provide you with its undertaking to arrange and syndicate the
Senior Facilities to the Lenders (as defined under the section "LENDERS" in
the Annexes). SSB, BNP, Barclays Capital, DBSI, Morgan and NMS are,
collectively, the "ARRANGERS".

          You have asked each of Citibank, Bank of America NT&SA ("BOFA"),
BNP, Barclays Bank PLC ("BARCLAYS"), Deutsche Bank AG, New York Branch
and/or Cayman Islands Branch ("DEUTSCHE BANK") and Morgan Guaranty Trust
Company of New York ("MORGAN GUARANTY") (collectively, the "INITIAL
LENDERS") to provide you with their several commitments for a portion of
the senior debt facilities aggregating $9,250,000,000 (the "SENIOR
FACILITIES") required to consummate the Transaction, consisting of (a) a
364-day multicurrency commercial paper backstop facility (the "BACKSTOP
FACILITY") in the amount of $900,000,000, (b) a 364-day multicurrency
revolving credit facility (the "364-DAY FACILITY") in the amount of
$7,000,000,000 (which will replace the Backstop Facility) and (c) a five
year multicurrency revolving credit facility (the "FIVE-YEAR FACILITY") in
the amount of $2,250,000,000. Each of the Backstop Facility, 364-Day
Facility and the Five-Year Facility will also provide a competitive bid
option to you. The proceeds of the Senior Facilities are intended to be
used primarily in connection with the Transaction, and after the
acquisition of the Target is completed in connection with general corporate
purposes.

          Subject to the satisfaction of the conditions contained in this
Commitment Letter and your acceptance hereof, Citibank commits to lend
$200,000,000 of the Backstop Facility and $1,000,000,000 of the 364-Day and
Five-Year Facilities, and BofA, BNP, Barclays, Deutsche Bank and Morgan
Guaranty each commits to lend $140,000,000 of the Backstop Facility and
$750,000,000 of the 364-Day and Five Year Facilities, on the terms and
conditions referred to in this Commitment Letter. The Arrangers agree to
use their best efforts, but without any obligation to underwrite a
syndication, to arrange a syndicate of lenders for the balance of the
financing for the Transaction (it being understood that none of the
Arrangers or the Initial Lenders, individually or in the aggregate, have
agreed to underwrite the Senior Facilities). The commitment of each Initial
Lender will be allocated pro rata to the 364-Day and Five Year Facilities.

          Please note, however, that the terms and conditions of this
commitment and undertaking are not limited to those set forth in this
Commitment Letter. Those matters that are not covered or made clear herein
or in the attached Annexes are subject to mutual agreement of the parties.
The terms and conditions of this commitment and undertaking may be modified
only in writing. In addition, this commitment and undertaking is subject to
(a) the preparation, execution and delivery of mutually acceptable loan
documentation, including credit agreements incorporating substantially the
terms and conditions outlined herein and in the Annexes, (b) the absence of
(i) a material adverse change in the business, condition (financial or
otherwise), operations, performance, properties or prospects of you and
your subsidiaries, taken as a whole, since December 31, 1997 and (ii) any
material adverse change in loan syndication or financial or capital market
conditions generally from those currently in effect, (c) the accuracy and
completeness of all representations that you make to us and all information
that you furnish to us in connection with this commitment and undertaking
and your compliance with the terms of this Commitment Letter, (d) with
respect to the commitment and undertaking for the 364-Day and Five Year
Facilities, syndication of such Facilities shall have commenced by November
15, 1998 (meaning that the Information Memorandum (as defined below) shall
have been prepared and the bank information meeting shall have been
scheduled to take place no later than one week after such date), (e)
receipt of commitments from other Lenders on the terms and conditions
referred to in the attached Annexes for the balance of the financing of the
Transaction and (f) the acquisition of the Target Stock on a basis or
pursuant to terms not materially different from those previously agreed to
by the Arrangers (it being understood that an increase of the price per
share of Target Stock of 10% or less shall be deemed not to be material).
Each Initial Lender's commitment and each Arranger's undertaking with
respect to the 364-Day Facility and the Five-Year Facility set forth in
this Commitment Letter will terminate on January 25, 1999, unless the loan
documentation relating thereto is executed on or before such date.

          The Initial Lenders' commitments and the Arrangers' undertaking
with respect to the (a) 364-Day Facility and the Five-Year Facility or (b)
the Backstop Facility set forth in this Commitment Letter may also be
terminated upon written notice by you at any time at your option upon
payment of all Agreed Fees (as hereinafter defined) then payable and all
fees, expenses and other amounts then payable under this Commitment Letter.

          The Arrangers intend to syndicate the 364-Day Facility and the
Five-Year Facility promptly and, if the commitments for the 364-Day
Facility and the Five-Year Facility have been terminated, the Backstop
Facility, to additional Lenders and, to the extent that commitments are
received from other Lenders, the initial commitments of each Initial Lender
shall be reduced. The Arrangers will manage all aspects of the syndication
in consultation with you, including the timing of all offers to potential
Lenders and the acceptance of commitments, the amounts offered and the
compensation provided. By acceptance of this Commitment Letter, you agree
to take all actions that the Arrangers may reasonably request to assist
them in forming a syndicate acceptable to the Arrangers. Your assistance in
forming such a syndicate shall include but not be limited to: (a) making
your senior management and representatives available to participate in
information meetings with potential Lenders at such times and places as the
Arrangers may reasonably request; (b) using your best efforts to ensure
that the syndication efforts of the Arrangers benefit from your lending
relationships; (c) providing the Arrangers with all information reasonably
deemed necessary by them to complete a successful syndication and (d)
assisting in the preparation of an information memorandum for use in
connection with the syndication of the Senior Facilities (the "INFORMATION
MEMORANDUM"), the contents of which you shall be solely responsible for.
You agree to advise the Arrangers immediately of the occurrence of any
event or other development that results in the Information Memorandum
failing to comply with the representation and warranties set forth in the
first paragraph on page five of this Commitment Letter.

          To ensure an orderly and effective syndication of the Senior
Facilities, you agree that until the termination of the syndication (as
determined by the Arrangers and evidenced by written notification received
by you from SSB), you will not, and will not permit any of
your affiliates to, syndicate or issue, attempt to syndicate or issue,
announce or authorize the announcement of the syndication or issuance of,
or engage in discussions concerning the syndication or issuance of, any
debt facility or debt security (including any renewals thereof), without
the prior written consent of the Arrangers; provided, however, that the
foregoing shall not limit your ability to amend your $750,000,000 existing
credit agreement, or to issue commercial paper, extendable notes or similar
financial products, other short-term debt instruments not syndicated in the
bank loan market, public debt securities or securitizations.

          You agree that Citibank will act as the sole administrative agent
for the Senior Facilities and that the Arrangers will act as sole arrangers
for the Senior Facilities and that no additional agents, co-agents or
arrangers will be appointed, or other titles conferred, without the prior
consent of each of the Arrangers. You agree that no Lender will receive any
compensation of any kind for its participation in the Senior Facilities,
except as expressly provided for in the Fee Letters (as hereinafter
defined) or in the Annexes.

          In addition to the fees described in the Annexes, you hereby
confirm your agreement to pay the nonrefundable fees set forth in the fee
letters dated the date hereof (the "FEE LETTERS") with the Initial Lenders
and the Arrangers (the "AGREED FEES").

          You agree to indemnify and hold harmless each Initial Lender,
each Arranger, each Lender and each of their affiliates and their officers,
directors, employees, agents, advisors and other representatives (each an
"INDEMNIFIED PARTY") from and against any and all claims, damages, losses,
liabilities and expenses (including, without limitation, reasonable fees
and expenses of counsel) that may be incurred by or asserted or awarded
against any Indemnified Party, in each case arising out of or in connection
with or by reason of (including, without limitation, in connection with any
investigation, litigation or proceeding or preparation of a defense in
connection therewith) (a) the Transaction or any similar transaction and
any of the other transactions contemplated thereby, (b) any acquisition or
proposed acquisition or similar business combination or proposed business
combination (including, without limitation, the transactions contemplated
hereby) by you or any of your subsidiaries or affiliates of all or any
portion of the capital stock or substantially all of the assets of the
Target or any of its subsidiaries or (c) the Senior Facilities and any
other financings, or any use made or proposed to be made with the proceeds
thereof, except to the extent such claim, damage, loss, liability or
expense is found in a final, nonappealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party's gross
negligence or willful misconduct. In the case of an investigation,
litigation or proceeding to which the indemnity in this paragraph applies,
such indemnity shall be effective whether or not such investigation,
litigation or proceeding is brought by you, your shareholders or creditors
or an Indemnified Party or an Indemnified Party is otherwise a party
thereto and whether or not the Transaction is consummated. You also agree
that no Indemnified Party shall have any liability (whether direct or
indirect, in contract or tort or otherwise) to you or your subsidiaries or
affiliates or to your or their respective security holders or creditors
arising out of, related to or in connection with the Transaction, except
for direct, as opposed to consequential, damages determined in a final
nonappealable judgment by a court of competent jurisdiction to have
resulted from such Indemnified Party's gross negligence or willful
misconduct.

          In further consideration of the commitment of each Initial Lender
and the undertakings of each Arranger, respectively, hereunder, and
recognizing that in connection herewith each of them is incurring
substantial costs and expenses, including, without limitation, fees and
expenses of counsel and due diligence, syndication (including printing,
distribution and bank meetings), transportation, computer, duplication,
appraisal, audit, insurance, consultant, search, filing and recording fees,
you agree to pay, from time to time on request, such costs and expenses
directly related to the Senior Facilities (whether incurred before or after
the date hereof), regardless of whether the Transaction (or any part
thereof) is consummated or any loan documentation is entered into. You also
agree to pay all costs and expenses of each Initial Lender and each
Arranger (including, without limitation, fees and expenses of counsel)
incurred in connection with the enforcement of this Commitment Letter.

          You should be aware that any Initial Lender, any Arranger or one
or more of their affiliates may be providing financing or other services to
parties whose interests may conflict with yours. However, be assured that,
consistent with each Initial Lender's and each Arranger's longstanding
policies to hold in confidence the affairs of their customers, none of the
Initial Lenders, the Arrangers or any of their affiliates will furnish
confidential information obtained from you to any of their other customers.
By the same token, the Initial Lenders, the Arrangers and their affiliates
will not make available to you confidential information that they have
obtained or may obtain from any other customer.

          You agree that this Commitment Letter is for your confidential
use only and neither its existence nor the terms hereof will be disclosed
by you to any person or entity other than your officers, directors,
accountants, attorneys and other advisors, and then only on a "need to
know" basis in connection with the Transaction and on a confidential basis,
except that, following your return of an executed counterpart hereof to
each Arranger, you may (a) make public disclosure of the existence and
amount of the Initial Lenders' commitments and the Arrangers' undertakings
hereunder, (b) file a copy of this Commitment Letter in any public record
in which it is required by law to be filed, (c) provide a copy of this
Commitment Letter on a confidential basis to the Target and its
accountants, attorneys and other advisors and (d) make such other public
disclosures of the terms and conditions hereof as you are required by law,
in the opinion of your counsel, to make. You agree that you will permit
each Arranger and each Initial Lender to review and approve any reference
to it or to any of its affiliates or any other agent or arranger under the
Senior Facilities contained in any press release or similar public
disclosure prior to public release. Each Initial Lender and Arranger agrees
that you will be permitted to review and approve any reference to you and
your affiliates relating to the Senior Facilities contained in any press
release, advertisement or similar public disclosure prior to public
release.

          You represent and warrant that (a) all information that has been
or will hereafter be made available by or on behalf of you or by any of
your representatives in connection with the Transaction and the other
transactions contemplated hereby to any Initial Lender, any Arranger or any
of their affiliates or representatives or to any Lender or any potential
Lender is and will be complete and correct in all material respects and
does not and will not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
contained therein not misleading in light of the circumstances under which
such statements were or are made and (b) all financial projections, if any,
that have been or will be prepared by you or on your behalf or by any of
your representatives and made available to any Initial Lender, any Arranger
or any of their affiliates or representatives or to any Lender or any
potential Lender in connection with the Transaction and the other
transactions contemplated hereby have been or will be prepared in good
faith based upon reasonable assumptions (it being understood that such
projections are subject to significant uncertainties and contingencies,
many of which are beyond your control, and that no assurance can be given
that any particular projections will be realized). You agree to supplement
the information and projections from time to time so that the
representations and warranties contained in this paragraph remain complete
and correct.

          In issuing this commitment and undertaking, each Initial Lender
and each Arranger is relying on the accuracy of the information furnished
to it by you or on your behalf. The obligations of each Initial Lender and
each Arranger under this Commitment Letter and of any Lender that issues a
commitment for the Senior Facilities are made solely for your benefit and
may not be relied upon or enforced by any other person or entity.

          This Commitment Letter shall be governed by, and construed in
accordance with, the laws of the State of New York. Delivery of an executed
counterpart of this Commitment Letter by telecopier shall be effective as
delivery of a manually executed counterpart of this Commitment Letter. Each
of you, each Initial Lender and each Arranger hereby irrevocably waives all
right to trial by jury in any action, proceeding or counterclaim (whether
based on contract, tort or otherwise) arising out of or relating to this
Commitment Letter, the transactions contemplated hereby or the actions of
any Initial Lender or any Arranger in the negotiation, performance or
enforcement hereof.

          Please evidence your acceptance of the provisions of this
Commitment Letter (including, without limitation, the attached Annexes) and
the other matters referred to above by signing the enclosed copy of this
Commitment Letter and returning it to Steven Victorin, Citibank, N.A., 399
Park Avenue, New York, New York 10043 at or before 5:00 P.M. (New York City
time) on October 7, 1998, the time at which each Initial Lender's
commitment and each Arranger's undertaking set forth above (if not so
accepted prior thereto) will expire.

                                    Very truly yours,

                                    CITIBANK, N.A.


                                    By /s/ Carolyn A. Kee
                                      ------------------------------
                                      Name:  Carolyn A. Kee
                                      Title: Attorney-in-Fact


                                    SALOMON SMITH BARNEY INC.


                                    By /s/ Steven R. Victorin
                                      ------------------------------
                                      Name:  Steven R. Victorin
                                      Title: Attorney-in-Fact


                                    BANK OF AMERICA NT&SA


                                    By /s/ W.L. Hess
                                      ------------------------------
                                      Name:  W.L. Hess
                                      Title: Managing Director


                                    NATIONSBANC MONTGOMERY SECURITIES LLC


                                    By /s/ John A. Finan
                                      ------------------------------
                                      Name:  John A. Finan
                                      Title: Managing Director


                                    BANQUE NATIONALE DE PARIS


                                    By /s/ Robert S. Taylor, Jr.
                                      ------------------------------
                                      Name:  Robert S. Taylor, Jr.
                                      Title: Senior Vice President

                                    By /s/ Richard L. Sted
                                      ------------------------------
                                      Name:  Richard L. Sted
                                      Title: Senior Vice President

                                    BARCLAYS BANK PLC


                                    By /s/ Keith Mackie
                                      ------------------------------
                                      Name:  Keith Mackie
                                      Title: Director


                                    DEUTSCHE BANK AG, NEW YORK BRANCH AND/OR 
                                    CAYMAN ISLANDS BRANCH


                                    By /s/ Jean M. Hannigan
                                      ------------------------------
                                      Name:  Jean M. Hannigan
                                      Title: Vice President

                                    By /s/ Susan L. Pearson
                                      ------------------------------
                                      Name:  Susan L. Pearson
                                      Title: Director


                                    DEUTSCHE BANK SECURITIES INC.


                                    By /s/ Jean M. Hannigan
                                      ------------------------------
                                      Name:  Jean M. Hannigan
                                      Title: Vice President

                                    By /s/ Thomas A. Foley
                                      ------------------------------
                                      Name:  Thomas A. Foley
                                      Title: Vice President


                                    MORGAN GUARANTY TRUST COMPANY OF NEW YORK


                                    By /s/ Christopher C. Kunhardt
                                      ------------------------------
                                      Name:  Christopher C. Kunhardt
                                      Title: Vice President


                                    J.P. MORGAN SECURITIES INC.


                                    By /s/ Charles H. King
                                      ------------------------------
                                      Name:  Charles H. King
                                      Title: Vice President


ACCEPTED this 9th day
of October, 1998

ALLIEDSIGNAL INC.


By /s/ Richard F. Wallman
  -------------------------
  Name:  Richard F. Wallman
  Title: Senior Vice President
         and Chief Financial Officer




                             ALLIEDSIGNAL INC.

                      SUMMARY OF TERMS AND CONDITIONS
      $7,000,000,000 364-DAY MULTI CURRENCY REVOLVING CREDIT FACILITY
                       WITH ONE YEAR TERM-OUT OPTION


BORROWERS:              AlliedSignal Inc. (the "Company") and any Designated
                        Subsidiaries (together with the Company, the
                        "Borrowers"), fully and unconditionally guaranteed by
                        the Company.

FACILITY AMOUNT:        $7,000,000,000.

TYPE OF FACILITY:       364-day unsecured revolving credit facility (the
                        "364-Day Facility"). Provided there is no default or
                        Event of Default, the Company will have the option,
                        on the Commitment Termination Date, to convert up to
                        $4,000,000,000 of outstanding Advances into a term
                        loan maturing no later than the first anniversary of
                        the Commitment Termination Date (the "Term Loan
                        Conversion Option").

PURPOSE:                Finance the acquisition of AMP Inc. (the "Target")
                        and general corporate purposes, including commercial
                        paper backstop.

ADMINISTRATIVE
AGENT:                  Citibank, N.A. ("Citibank", or the "Agent").

BOOKRUNNER:             Salomon Smith Barney Inc. ("SSB").

ARRANGERS:              Banque Nationale de Paris ("BNP"), Barclays
                        Capital, the investment banking division of
                        Barclays Bank PLC, Deutsche Bank Securities Inc.,
                        J.P. Morgan Securities Inc., NationsBanc Montgomery
                        Securities LLC and SSB.

LENDERS:                Citibank, Bank of America NT&SA ("BofA"), BNP,
                        Barclays Bank PLC ("Barclays"), Deutsche Bank AG, New
                        York Branch and/or Cayman Islands Branch
                        ("Deutsche"), Morgan Guaranty Trust Company of New
                        York ("Morgan") and other financial institutions
                        acceptable to the Arrangers and the Company.

CLOSING DATE:           Such date as may be agreed upon by the Company, the
                        Arrangers and the Agent.

COMMITMENT
TERMINATION DATE:       364 Days from the Closing Date, subject to the
                        Renewal of Commitments section.

FINAL
MATURITY DATE:          The Commitment Termination Date, provided that, if
                        the Company elects the Term Loan Conversion Option,
                        the Final Maturity Date will be the first anniversary
                        of the Commitment Termination Date.

ADVANCES:               At the applicable Borrower's option, either
                        Eurocurrency Rate Advances, Base Rate Advances or
                        Competitive Bid Advances.  Each Lender will be
                        severally obligated to make its pro rata share of any
                        Eurocurrency Rate Advance or Base Rate Advance.
                        Eurocurrency Rate Advances, at the applicable
                        Borrower's option, may be made in U.S. Dollars,
                        Pounds Sterling, Deutsche Marks, French Francs,
                        Euros/Ecu  and Japanese Yen (the "Major Currencies").

RENEWAL OF
COMMITMENTS:            At least 45 but no earlier than 60 days prior to each
                        anniversary date of the 364-Day Facility and provided
                        all representations and warranties are true and
                        correct in all material respects and no Event of
                        Default has occurred and is continuing, the Company
                        may request that the Lenders extend for an additional
                        364 days the then applicable Commitment Termination
                        Date. The Company may replace any non-consenting
                        Lender by assignment to any consenting Lender or new
                        Lender, or by termination of a non-consenting
                        Lender's commitment.

COMMITMENT
REDUCTION:              The Company will have the right, upon at least three
                        business days' notice, to terminate or cancel, in
                        whole or in part, the unused portion of the 364-Day
                        Facility Amount in excess of the aggregate
                        outstanding Competitive Bid Advances, provided that
                        each partial reduction shall be in a minimum amount
                        of $10,000,000 or any whole multiple of $1,000,000 in
                        excess thereof.  Once terminated, a commitment may
                        not be reinstated.

FACILITY FEE:           At all times unless the Term Loan Conversion Option
                        has been selected and is in effect, an amount which
                        will vary as per attached Pricing Grid, based on the
                        Company's long-term senior unsecured non-credit
                        enhanced debt ratings, payable on each Lender's
                        commitment, irrespective of usage, quarterly in
                        arrears on the last day of each March, June,
                        September and December, and on the Commitment
                        Termination Date.  The Facility Fee shall be
                        calculated on the basis of actual number of days
                        elapsed in a year of 365/366 days.  No Facility Fee
                        will be payable after the Term Loan Conversion Option
                        has been selected and is in effect.

INTEREST RATES AND
INTEREST PERIODS:       At the applicable Borrower's option, any Advance that
                        is made to it will be available at the rates and for
                        the Interest Periods stated below:

                        a)    Base Rate:  a fluctuating rate equal to the
                              Base Rate plus the Applicable Margin.

                              The Base Rate is a fluctuating rate per annum
                              equal at all times to the highest of (i)
                              Citibank's publicly announced "base" rate, (ii)
                              1/2 of 1% percent per annum above the latest
                              three-week moving average of secondary market
                              morning offering rates in the United States for
                              three-month certificates of deposit of major
                              U.S. money market banks, adjusted to the
                              nearest 1/16 of 1%, and (iii) a rate equal to
                              1/2 of 1% per annum above the weighted average
                              of the rates on overnight Federal funds
                              transactions with members of the Federal
                              Reserve System arranged by Federal funds
                              brokers.

                        b)    Eurocurrency Rate: a periodic fixed rate equal
                              to the Eurocurrency Rate plus the
                              Applicable Margin.

                              The Eurocurrency Rate, which is a rate per
                              annum equal to the London Interbank Offered
                              Rate as determined by reference to Dow Jones
                              Markets screen 3750 (or other applicable
                              pages with respect to a Major Currency), or
                              if not applicable the average rate per annum
                              (rounded upward to the nearest 1/16 of 1%) at
                              which deposits in the applicable Major
                              Currency are offered by the Reference Banks
                              to prime banks in the London interbank market
                              at 11:00 A.M. (London time) two business days
                              before the first day of the Interest Period
                              and in amounts approximately equal to the
                              Reference Banks' pro rata share of the
                              contemplated Advance for a given Interest
                              Period and with a maturity equal to such
                              Interest Period, adjusted for reserve
                              requirements and, in the case of particular
                              Major Currencies, as appropriate for such
                              currencies. The Eurocurrency Rate shall be
                              fixed for Interest Periods of 1, 2, 3, 6 or 9
                              months if available to all Lenders.

APPLICABLE MARGIN:      The Applicable Margin means:

                        (i)   for Base Rate  Advances,  0.00 basis  points per
                              annum;

                        (ii)  for Eurocurrency Rate Advances, (i) at all
                              times unless the Term Loan Conversion Option
                              has been selected and is in effect an amount
                              which will vary as per the attached Pricing
                              Grid, based on the Company's long-term senior
                              unsecured non-credit enhanced debt ratings and,
                              (ii) if the Term Loan Conversion Option has
                              been selected and is in effect, an amount which
                              will vary as per the attached Term-Out Option
                              Pricing Grid.

                        Upon the occurrence and during the continuance of any
                        monetary Event of Default, the Applicable Margin will
                        increase by 100 basis points per annum, and if such
                        Advance is a Eurocurrency Rate Advance, it will
                        convert to a Base Rate Advance at the end of the
                        Interest Period then in effect for such Eurocurrency
                        Rate Advance.

REFERENCE BANKS:        Citibank, BofA, BNP, Barclays, Deutsche and Morgan.


INTEREST PAYMENTS:      At the end of each Interest Period for each Advance,
                        but no less frequently than quarterly.  Interest will
                        be computed on a 365/366-day basis for Base Rate
                        Advances and a 360-day basis for Eurocurrency Rate
                        Advances.

UTILIZATION FEE:        As per the attached Pricing Grid, based on the
                        Company's long-term senior unsecured
                        non-credit-enhanced debt ratings.  The Utilization
                        Fee will be added to the Applicable Margin for any
                        date where outstanding Advances exceed 33 1/3% and
                        66 2/3% of commitments.  The Utilization Fee will be
                        calculated on a 360-day basis and will be payable on
                        the same basis as interest.

BORROWINGS:             Borrowings shall be in minimum principal amounts of
                        $10,000,000 and integral multiples of $1,000,000 in
                        excess thereof.  All Advances (other than Competitive
                        Bid Advances) shall be made by the Lenders ratably in
                        proportion to their respective Commitments. Other
                        than Competitive Bid Advances, borrowings will be
                        available on same day notice for Base Rate Advances
                        and 3 business days notice for Eurocurrency Rate
                        Advances.

AVAILABILITY:           From the Closing Date and prior to the Commitment
                        Termination Date, the Borrowers may, subject to the
                        terms of the 364-Day Facility, borrow, repay and
                        reborrow.

COMPETITIVE BID
OPTION:                 The Borrowers may request the Agent to solicit
                        competitive bids from the Lenders (individually a
                        "Bidder" and collectively the "Bidders") for Advances
                        in U.S. Dollars or Foreign Currencies (meaning any
                        currency other than U.S. Dollars which is freely
                        transferable and convertible into U.S. Dollars), for
                        requested maturities of 5 days or more.  Each Bidder
                        will bid at its discretion.  Each Borrower's notice
                        requesting such bids will be given to the Agent at
                        least 1 business day prior to the proposed Advance
                        date for fixed rate U.S. Dollar based bids, at least
                        4 business days prior to the proposed Advance date
                        for Eurocurrency Rate U.S. Dollar based bids, at
                        least 3 business days prior to the proposed Advance
                        date for fixed or local rate based bids in Foreign
                        Currencies and at least 5 business days prior to the
                        proposed Advance date for Eurocurrency Rate based
                        bids in Foreign Currencies, and will specify the
                        proposed date of Advance, amount, currency and
                        maturity date of the proposed Advance, interest
                        payment schedule, the interest rate basis to be used
                        by the Bidders in bidding, the location of such
                        Borrower's account to which funds are to be advanced,
                        and such other terms as such Borrower may specify.
                        The Agent will advise the Bidders of the terms of the
                        applicable Borrower's notice, and such Bidders as
                        elect may submit bids, which the Agent shall provide
                        to such Borrower.

                        The Borrower giving the notice may accept one or more
                        bids, provided that the aggregate outstanding
                        Advances of all Lenders on the date of, and after
                        giving effect to, any Competitive Bid Advance shall
                        not exceed the aggregate Commitments at such time.
                        Bids will be accepted in order of the lowest to the
                        highest rates ("Bid Rates").  The Borrowers may not
                        accept bids in excess of the requested bid amount for
                        any maturity.  If two or more Bidders bid at the same
                        Bid Rate, the amount to be borrowed at such Bid Rate
                        will be allocated among such Bidders in proportion to
                        the amount which each Bidder bid at such Bid Rate.

                        Each Borrowing under the Competitive Bid Option shall
                        be in an amount of not less than $10,000,000 and
                        integral multiples of $1,000,000 in excess thereof.
                        While any such Borrowing is outstanding, it will be
                        deemed usage of the 364-Day Facility for the purposes
                        of availability and the Commitment of each Lender
                        (whether or not a Bidder) shall be reduced and deemed
                        used for all purposes by its pro rata share (based on
                        its respective Commitment) of an amount equal to the
                        outstanding amount of such Borrowing.  However, each
                        Lender's Advance made under the Competitive Bid
                        Option shall not reduce such Lender's obligation to
                        lend its pro rata share of the remaining undrawn
                        Commitment.

COMPETITIVE BID
ADMINISTRATIVE FEE:     As agreed between Citibank and the Company.

ANNUAL AGENCY FEE:      As agreed between Citibank and the Company.

REPAYMENT:              The Borrowers will repay (i) each Advance (other than
                        a Competitive Bid Advance) no later than on the
                        Commitment Termination Date , subject to the Term
                        Loan Conversion Option and (ii) each Competitive Bid
                        Advance at the maturity date specified in the
                        applicable Borrower's notice requesting such
                        Competitive Bid Advance.

OPTIONAL
PREPAYMENT:             Advances (other than Competitive Bid Advances) may be
                        prepaid without penalty, with notice not later than
                        11:00 A.M. for Base Rate Advances, and with two
                        business days notice for Eurocurrency Rate Advances,
                        in minimum amounts of $10,000,000 and increments of
                        $1,000,000 in excess thereof.  The Borrowers will
                        bear all costs related to the prepayment of a
                        Eurocurrency Rate Advance prior to the last day of
                        its Interest Period.  Competitive Bid Advances may
                        not be prepaid unless the invitation for Competitive
                        Bid Advances specifies the right to prepay, and in
                        such case the Borrowers will reimburse the Lender(s)
                        for any funding losses.

LOAN
DOCUMENTATION:          The commitments will be subject to preparation,
                        execution and delivery of mutually acceptable loan
                        documentation which will contain conditions
                        precedent, representations and warranties, covenants,
                        events of default and other provisions customary for
                        facilities of this nature, including, but not limited
                        to, those noted below.  Except as otherwise
                        specifically stated in this term sheet, terms and
                        conditions set forth in documentation for the 364-Day
                        Facility shall be substantially the same as such
                        terms and conditions set forth in the Company's
                        existing $750 million five-year credit facility.

DOLLAR EQUIVALENT
VALUE LIMITATION
FOR ALL ADVANCES:       If at any time the dollar equivalent value of all
                        Advances exceeds 103%  of the Facility Amount, the
                        Borrowers shall promptly make a mandatory prepayment
                        to reduce the dollar equivalent value of all Advances
                        to 100% of the Facility Amount.

DOLLAR EQUIVALENT
VALUE LIMITATION FOR
ADVANCES IN MAJOR
CURRENCIES:             If at any time the dollar equivalent value of all
                        Advances in Major and Alternate Currencies exceeds
                        110% of $200,000,000 (the "Major Currency Sublimit"),
                        the Borrowers shall make a mandatory prepayment at
                        the end of the respective Interest Periods for such
                        Advances to reduce the dollar equivalent value of all
                        Advances in Major Currencies to 100% of the Major
                        Currency Sublimit.

CONDITIONS
PRECEDENT TO
CLOSING:                Customary for facilities of this nature, including,
                        but not limited to:

                        (1)   The Notes, if requested.

                        (2)   Board resolutions.

                        (3)   Incumbency certificate.

                        (4)   Favorable legal opinion from counsel for the
                              Company.

                        (5)   Favorable legal opinion from counsel for the
                              Agent.

                        (6)   Accuracy of representations and warranties.

                        (7)   Amendment of the Borrowers' existing
                              $750,000,000 credit facility to have terms
                              substantially similar to the $2,250,000,000
                              Five-Year Credit Facility among the Borrowers,
                              the Lenders and the Agent.

                        (8)   Termination of commitments and repayment in
                              full of amounts owing under the $900,000,000
                              364-Day Backstop Credit Agreement among the
                              Borrowers, the Lenders and the Agent.
CONDITION PRECEDENT
TO INITIAL ADVANCE:     The Lenders shall be satisfied that any applicable
                        state takeover law and any supermajority charter
                        provisions are not applicable to the acquisition of
                        the Target or that any conditions for avoiding the
                        restrictions set forth therein have been satisfied.

CONDITIONS
PRECEDENT TO ALL
ADVANCES:               Customary for facilities of this nature, including,
                        but not limited to:

                        (1)   All representations and warranties are true and
                              correct in all material respects on and as of
                              the date of the Borrowing, before and after
                              giving effect to such Borrowing and to the
                              application of the proceeds therefrom, as
                              though made on and as of such date; provided
                              that the representation as to no material
                              adverse change shall be made only at Closing
                              and Renewal of Commitments.

                        (2)   No Event of Default or event which, with the
                              giving of notice or passage of time or both,
                              would be an Event of Default, has occurred and
                              is continuing, or would result from such
                              Borrowing.

CONDITIONS PRECEDENT TO
INITIAL ADVANCE TO EACH
BORROWER THAT IS A
DESIGNATED SUBSIDIARY:  Customary for facilities of this nature, including,
                        but not limited to:

                        (1)   Such Borrower's Note if requested;

                        (2)   Representations by the Company that such
                              Borrower has received all governmental
                              authorizations, consents, approvals and
                              licenses under applicable laws and regulations
                              for such Borrower to execute and deliver the
                              Credit Agreement and to perform its obligations
                              thereunder;

                        (3)   Board resolutions of such Borrower;

                        (4)   Incumbency Certificate of such Borrower;

                        (5)   Designation Letter;

                        (6)   Accuracy of representations and warranties of
                              such Borrower;

                        (7)   Favorable legal opinion from counsel for such
                              Borrower.

ADDITIONAL CONDITION
PRECEDENT TO 
COMPETITIVE
BID ADVANCES:           The information provided by the applicable Borrower
                        does not contain an untrue statement or omit to state
                        any material fact necessary to make the statements
                        contained therein, in light of the circumstances
                        under which they are made, not misleading.

REPRESENTATIONS
AND WARRANTIES:         Customary for facilities of this nature, including,
                        but not limited to:

                        (1)   Confirmation of corporate status and authority;

                        (2)   Execution, delivery, and performance of loan
                              documents do not violate law or existing
                              agreements;

                        (3)   No government or regulatory approvals required;

                        (4)   No litigation currently or threatened which is
                              likely to be determined adversely so as to
                              affect materially the ability of the Company to
                              pay its debts, including the Advances, or which
                              would affect the legality, validity and
                              enforceability of the loan documents;

                        (5)   No material adverse change in financial
                              condition or results of operations or prospects
                              since December 31, 1997 for the Company and its
                              Consolidated Subsidiaries taken as a whole;

                        (6)   Accuracy of information, financial statements;

                        (7)   Material compliance with laws and regulations,
                              including ERISA and all applicable
                              environmental laws and regulations;

                        (8)   Legality, validity, binding effect and
                              enforceability of the loan documents;

                        (9)   Not an  investment  company  or  public  utility
                              holding company.

FINANCIAL
COVENANTS:              (1)   Minimum Net Worth greater than or equal to
                              $3,300,000,000;

                        (2)   Limitation on Domestic Subsidiary Indebtedness.

COVENANTS:              Customary for facilities of this nature, including,
                        but not limited to:

                        (1)   Preservation of corporate existence;

                        (2)   Material compliance with laws (including ERISA
                              and applicable environmental laws);

                        (3)   Payment of taxes;

                        (4)   Payment of material obligations;

                        (5)   Visitation rights;

                        (6)   Maintenance of books and records;

                        (7)   Maintenance of properties;

                        (8)   Maintenance of insurance;

                        (9)   Negative pledge and limitations on liens and
                              secured debt with certain exceptions
                              essentially in conformity to Section 1005 of
                              the 1985 Indenture (which will not be
                              incorporated by reference, but will be directly
                              inserted);

                        (10)  Certain restrictions on change of business,
                              consolidations, mergers, sale of assets;

                        (11)  Certain reporting requirements, including
                              financial and ERISA;

                        (12)  Use of proceeds;

                        (13)  Change of control.

EVENTS OF DEFAULT:      Customary for facilities of this nature, including,
                        but not limited to:

                        (1)   Failure to pay principal when due and
                              interest, Facility Fee and Utilization Fee
                              within three business days of when due;

                        (2)   Representations or warranties materially
                              incorrect;

                        (3)   Failure to comply with covenants (with notice
                              and cure periods as applicable);

                        (4)   Cross-default to payment defaults on principal
                              aggregating $100,000,000, excluding defaults on
                              indebtedness to any institution to the extent
                              the Company or a Subsidiary has deposits with
                              such institution sufficient to repay such
                              indebtedness, or to default or event if the
                              effect is to accelerate or permit acceleration
                              of any such debt. This cross default provision
                              shall not apply to debt of any subsidiary or
                              affiliate of the Company located in China,
                              India, Commonwealth of Independent States or
                              Turkey provided that such debt is not
                              guaranteed or supported in any legally
                              enforceable manner by any Borrower or by any
                              subsidiary or affiliate of the Company located
                              outside of these countries, and such default is
                              due to the direct or indirect action of any
                              government entity or agency of these countries
                              and provided further each subsidiary to which
                              this exception applies shall not have assets of
                              more than $80 million individually nor
                              collectively $300 million measured as of the
                              most recent calendar quarter end;

                        (5)   Unsatisfied judgment or order in excess of
                              $100,000,000 individually or in the
                              aggregate. A carve-out will be provided
                              similar to that contained in the second
                              sentence of item (4) immediately above;

                        (6)   Bankruptcy/insolvency;

                        (7)   ERISA Event and aggregate Plan Insufficiencies
                              exceed  $100,000,000, or Plan reorganization or
                              termination resulting in an increase in annual
                              contributions exceeding  $100,000,000.

ECONOMIC MONETARY
UNION:                  Appropriate language will be incorporated into the
                        364-Day Facility to address certain issues that will
                        be raised by the introduction of the Euro on January
                        1, 1999 and the removal from circulation of the
                        various national currency denominations on and after
                        January 1, 2002.

OTHER:                  Loan documentation will include:

                        (1)   Indemnification of Agent and Lenders and their
                              respective affiliates, officers, directors,
                              employees, agents and advisors for any
                              liabilities and expenses arising out of the
                              364-Day Facility or the use of proceeds.

                        (2)   Normal agency language.

                        (3)   Majority Lenders defined as those holding 51%
                              of outstanding Advances (excluding Competitive
                              Bid Advances) or, if none, Commitments.  The
                              consent of all the Lenders will be required to
                              increase the size of the 364-Day Facility, to
                              extend the maturity or to decrease interest
                              rates or fees.

                        (4)   The Company will have the right to replace any
                              Lender through assignment or the addition of a
                              new Lender provided that no Event of Default
                              has occurred and is continuing and no more than
                              3 Lenders in any calendar year may be replaced.
ASSIGNMENTS AND
PARTICIPATIONS:         Each Lender will have the right to assign to one or
                        more Eligible Assignees all or a portion of its
                        rights and obligations under the loan documents with
                        the consent of the Company (not to be unreasonably
                        withheld).  Minimum aggregate assignment level of
                        $10,000,000 and increments of $1,000,000 in excess
                        thereof.  The parties to the assignment (other than
                        the Company) shall pay to the Agent an administrative
                        fee of $3,500 per assignment.

                        Each Lender will also have the right, without the
                        consent of the Company or the Agent, to assign (i) as
                        security, all or part of its rights under the loan
                        documents to any Federal Reserve Bank and (ii) with
                        notice to the Company and the Agent, all or part of
                        its rights or obligations under the loan documents to
                        any of its affiliates.

                        Each Lender will have the right to sell
                        participations in its rights and obligations under
                        the loan documents, subject to customary restrictions
                        on the participants' voting rights.  Each Lender
                        selling a participation shall notify the Company
                        within 30 days of such sale.

YIELD PROTECTION,
TAXES, AND
OTHER DEDUCTIONS:       (1)   The loan documents will contain yield
                              protection provisions, customary for facilities
                              of this nature, protecting the Lenders in the
                              event of unavailability of funding, funding
                              losses, reserve and capital adequacy
                              requirements.

                        (2)   All payments to be free and clear of any
                              present or future taxes, withholdings or other
                              deductions whatsoever (other than income taxes
                              in the jurisdiction of the Lender's applicable
                              lending office).

                        The Company will have the right to replace any Lender
                        which requests reimbursements for amounts owing under
                        (1) and (2) above provided that (i) no Event of
                        Default, or event which with the giving of notice or
                        lapse of time or both would be an Event of Default,
                        has occurred and is continuing, (ii) the Company has
                        satisfied all of its obligations under the Facility
                        relating to such Lender, and (iii) any replacement is
                        acceptable to the Agent and the Company will have
                        paid the Agent a $3,500 administrative fee if such
                        replacement Lender is not an existing Lender.

GOVERNING LAW:          State of New York.

COUNSEL TO
THE AGENT:              Shearman & Sterling

EXPENSES:               The Company shall reimburse each Arranger, the
                        Co-Arranger and Citibank for all agreed out-of-pocket
                        expenses  incurred by them in the negotiation,
                        syndication and execution of the Facility.  Such
                        expenses shall be reimbursed by the Company upon
                        presentation of a statement of account, regardless of
                        whether the transaction contemplated is actually
                        completed or the loan documents are signed.



                             ALLIEDSIGNAL INC.

              $7,000,000,000 364-DAY REVOLVING CREDIT FACILITY
                                PRICING GRID


=============================================================================================== LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 4 LEVEL 5 LEVEL 6 ----------------------------------------------------------------------------------------------- BASIS FOR LT Senior LT Senior LT Senior LT Senior LT Senior LT Senior PRICING Unsecured Unsecured Unsecured Unsecured Unsecured Unsecured Debt Rated Debt Rated Debt Rated Debt Rated Debt Rated Debt Rated At Least A Less Than Less Than Less Than Less Than Less Than By Standard Level 1 But Level 2 But Level 3 But Level 4 But Level 5. & Poor's Or At Least A- At Least At Least At Least A2 By By Standard BBB+ By BBB By BBB-By Moody's. & Poor's Or Standard & Standard & Standard & A3 By Poor's Or Poor's Or Poor's Or Moody's. BAA1 By BAA2 By BAA3 By Moody's. Moody's. Moody's. ----------------------------------------------------------------------------------------------- FACILITY FEE 5.5 bps 7.0 bps 8.5 bps 9.5 bps 12.0 bps 20.0 bps (FN1) ----------------------------------------------------------------------------------------------- APPLICABLE 17.0 bps 20.5 bps 26.5 bps 30.5 bps 40.5 bps 50.0 bps MARGIN ----------------------------------------------------------------------------------------------- DRAWN COST LIBOR+22.5 LIBOR+27.5 LIBOR+35.0 LIBOR+40.0 LIBOR+52.5 LIBOR+70.0 (FN2) bps bps bps bps bps bps ----------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------- UTILIZATION FEE (USAGE 0.0 bps 2.5 bps 2.5 bps 5.0 bps 5.0 bps 5.0 bps (greater than or equal to) 33 1/3% AND (less than) 66 2/3%) ----------------------------------------------------------------------------------------------- UTILIZATION FEE 2.5 bps 5.0 bps 5.0 bps 10.0 bps 10.0 bps 17.5 bps (USAGE (greater than or equal to) 66 2/3%) ----------------------------------------------------------------------------------------------- FULLY DRAWN LIBOR+25.0 LIBOR+32.5 LIBOR+40.0 LIBOR+50.0 LIBOR+62.5 LIBOR+87.5 COST (FN3) bps bps bps bps bps bps ----------------------------------------------------------------------------------------------- (1) Paid quarterly in arrears on each bank's commitment irrespective of usage. (2) Facility Fee plus Applicable Margin. (3) Drawn Cost plus Utilization Fee. bps = basis points per annum
ALLIEDSIGNAL INC. $7,000,000,000 ONE YEAR TERM-OUT OPTION PRICING GRID ----------------------------------------------------------------------------------============= LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 4 LEVEL 5 LEVEL 6 ----------------------------------------------------------------------------------------------- BASIS FOR LT Senior LT Senior LT Senior LT Senior LT Senior LT Senior PRICING Unsecured Unsecured Unsecured Unsecured Unsecured Unsecured Debt Rated Debt Rated Debt Rated Debt Rated Debt Rated Debt Rated At Least A Less Than Less Than Less Than Less Than Less Than By Standard Level 1 But Level 2 But Level 3 But Level 4 But Level 5. & Poor's Or At Least A- At Least At Least At Least A2 By By Standard BBB+ By BBB By BBB-By Moody's. & Poor's Or Standard & Standard & Standard & A3 By Poor's Or Poor's Or Poor's Or Moody's. BAA1 By BAA2 By BAA3 By Moody's. Moody's. Moody's. =============================================================================================== APPLICABLE 22.5 bps 27.5 bps 35.0 bps 40.0 bps 52.5 bps 70.0 bps MARGIN =============================================================================================== UTILIZATION FEE (USAGE 0.0 bps 2.5 bps 2.5 bps 5.0 bps 5.0 bps 5.0 bps (greater than or equal to) 33 1/3% AND (less than) 66 2/3%) ----------------------------------------------------------------------------------------------- UTILIZATION FEE 2.5 bps 5.0 bps 5.0 bps 10.0 bps 10.0 bps 17.5 bps (USAGE (greater than or equal to) 66 2/3%) ----------------------------------------------------------------------------------------------- FULLY DRAWN LIBOR+25.0 LIBOR+32.5 LIBOR+40.0 LIBOR+50.0 LIBOR+62.5 LIBOR+87.5 COST (FN1) bps bps bps bps bps bps =============================================================================================== (1) Applicable Margin plus Utilization Fee. bps = basis points per annum
ALLIEDSIGNAL INC. $900,000,000 ONE YEAR TERM-OUT OPTION PRICING GRID
================================================================================================================== LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 4 LEVEL 5 LEVEL 6 ------------------------------------------------------------------------------------------------------------------ BASIS FOR LT Senior LT Senior LT Senior LT Senior LT Senior LT Senior PRICING Unsecured Debt Unsecured Debt Unsecured Debt Unsecured Debt Unsecured Debt Unsecured Debt Rated At Least Rated Less Than Rated Less Rated Less Rated Less Than Rated Less A By Standard Level 1 But At Than Level 2 Than Level 3 Level 4 But At Than Level 5. & Poor's Or A2 Least A- By But At Least But At Least Least BBB-By By Moody's. Standard & BBB+ By BBB By Standard & Poor's Or A3 By Standard & Standard & Poor's Or BAA3 Moody's. Poor's Or BAA1 Poor's Or BAA2 By Moody's. By Moody's. By Moody's. ------------------------------------------------------------------------------------------------------------------ APPLICABLE 22.5 bps 27.5 bps 35.0 bps 40.0 bps 52.5 bps 70.0 bps MARGIN ------------------------------------------------------------------------------------------------------------------ UTILIZATION FEE (USAGE 0.0 bps 2.5 bps 2.5 bps 5.0 bps 5.0 bps 5.0 bps (greater than or equal to) 33 1/3% AND (less than) 66 2/3%) ------------------------------------------------------------------------------------------------------------------ UTILIZATION FEE (USAGE (greater than or equal to) 66 2/3%) 2.5 bps 5.0 bps 5.0 bps 10.0 bps 10.0 bps 17.5 bps ------------------------------------------------------------------------------------------------------------------ FULLY DRAWN LIBOR+25.0 bps LIBOR+32.5 bps LIBOR+40.0 bps LIBOR+50.0 bps LIBOR+62.5 bps LIBOR+87.5 bps COST(FN1) ------------------------------------------------------------------------------------------------------------------ --------------------- (1) Applicable Margin plus Utilization Fee. bps = basis points per annum
ALLIEDSIGNAL INC. SUMMARY OF TERMS AND CONDITIONS $2,250,000,000 5-YEAR MULTI CURRENCY REVOLVING CREDIT FACILITY BORROWERS: AlliedSignal Inc. (the "Company") and any Designated Subsidiaries (together with the Company, the "Borrowers"), fully and unconditionally guaranteed by the Company. FACILITY AMOUNT: $2,250,000,000 or such other amount as provided for under the Commitment Increase and Commitment Reduction sections of this Summary of Terms and Conditions, but, in any event, no more than $5,000,000,000. TYPE OF FACILITY: Five year unsecured multi currency revolving credit facility (the "5-Year Facility"). PURPOSE: Finance the acquisition of AMP Inc. (the "Target") and general corporate purposes, including commercial paper backstop. ADMINISTRATIVE AGENT: Citibank, N.A. ("Citibank", or the "Agent"). BOOKRUNNER: Salomon Smith Barney Inc. ("SSB"). ARRANGERS: Banque Nationale de Paris ("BNP"), Barclays Capital, the investment banking division of Barclays Bank PLC, Deutsche Bank Securities Inc., J.P. Morgan Securities, Inc., NationsBanc Montgomery Securities LLC and SSB. LENDERS: Citibank, Bank of America NT&SA ("BofA"), BNP, Barclays Bank PLC ("Barclays"), Deutsche Bank AG, New York Branch and/or Cayman Islands Branch ("Deutsche"), Morgan Guaranty Trust Company of New York ("Morgan") and other financial institutions acceptable to the Arrangers and the Company. CLOSING DATE: Such date as may be agreed upon by the Company, the Arrangers and the Agent. COMMITMENT TERMINATION DATE: Fifth anniversary of the Closing Date. ADVANCES: At the applicable Borrower's option, either Eurocurrency Rate Advances, Base Rate Advances or Competitive Bid Advances. Each Lender will be severally obligated to make its pro rata share of any Eurocurrency Rate Advance or Base Rate Advance. Eurocurrency Rate Advances, at the applicable Borrower's option, may be made in U.S. Dollars, Pounds Sterling, Deutsche Marks, French Francs, Euros/Ecu and Japanese Yen (the "Major Currencies"). COMMITMENT INCREASE: The Company shall have the right, no more than once a year after Closing, to increase the Facility Amount, in minimum increments of $50,000,000, up to a maximum Facility Amount of $5,000,000,000, provided that no Event of Default, or event which with the giving of notice or lapse of time or both would be an Event of Default, has occurred and is continuing. The Company may offer the increase to (x) its existing Lenders, and each existing Lender will have the right, but no obligation, to commit to all or a portion of the proposed increase (the "Proposed Increased Commitment") or (y) third party financial institutions provided that the minimum commitment of each such institution equals or exceeds $10,000,000. COMMITMENT REDUCTION: The Company will have the right, upon at least three business days' notice, to terminate or cancel, in whole or in part, the unused portion of the 5-Year Facility Amount in excess of the aggregate outstanding Competitive Bid Advances, provided that each partial reduction shall be in a minimum amount of $10,000,000 or any whole multiple of $1,000,000 in excess thereof. Once terminated, a commitment may not be reinstated except as provided for in the Commitment Increase section. FACILITY FEE: As per attached Pricing Grid, based on the Company's long-term senior unsecured non-credit enhanced debt ratings, payable on each Lender's commitment, irrespective of usage, quarterly in arrears on the last day of each March, June, September and December, and on the Commitment Termination Date. The Facility Fee shall be calculated on the basis of actual number of days elapsed in a year of 365/366 days. EXTENSION OF COMMITMENT TERMINATION DATE: At least 45 but no earlier than 60 days prior to each anniversary date of the 5-Year Facility and provided all representations and warranties are true and correct in all material respects and no Event of Default has occurred and is continuing, the Company may request that the Lenders extend for an additional one year the then applicable Commitment Termination Date. The Company may replace any non-consenting Lender by assignment to any consenting Lender or new Lender, or by termination of a non-consenting Lender's commitment. INTEREST RATES AND INTEREST PERIODS: At the applicable Borrower's option, any Advance that is made to it will be available at the rates and for the Interest Periods stated below: a) Base Rate: a fluctuating rate equal to the Base Rate plus the Applicable Margin. The Base Rate is a fluctuating rate per annum equal at all times to the highest of (i) Citibank's publicly announced "base" rate, (ii) 1/2 of 1% percent per annum above the latest three-week moving average of secondary market morning offering rates in the United States for three-month certificates of deposit of major U.S. money market banks, adjusted to the nearest 1/16 of 1%, and (iii) a rate equal to 1/2 of 1% per annum above the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers. b) Eurocurrency Rate: a periodic fixed rate equal to the Eurocurrency Rate plus the Applicable Margin. The Eurocurrency Rate, which is a rate per annum equal to the London Interbank Offered Rate as determined by reference to Dow Jones Markets screen 3750 (or other applicable pages with respect to a Major Currency), or if not applicable the average rate per annum (rounded upward to the nearest 1/16 of 1%) at which deposits in the applicable Major Currency are offered by the Reference Banks to prime banks in the London interbank market at 11:00 A.M. (London time) two business days before the first day of the Interest Period and in amounts approximately equal to the Reference Banks' pro rata share of the contemplated Advance for a given Interest Period and with a maturity equal to such Interest Period, adjusted for reserve requirements and, in the case of particular Major Currencies, as appropriate for such currencies. The Eurocurrency Rate shall be fixed for Interest Periods of 1, 2, 3, 6, 9 or 12 months (9 or 12 month options if available to all Lenders). APPLICABLE MARGIN: The Applicable Margin means: (i) for Base Rate Advances, 0.00 basis points per annum; (ii) for Eurocurrency Rate Advances, an amount which will vary as per the attached Pricing Grid, based on the Company's long-term senior unsecured non-credit enhanced debt ratings. Upon the occurrence and during the continuance of any monetary Event of Default, the Applicable Margin will increase by 100 basis points per annum, and if such Advance is a Eurocurrency Rate Advance, it will convert to a Base Rate Advance at the end of the Interest Period then in effect for such Eurocurrency Rate Advance. REFERENCE BANKS: Citibank, BofA, BNP, Barclays, Deutsche and Morgan. INTEREST PAYMENTS: At the end of each Interest Period for each Advance, but no less frequently than quarterly. Interest will be computed on a 365/366-day basis for Base Rate Advances and a 360-day basis for Eurocurrency Rate Advances. UTILIZATION FEE: As per the attached Pricing Grid, based on the Company's long-term senior unsecured non-credit-enhanced debt ratings. The Utilization Fee will be added to the Applicable Margin for any date where outstanding Advances exceed 33 1/3% and 66 2/3% of commitments. The Utilization Fee will be calculated on a 360-day basis and will be payable on the same basis as interest. BORROWINGS: Borrowings shall be in minimum principal amounts of $10,000,000 and integral multiples of $1,000,000 in excess thereof. All Advances (other than Competitive Bid Advances) shall be made by the Lenders ratably in proportion to their respective Commitments. Other than Competitive Bid Advances, borrowings will be available on same day notice for Base Rate Advances and 3 business days notice for Eurocurrency Rate Advances. AVAILABILITY: From the Closing Date and prior to the Commitment Termination Date, the Borrowers may, subject to the terms of the 5-Year Facility, borrow, repay and reborrow. COMPETITIVE BID OPTION: The Borrowers may request the Agent to solicit competitive bids from the Lenders (individually a "Bidder" and collectively the "Bidders") for Advances in U.S. Dollars or Foreign Currencies (meaning any currency other than U.S. Dollars which is freely transferable and convertible into U.S. Dollars), for requested maturities of 5 days or more. Each Bidder will bid at its discretion. Each Borrower's notice requesting such bids will be given to the Agent at least 1 business day prior to the proposed Advance date for fixed rate U.S. Dollar based bids, at least 4 business days prior to the proposed Advance date for Eurocurrency Rate U.S. Dollar based bids, at least 3 business days prior to the proposed Advance date for fixed or local rate based bids in Foreign Currencies and at least 5 business days prior to the proposed Advance date for Eurocurrency Rate based bids in Foreign Currencies, and will specify the proposed date of Advance, amount, currency and maturity date of the proposed Advance, interest payment schedule, the interest rate basis to be used by the Bidders in bidding, the location of such Borrower's account to which funds are to be advanced, and such other terms as such Borrower may specify. The Agent will advise the Bidders of the terms of the applicable Borrower's notice, and such Bidders as elect may submit bids, which the Agent shall provide to such Borrower. The Borrower giving the notice may accept one or more bids, provided that the aggregate outstanding Advances of all Lenders on the date of, and after giving effect to, any Competitive Bid Advance shall not exceed the aggregate Commitments at such time. Bids will be accepted in order of the lowest to the highest rates ("Bid Rates"). The Borrowers may not accept bids in excess of the requested bid amount for any maturity. If two or more Bidders bid at the same Bid Rate, the amount to be borrowed at such Bid Rate will be allocated among such Bidders in proportion to the amount which each Bidder bid at such Bid Rate. Each Borrowing under the Competitive Bid Option shall be in an amount of not less than $10,000,000 and integral multiples of $1,000,000 in excess thereof. While any such Borrowing is outstanding, it will be deemed usage of the 5-Year Facility for the purposes of availability and the Commitment of each Lender (whether or not a Bidder) shall be reduced and deemed used for all purposes by its pro rata share (based on its respective Commitment) of an amount equal to the outstanding amount of such Borrowing. However, each Lender's Advance made under the Competitive Bid Option shall not reduce such Lender's obligation to lend its pro rata share of the remaining undrawn Commitment. COMPETITIVE BID ADMINISTRATIVE FEE: As agreed between Citibank and the Company. ANNUAL AGENCY FEE: As agreed between Citibank and the Company. REPAYMENT: The Borrowers shall repay (i) each Advance (including a Competitive Bid Advance) no later than on the Commitment Termination Date and (ii) each Competitive Bid Advance at the maturity date specified in the applicable Borrower's notice requesting such Competitive Bid Advance. OPTIONAL PREPAYMENT: Advances (other than Competitive Bid Advances) may be prepaid without penalty, with notice not later than 11:00 A.M. for Base Rate Advances, and with two business days notice for Eurocurrency Rate Advances, in minimum amounts of $10,000,000 and increments of $1,000,000 in excess thereof. The Borrowers will bear all costs related to the prepayment of a Eurocurrency Rate Advance prior to the last day of its Interest Period. Competitive Bid Advances may not be prepaid unless the invitation for Competitive Bid Advances specifies the right to prepay, and in such case the Borrowers will reimburse the Lender(s) for any funding losses. LOAN DOCUMENTATION: The commitments will be subject to preparation, execution and delivery of mutually acceptable loan documentation which will contain conditions precedent, representations and warranties, covenants, events of default and other provisions customary for facilities of this nature, including, but not limited to, those noted below. Except as otherwise specifically stated in this term sheet, terms and conditions set forth in documentation for the 5-Year Facility shall be substantially the same as such terms and conditions set forth in the Company's existing $750 million five-year facility. DOLLAR EQUIVALENT VALUE LIMITATION FOR ALL ADVANCES: If at any time the dollar equivalent value of all Advances exceeds 103% of the Facility Amount, the Borrowers shall promptly make a mandatory prepayment to reduce the dollar equivalent value of all Advances to 100% of the Facility Amount. DOLLAR EQUIVALENT VALUE LIMITATION FOR ADVANCES IN MAJOR CURRENCIES: If at any time the dollar equivalent value of all Advances in Major and Alternate Currencies exceeds 110% of $200,000,000 (the "Major Currency Sublimit"), the Borrowers shall make a mandatory prepayment at the end of the respective Interest Periods for such Advances to reduce the dollar equivalent value of all Advances in Major Currencies to 100% of the Major Currency Sublimit. CONDITIONS PRECEDENT TO CLOSING: Customary for facilities of this nature, including, but not limited to: (1) The Notes, if requested. (2) Board resolutions. (3) Incumbency certificate. (4) Favorable legal opinion from counsel for the Company. (5) Favorable legal opinion from counsel for the Agent. (6) Accuracy of representations and warranties. (7) Amendment of the Borrowers' existing $750,000,000 credit facility to have terms substantially similar to this Facility. CONDITIONS PRECEDENT TO INITIAL ADVANCE: The Lenders shall be satisfied that any applicable state takeover law and any supermajority charter provisions are not applicable to the acquisition of the Target or that any conditions for avoiding the restrictions set forth therein have been satisfied. CONDITIONS PRECEDENT TO ALL ADVANCES: Customary for facilities of this nature, including, but not limited to: (1) All representations and warranties are true and correct in all material respects on and as of the date of the Borrowing, before and after giving effect to such Borrowing and to the application of the proceeds therefrom, as though made on and as of such date; provided that the representation as to no material adverse change shall be made only at Closing and Extension of Termination Date. (2) No Event of Default or event which, with the giving of notice or passage of time or both, would be an Event of Default, has occurred and is continuing, or would result from such Borrowing. CONDITIONS PRECEDENT TO INITIAL ADVANCE TO EACH BORROWER THAT IS A DESIGNATED SUBSIDIARY: Customary for facilities of this nature, including, but not limited to: (1) Such Borrower's Note, if requested; (2) Representations by the Company that such Borrower has received all governmental authorizations, consents, approvals and licenses under applicable laws and regulations for such Borrower to execute and deliver the Credit Agreement and to perform its obligations thereunder; (3) Board resolutions of such Borrower; (4) Incumbency Certificate of such Borrower; (5) Designation Letter; (6) Accuracy of representations and warranties of such Borrower; (7) Favorable legal opinion from counsel for such Borrower. ADDITIONAL CONDITION PRECEDENT TO COMPETITIVE BID ADVANCES: The information provided by the applicable Borrower does not contain an untrue statement or omit to state any material fact necessary to make the statements contained therein, in light of the circumstances under which they are made, not misleading. REPRESENTATIONS AND WARRANTIES: Customary for facilities of this nature, including, but not limited to: (1) Confirmation of corporate status and authority; (2) Execution, delivery, and performance of loan documents do not violate law or existing agreements; (3) No government or regulatory approvals required; (4) No litigation currently or threatened which is likely to be determined adversely so as to affect materially the ability of the Company to pay its debts, including the Advances, or which would affect the legality, validity and enforceability of the loan documents; (5) No material adverse change in financial condition or results of operations or prospects since December 31, 1997 for the Company and its Consolidated Subsidiaries taken as a whole; (6) Accuracy of information, financial statements; (7) Material compliance with laws and regulations, including ERISA and all applicable environmental laws and regulations; (8) Legality, validity, binding effect and enforceability of the loan documents; (9) Not an investment company or public utility holding company. FINANCIAL COVENANTS: (1) Minimum Net Worth greater than or equal to $3,300,000,000; (2) Limitation on Domestic Subsidiary Indebtedness. OTHER COVENANTS: Customary for facilities of this nature, including, but not limited to: (1) Preservation of corporate existence; (2) Material compliance with laws (including ERISA and applicable environmental laws); (3) Payment of taxes; (4) Payment of material obligations; (5) Visitation rights; (6) Maintenance of books and records; (7) Maintenance of properties; (8) Maintenance of insurance; (9) Negative pledge and limitations on liens and secured debt with certain exceptions essentially in conformity to Section 1005 of the 1985 Indenture (which will not be incorporated by reference, but will be directly inserted); (10) Certain restrictions on change of business, consolidations, mergers, sale of assets; (11) Certain reporting requirements, including financial and ERISA; (12) Use of proceeds; (13) Change of control. EVENTS OF DEFAULT: Customary for facilities of this nature, including, but not limited to: (1) Failure to pay principal when due and interest, Facility Fee and Utilization Fee within three business days of when due; (2) Representations or warranties materially incorrect; (3) Failure to comply with covenants (with notice and cure periods as applicable); (4) Cross-default to payment defaults on principal aggregating $100,000,000, excluding defaults on indebtedness to any institution to the extent the Company or a Subsidiary has deposits with such institution sufficient to repay such indebtedness, or to default or event if the effect is to accelerate or permit acceleration of any such debt. This cross default provision shall not apply to debt of any subsidiary or affiliate of the Company located in China, India, Commonwealth of Independent States or Turkey provided that such debt is not guaranteed or supported in any legally enforceable manner by any Borrower or by any subsidiary or affiliate of the Company located outside of these countries, and such default is due to the direct or indirect action of any government entity or agency of these countries and provided further each subsidiary to which this exception applies shall not have assets of more than $80 million individually nor collectively $300 million measured as of the most recent calendar quarter end; (5) Unsatisfied judgment or order in excess of $100,000,000 individually or in the aggregate. A carve-out will be provided similar to that contained in the second sentence of item (4) immediately above; (6) Bankruptcy/insolvency; (7) ERISA Event and aggregate Plan Insufficiencies exceed $100,000,000, or Plan reorganization or termination resulting in an increase in annual contributions exceeding $100,000,000. ECONOMIC MONETARY UNION: Appropriate language will be incorporated into the 5-Year Facility to address certain issues that will be raised by the introduction of the Euro on January 1, 1999 and the removal from circulation of the various national currency denominations on and after January 1, 2002. OTHER: Loan documentation will include: (1) Indemnification of Agent and Lenders and their respective affiliates, officers, directors, employees, agents and advisors for any liabilities and expenses arising out of the 5-Year Facility or the use of proceeds. (2) Normal agency language. (3) Majority Lenders defined as those holding 51% of outstanding Advances (excluding Competitive Bid Advances) or, if none, Commitments. The consent of all the Lenders will be required to increase the size of the 5-Year Facility (other than as provided for in the Commitment Increase section), to extend the maturity or to decrease interest rates or fees. (4) The Company will have the right to replace any Lender through assignment or the addition of a new Lender, provided that no Event of Default has occurred and is continuing and no more than 3 Lenders in any calendar year may be replaced. ASSIGNMENTS AND PARTICIPATIONS: Each Lender will have the right to assign to one or more Eligible Assignees all or a portion of its rights and obligations under the loan documents with the consent of the Company (not to be reasonably withheld). Minimum aggregate assignment level of $10,000,000 and increments of $1,000,000 in excess thereof. The parties to the assignment (other than the Company) shall pay to the Agent an administrative fee of $3,500 per assignment. Each Lender will also have the right, without the consent of the Company or the Agent, to assign (i) as security, all or part of its rights under the loan documents to any Federal Reserve Bank and (ii) with notice to the Company and the Agent, all or part of its rights or obligations under the loan documents to any of its affiliates. Each Lender will have the right to sell participations in its rights and obligations under the loan documents, subject to customary restrictions on the participants' voting rights. Each Lender selling a participation shall notify the Company within 30 days of such sale. YIELD PROTECTION, TAXES, AND OTHER DEDUCTIONS: (1) The loan documents will contain yield protection provisions, customary for facilities of this nature, protecting the Lenders in the event of unavailability of funding, funding losses, reserve and capital adequacy requirements. (2) All payments to be free and clear of any present or future taxes, withholdings or other deductions whatsoever (other than income taxes in the jurisdiction of the Lender's applicable lending office). The Company will have the right to replace any Lender which requests reimbursements for amounts owing under (1) and (2) above, provided that (i) no Event of Default, or event which with the giving of notice or lapse of time or both would be an Event of Default, has occurred and is continuing, (ii) the Company has satisfied all of its obligations under the Facility relating to such Lender, and (iii) any replacement is acceptable to the Agent and the Company will have paid the Agent a $3,500 administrative fee if such replacement Lender is not an existing Lender. GOVERNING LAW: State of New York. COUNSEL TO THE AGENT: Shearman & Sterling EXPENSES: The Company shall reimburse each Arranger, the Co-Arranger and Citibank for all agreed out-of-pocket expenses incurred by them in the negotiation, syndication and execution of the Facility. Such expenses shall be reimbursed by the Company upon presentation of a statement of account, regardless of whether the transaction contemplated is actually completed or the loan documents are signed. ALLIEDSIGNAL INC. $2,250,000,000 5-YEAR REVOLVING CREDIT FACILITY PRICING GRID
============================================================================================ LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 4 LEVEL 5 LEVEL 6 ------------- ----------- ------------ ----------- ----------- ------------ --------- BASIS FOR LT Senior LT Senior LT Senior LT Senior LT Senior LT Senior PRICING Unsecured Unsecured Unsecured Unsecured Unsecured Unsecured Debt Debt Rated Debt Debt Debt Rated Debt Rated At Less Than Rated Rated Less Than Rated Least A Level 1 Less Than Less Level 4 Less Than By But At Level 2 Than But At Level 5. Standard Least A- But At Level 3 Least BBB- & Poor's By Least But At By Or A2 By Standard & BBB+ By Least BBB Standard & Moody's. Poor's Or Standard By Poor's Or A3 by & Poor's Standard BAA3 By Moody's. Or BAA1 & Poor's Moody's. by Or BAA2 Moody's. By Moody's. ------------- ----------- ------------ ----------- ----------- ------------ --------- FACILITY 7.5 bps 9.0 bps 10.5 bps 12.0 bps 14.5 bps 25.0 bps FEE(FN1) ------------- ----------- ------------ ----------- ----------- ------------ --------- APPLICABLE 15.0 bps 18.5 bps 24.5 bps 28.50bps 38.0 bps 45.0 bps MARGIN ------------- ----------- ------------ ----------- ----------- ------------ --------- DRAWN LIBOR LIBOR LIBOR LIBOR LIBOR LIBOR COST(FN2) +22.5 bps +27.5 bps +35.0 bps +40.0 bps +52.5 bps +70.0 bps ------------- ----------- ------------ ----------- ----------- ------------ --------- UTILIZATION 0.0 bps 2.5 bps 2.5 bps 5.0 bps 5.0 bps 5.0 bps FEE (USAGE (greater than or equal to) 33 1/3% AND (less than) 66 2/3%) ------------- ----------- ------------ ----------- ----------- ------------ --------- UTILIZATION 2.5 bps 5.0 bps 5.0 bps 10.0 bps 10.0 bps 17.5 bps FEE (USAGE (greater than or equal to) 66 2/3%) ------------- ----------- ------------ ----------- ----------- ------------ --------- FULLY DRAWN LIBOR LIBOR LIBOR LIBOR LIBOR LIBOR COST(FN3) +25.0 bps +32.5 bps +40.0 bps +50.0 bps +62.5 bps +87.5 bps ============================================================================================ (1) Paid quarterly in arrears on each bank's commitment irrespective of usage. (2) Facility Fee plus Applicable Margin. (3) Drawn Cost plus Utilization Fee. bps = basis points per annum
ALLIEDSIGNAL INC. SUMMARY OF TERMS AND CONDITIONS $900,000,000 364-DAY MULTI CURRENCY REVOLVING CREDIT FACILITY WITH ONE YEAR TERM-OUT OPTION BORROWERS: AlliedSignal Inc. (the "Company") and any Designated Subsidiaries (together with the Company, the "Borrowers"), fully and unconditionally guaranteed by the Company. FACILITY AMOUNT: $900,000,000. TYPE OF FACILITY: 364-day unsecured revolving credit facility (the "Backstop Facility"). Provided there is no default or Event of Default, the Company will have the option, on the Commitment Termination Date, to convert outstanding Advances into a term loan maturing no later than the first anniversary of the Commitment Termination Date (the "Term Loan Conversion Option"). PURPOSE: Finance the acquisition of AMP Inc. (the "Target") and general corporate purposes, including commercial paper backstop. ADMINISTRATIVE AGENT: Citibank, N.A. ("Citibank", or the "Agent"). BOOKRUNNER: Salomon Smith Barney Inc. ("SSB"). ARRANGERS: Banque Nationale de Paris ("BNP"), Barclays Capital, the investment banking division of Barclays Bank PLC, Deutsche Bank Securities Inc., J.P. Morgan Securities Inc., NationsBanc Montgomery Securities LLC and SSB. LENDERS: Citibank, Bank of America NT&SA ("BofA"), BNP, Barclays Bank PLC ("Barclays"), Deutsche Bank AG, New York Branch and/or Cayman Islands Branch ("Deutsche"), Morgan Guaranty Trust Company of New York ("Morgan") and other financial institutions acceptable to the Arrangers and the Company. CLOSING DATE: Such date as may be agreed upon by the Company, the Arrangers and the Agent. COMMITMENT TERMINATION DATE: 364 days from the Closing Date, subject to the Renewal of Commitments section. FINAL MATURITY DATE: The Commitment Termination Date, provided that, if the Company elects the Term Loan Conversion Option, the Final Maturity Date will be the first anniversary of the Commitment Termination Date. ADVANCES: At the applicable Borrower's option, either Eurocurrency Rate Advances, Base Rate Advances or Competitive Bid Advances. Each Lender will be severally obligated to make its pro rata share of any Eurocurrency Rate Advance or Base Rate Advance. Eurocurrency Rate Advances, at the applicable Borrower's option, may be made in U.S. Dollars, Pounds Sterling, Deutsche Marks, French Francs, Euros/Ecu and Japanese Yen (the "Major Currencies"). RENEWAL OF COMMITMENTS: At least 45 but no earlier than 60 days prior to each anniversary date of the Backstop Facility and provided all representations and warranties are true and correct in all material respects and no Event of Default has occurred and is continuing, the Company may request that the Lenders extend for an additional 364 days the then applicable Commitment Termination Date. The Company may replace any non-consenting Lender by assignment to any consenting Lender or new Lender, or by termination of a non-consenting Lender's commitment. COMMITMENT REDUCTION: The Company will have the right, upon at least three business days' notice, to terminate or cancel, in whole or in part, the unused portion of the Backstop Facility Amount in excess of the aggregate outstanding Competitive Bid Advances, provided that each partial reduction shall be in a minimum amount of $10,000,000 or any whole multiple of $1,000,000 in excess thereof. Once terminated, a commitment may not be reinstated. FACILITY FEE: At all times unless the Term Loan Conversion Option has been selected and is in effect, an amount which will vary as per attached Pricing Grid, based on the Company's long-term senior unsecured non-credit enhanced debt ratings, payable on each Lender's commitment, irrespective of usage, quarterly in arrears on the last day of each March, June, September and December, and on the Commitment Termination Date. The Facility Fee shall be calculated on the basis of actual number of days elapsed in a year of 365/366 days. No Facility Fee will be payable after the Term Loan Conversion Option has been selected and is in effect. INTEREST RATES AND INTEREST PERIODS: At the applicable Borrower's option, any Advance that is made to it will be available at the rates and for the Interest Periods stated below: a) Base Rate: a fluctuating rate equal to the Base Rate plus the Applicable Margin. The Base Rate is a fluctuating rate per annum equal at all times to the highest of (i) Citibank's publicly announced "base" rate, (ii) 1/2 of 1% percent per annum above the latest three-week moving average of secondary market morning offering rates in the United States for three-month certificates of deposit of major U.S. money market banks, adjusted to the nearest 1/16 of 1%, and (iii) a rate equal to 1/2 of 1% per annum above the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers. b) Eurocurrency Rate: a periodic fixed rate equal to the Eurocurrency Rate plus the Applicable Margin. The Eurocurrency Rate, which is a rate per annum equal to the London Interbank Offered Rate as determined by reference to Dow Jones Markets screen 3750 (or other applicable pages with respect to a Major Currency), or if not applicable the average rate per annum (rounded upward to the nearest 1/16 of 1%) at which deposits in the applicable Major Currency are offered by the Reference Banks to prime banks in the London interbank market at 11:00 A.M. (London time) two business days before the first day of the Interest Period and in amounts approximately equal to the Reference Banks' pro rata share of the contemplated Advance for a given Interest Period and with a maturity equal to such Interest Period, adjusted for reserve requirements and, in the case of particular Major Currencies, as appropriate for such currencies. The Eurocurrency Rate shall be fixed for Interest Periods of 1, 2, 3, 6 or 9 months if available to all Lenders. APPLICABLE MARGIN: The Applicable Margin means: (i) for Base Rate Advances, 0.00 basis points per annum; (ii) for Eurocurrency Rate Advances, (i) at all times unless the Term Loan Conversion Option has been selected and is in effect an amount which will vary as per the attached Pricing Grid, based on the Company's long-term senior unsecured non-credit enhanced debt ratings and, (ii) if the Term Loan Conversion Option has been selected and is in effect, an amount which will vary as per the attached Term-Out Option Pricing Grid. Upon the occurrence and during the continuance of any monetary Event of Default, the Applicable Margin will increase by 100 basis points per annum, and if such Advance is a Eurocurrency Rate Advance, it will convert to a Base Rate Advance at the end of the Interest Period then in effect for such Eurocurrency Rate Advance. REFERENCE BANKS: Citibank, BofA, BNP, Barclays, Deutsche and Morgan. INTEREST PAYMENTS: At the end of each Interest Period for each Advance, but no less frequently than quarterly. Interest will be computed on a 365/366-day basis for Base Rate Advances and a 360-day basis for Eurocurrency Rate Advances. UTILIZATION FEE: As per the attached Pricing Grid, based on the Company's long-term senior unsecured non-credit-enhanced debt ratings. The Utilization Fee will be added to the Applicable Margin for any date where outstanding Advances exceed 33 1/3% and 66 2/3% of commitments. The Utilization Fee will be calculated on a 360-day basis and will be payable on the same basis as interest. BORROWINGS: Borrowings shall be in minimum principal amounts of $10,000,000 and integral multiples of $1,000,000 in excess thereof. All Advances (other than Competitive Bid Advances) shall be made by the Lenders ratably in proportion to their respective Commitments. Other than Competitive Bid Advances, borrowings will be available on same day notice for Base Rate Advances and 3 business days notice for Eurocurrency Rate Advances. AVAILABILITY: From the Closing Date and prior to the Commitment Termination Date, the Borrowers may, subject to the terms of the Backstop Facility, borrow, repay and reborrow. COMPETITIVE BID OPTION: The Borrowers may request the Agent to solicit competitive bids from the Lenders (individually a "Bidder" and collectively the "Bidders") for Advances in U.S. Dollars or Foreign Currencies (meaning any currency other than U.S. Dollars which is freely transferable and convertible into U.S. Dollars), for requested maturities of 5 days or more. Each Bidder will bid at its discretion. Each Borrower's notice requesting such bids will be given to the Agent at least 1 business day prior to the proposed Advance date for fixed rate U.S. Dollar based bids, at least 4 business days prior to the proposed Advance date for Eurocurrency Rate U.S. Dollar based bids, at least 3 business days prior to the proposed Advance date for fixed or local rate based bids in Foreign Currencies and at least 5 business days prior to the proposed Advance date for Eurocurrency Rate based bids in Foreign Currencies, and will specify the proposed date of Advance, amount, currency and maturity date of the proposed Advance, interest payment schedule, the interest rate basis to be used by the Bidders in bidding, the location of such Borrower's account to which funds are to be advanced, and such other terms as such Borrower may specify. The Agent will advise the Bidders of the terms of the applicable Borrower's notice, and such Bidders as elect may submit bids, which the Agent shall provide to such Borrower. The Borrower giving the notice may accept one or more bids, provided that the aggregate outstanding Advances of all Lenders on the date of, and after giving effect to, any Competitive Bid Advance shall not exceed the aggregate Commitments at such time. Bids will be accepted in order of the lowest to the highest rates ("Bid Rates"). The Borrowers may not accept bids in excess of the requested bid amount for any maturity. If two or more Bidders bid at the same Bid Rate, the amount to be borrowed at such Bid Rate will be allocated among such Bidders in proportion to the amount which each Bidder bid at such Bid Rate. Each Borrowing under the Competitive Bid Option shall be in an amount of not less than $10,000,000 and integral multiples of $1,000,000 in excess thereof. While any such Borrowing is outstanding, it will be deemed usage of the Backstop Facility for the purposes of availability and the Commitment of each Lender (whether or not a Bidder) shall be reduced and deemed used for all purposes by its pro rata share (based on its respective Commitment) of an amount equal to the outstanding amount of such Borrowing. However, each Lender's Advance made under the Competitive Bid Option shall not reduce such Lender's obligation to lend its pro rata share of the remaining undrawn Commitment. COMPETITIVE BID ADMINISTRATIVE FEE: As agreed between Citibank and the Company. ANNUAL AGENCY FEE: As agreed between Citibank and the Company. REPAYMENT: The Borrowers will repay (i) each Advance (other than a Competitive Bid Advance) no later than on the Commitment Termination Date, subject to the Term Loan Conversion Option and (ii) each Competitive Bid Advance at the maturity date specified in the applicable Borrower's notice requesting such Competitive Bid Advance. OPTIONAL PREPAYMENT: Advances (other than Competitive Bid Advances) may be prepaid without penalty, with notice not later than 11:00 A.M. for Base Rate Advances, and with two business days notice for Eurocurrency Rate Advances, in minimum amounts of $10,000,000 and increments of $1,000,000 in excess thereof. The Borrowers will bear all costs related to the prepayment of a Eurocurrency Rate Advance prior to the last day of its Interest Period. Competitive Bid Advances may not be prepaid unless the invitation for Competitive Bid Advances specifies the right to prepay, and in such case the Borrowers will reimburse the Lender(s) for any funding losses. MANDATORY PREPAYMENT AND COMMITMENT TERMINATION: The Commitments shall be terminated and the Borrowers shall repay all outstanding Advances on the closing date of the $7,000,000,000 364-Day Credit Facility. LOAN DOCUMENTATION: The commitments will be subject to preparation, execution and delivery of mutually acceptable loan documentation which will contain conditions precedent, representations and warranties, covenants, events of default and other provisions customary for facilities of this nature, including, but not limited to, those noted below. Except as otherwise specifically stated in this term sheet, terms and conditions set forth in documentation for the Backstop Facility shall be substantially the same as such terms and conditions set forth in the Company's existing $750 million five-year credit facility. DOLLAR EQUIVALENT VALUE LIMITATION FOR ALL ADVANCES: If at any time the dollar equivalent value of all Advances exceeds 103% of the Facility Amount, the Borrowers shall promptly make a mandatory prepayment to reduce the dollar equivalent value of all Advances to 100% of the Facility Amount. DOLLAR EQUIVALENT VALUE LIMITATION FOR ADVANCES IN MAJOR CURRENCIES: If at any time the dollar equivalent value of all Advances in Major and Alternate Currencies exceeds 110% of $200,000,000 (the "Major Currency Sublimit"), the Borrowers shall make a mandatory prepayment at the end of the respective Interest Periods for such Advances to reduce the dollar equivalent value of all Advances in Major Currencies to 100% of the Major Currency Sublimit. CONDITIONS PRECEDENT TO CLOSING: Customary for facilities of this nature, including, but not limited to: (1) The Notes, if requested. (2) Board resolutions. (3) Incumbency certificate. (4) Favorable legal opinion from counsel for the Company. (5) Favorable legal opinion from counsel for the Agent. (6) Accuracy of representations and warranties. CONDITIONS PRECEDENT TO ALL ADVANCES: Customary for facilities of this nature, including, but not limited to: (1) All representations and warranties are true and correct in all material respects on and as of the date of the Borrowing, before and after giving effect to such Borrowing and to the application of the proceeds therefrom, as though made on and as of such date; provided that the representation as to no material adverse change shall be made only at Closing and Renewal of Commitments. (2) No Event of Default or event which, with the giving of notice or passage of time or both, would be an Event of Default, has occurred and is continuing, or would result from such Borrowing. CONDITIONS PRECEDENT TO INITIAL ADVANCE TO EACH BORROWER THAT IS A DESIGNATED SUBSIDIARY: Customary for facilities of this nature, including, but not limited to: (1) Such Borrower's Note if requested; (2) Representations by the Company that such Borrower has received all governmental authorizations, consents, approvals and licenses under applicable laws and regulations for such Borrower to execute and deliver the Credit Agreement and to perform its obligations thereunder; (3) Board resolutions of such Borrower; (4) Incumbency Certificate of such Borrower; (5) Designation Letter; (6) Accuracy of representations and warranties of such Borrower; (7) Favorable legal opinion from counsel for such Borrower. ADDITIONAL CONDITION PRECEDENT TO COMPETITIVE BID ADVANCES: The information provided by the applicable Borrower does not contain an untrue statement or omit to state any material fact necessary to make the statements contained therein, in light of the circumstances under which they are made, not misleading. REPRESENTATIONS AND WARRANTIES: Customary for facilities of this nature, including, but not limited to: (1) Confirmation of corporate status and authority; (2) Execution, delivery, and performance of loan documents do not violate law or existing agreements; (3) No government or regulatory approvals required; (4) No litigation currently or threatened which is likely to be determined adversely so as to affect materially the ability of the Company to pay its debts, including the Advances, or which would affect the legality, validity and enforceability of the loan documents; (5) No material adverse change in financial condition or results of operations or prospects since December 31, 1997 for the Company and its Consolidated Subsidiaries taken as a whole; (6) Accuracy of information, financial statements; (7) Material compliance with laws and regulations, including ERISA and all applicable environmental laws and regulations; (8) Legality, validity, binding effect and enforceability of the loan documents; (9) Not an investment company or public utility holding company. FINANCIAL COVENANTS: (1) Minimum Net Worth greater than or equal to $3,100,000,000; (2) Limitation on Domestic Subsidiary Indebtedness. COVENANTS: Customary for facilities of this nature, including, but not limited to: (1) Preservation of corporate existence; (2) Material compliance with laws (including ERISA and applicable environmental laws); (3) Payment of taxes; (4) Payment of material obligations; (5) Visitation rights; (6) Maintenance of books and records; (7) Maintenance of properties; (8) Maintenance of insurance; (9) Negative pledge and limitations on liens and secured debt with certain exceptions essentially in conformity to Section 1005 of the 1985 Indenture (which will not be incorporated by reference, but will be directly inserted); (10) Certain restrictions on change of business, consolidations, mergers, sale of assets; (11) Certain reporting requirements, including financial and ERISA; (12) Use of proceeds; (13) Change of control. EVENTS OF DEFAULT: Customary for facilities of this nature, including, but not limited to: (1) Failure to pay principal when due and interest, Facility Fee and Utilization Fee within three business days of when due; (2) Representations or warranties materially incorrect; (3) Failure to comply with covenants (with notice and cure periods as applicable); (4) Cross-default to payment defaults on principal aggregating $100,000,000, excluding defaults on indebtedness to any institution to the extent the Company or a Subsidiary has deposits with such institution sufficient to repay such indebtedness, or to default or event if the effect is to accelerate or permit acceleration of any such debt. This cross default provision shall not apply to debt of any subsidiary or affiliate of the Company located in China, India, Commonwealth of Independent States or Turkey provided that such debt is not guaranteed or supported in any legally enforceable manner by any Borrower or by any subsidiary or affiliate of the Company located outside of these countries, and such default is due to the direct or indirect action of any government entity or agency of these countries and provided further each subsidiary to which this exception applies shall not have assets of more than $80 million individually nor collectively $300 million measured as of the most recent calendar quarter end; (5) Unsatisfied judgment or order in excess of $100,000,000 individually or in the aggregate. A carve-out will be provided similar to that contained in the second sentence of item (4) immediately above; (6) Bankruptcy/insolvency; (7) ERISA Event and aggregate Plan Insufficiencies exceed $100,000,000, or Plan reorganization or termination resulting in an increase in annual contributions exceeding $100,000,000. ECONOMIC MONETARY UNION: Appropriate language will be incorporated into the Backstop Facility to address certain issues that will be raised by the introduction of the Euro on January 1, 1999 and the removal from circulation of the various national currency denominations on and after January 1, 2002. OTHER: Loan documentation will include: (1) Indemnification of Agent and Lenders and their respective affiliates, officers, directors, employees, agents and advisors for any liabilities and expenses arising out of the Backstop Facility or the use of proceeds. (2) Normal agency language. (3) Majority Lenders defined as those holding 51% of outstanding Advances (excluding Competitive Bid Advances) or, if none, Commitments. The consent of all the Lenders will be required to increase the size of the Backstop Facility, to extend the maturity or to decrease interest rates or fees. (4) The Company will have the right to replace any Lender through assignment or the addition of a new Lender provided that no Event of Default has occurred and is continuing and no more than 3 Lenders in any calendar year may be replaced. ASSIGNMENTS AND PARTICIPATIONS: Each Lender will have the right to assign to one or more Eligible Assignees all or a portion of its rights and obligations under the loan documents with the consent of the Company (not to be unreasonably withheld). Minimum aggregate assignment level of $10,000,000 and increments of $1,000,000 in excess thereof. The parties to the assignment (other than the Company) shall pay to the Agent an administrative fee of $3,500 per assignment. Each Lender will also have the right, without the consent of the Company or the Agent, to assign (i) as security, all or part of its rights under the loan documents to any Federal Reserve Bank and (ii) with notice to the Company and the Agent, all or part of its rights or obligations under the loan documents to any of its affiliates. Each Lender will have the right to sell participations in its rights and obligations under the loan documents, subject to customary restrictions on the participants' voting rights. Each Lender selling a participation shall notify the Company within 30 days of such sale. YIELD PROTECTION, TAXES, AND OTHER DEDUCTIONS: (1) The loan documents will contain yield protection provisions, customary for facilities of this nature, protecting the Lenders in the event of unavailability of funding, funding losses, reserve and capital adequacy requirements. (2) All payments to be free and clear of any present or future taxes, withholdings or other deductions whatsoever (other than income taxes in the jurisdiction of the Lender's applicable lending office). The Company will have the right to replace any Lender which requests reimbursements for amounts owing under (1) and (2) above provided that (i) no Event of Default, or event which with the giving of notice or lapse of time or both would be an Event of Default, has occurred and is continuing, (ii) the Company has satisfied all of its obligations under the Facility relating to such Lender, and (iii) any replacement is acceptable to the Agent and the Company will have paid the Agent a $3,500 administrative fee if such replacement Lender is not an existing Lender. GOVERNING LAW: State of New York. COUNSEL TO THE AGENT: Shearman & Sterling EXPENSES: The Company shall reimburse each Arranger and Citibank for all agreed out-of-pocket expenses incurred by them in the negotiation, syndication and execution of the Facility. Such expenses shall be reimbursed by the Company upon presentation of a statement of account, regardless of whether the transaction contemplated is actually completed or the loan documents are signed. ALLIEDSIGNAL INC. $900,000,000 364-DAY REVOLVING CREDIT FACILITY PRICING GRID
================================================================================================================== LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 4 LEVEL 5 LEVEL 6 ------------------------------------------------------------------------------------------------------------------ BASIS FOR LT Senior LT Senior LT Senior LT Senior LT Senior LT Senior PRICING Unsecured Debt Unsecured Debt Unsecured Debt Unsecured Debt Unsecured Debt Unsecured Debt Rated At Least Rated Less Than Rated Less Rated Less Rated Less Than Rated Less A By Standard Level 1 But At Than Level 2 Than Level 3 Level 4 But At Than Level 5. & Poor's Or A2 Least A- By But At Least But At Least Least BBB- By By Moody's. Standard & BBB+ By BBB By Standard & Poor's Or A3 By Standard & Standard & Poor's Or BAA3 Moody's. Poor's Or BAA1 Poor's Or BAA2 By Moody's. By Moody's. By Moody's. ------------------------------------------------------------------------------------------------------------------ FACILITY FEE 5.5 bps 7.0 bps 8.5 bps 9.5 bps 12.0 bps 20.0 bps (FN1) ------------------------------------------------------------------------------------------------------------------ APPLICABLE 17.0 bps 20.5 bps 26.5 bps 30.5 bps 40.5 bps 50.0 bps MARGIN ------------------------------------------------------------------------------------------------------------------ DRAWN COST LIBOR+22.5 bps LIBOR+27.5 bps LIBOR+35.0 bps LIBOR+40.0 bps LIBOR+52.5 bps LIBOR+70.0 bps (FN2) ------------------------------------------------------------------------------------------------------------------ UTILIZATION FEE (USAGE (greater 0.0 bps 2.5 bps 2.5 bps 5.0 bps 5.0 bps 5.0 bps than or equal to) 33 1/3 AND (less than) 66 2/3%) ------------------------------------------------------------------------------------------------------------------ UTILIZATION FEE (USAGE (greater 2.5 bps 5.0 bps 5.0 bps 10.0 bps 10.0 bps 17.5 bps than or equal to) 66 2/3%) ------------------------------------------------------------------------------------------------------------------ FULLY DRAWN LIBOR+25.0 bps LIBOR+32.5 bps LIBOR+40.0 bps LIBOR+50.0 bps LIBOR+62.5 bps LIBOR+87.5 bps COST(FN3) ================================================================================================================== --------------------- (1) Paid quarterly in arrears on each bank's commitment irrespective of usage. (2) Facility Fee plus Applicable Margin. (3) Drawn Cost plus Utilization Fee. bps = basis points per annum
ALLIEDSIGNAL INC. $900,000,000 ONE YEAR TERM-OUT OPTION PRICING GRID
================================================================================================================== LEVEL 1 LEVEL 2 LEVEL 3 LEVEL 4 LEVEL 5 LEVEL 6 ------------------------------------------------------------------------------------------------------------------ BASIS FOR LT Senior LT Senior LT Senior LT Senior LT Senior LT Senior PRICING Unsecured Debt Unsecured Debt Unsecured Debt Unsecured Debt Unsecured Debt Unsecured Debt Rated At Least Rated Less Than Rated Less Rated Less Rated Less Than Rated Less A By Standard Level 1 But At Than Level 2 Than Level 3 Level 4 But At Than Level 5. & Poor's Or A2 Least A- By But At Least But At Least Least BBB-By By Moody's. Standard & BBB+ By BBB By Standard & Poor's Or A3 By Standard & Standard & Poor's Or BAA3 Moody's. Poor's Or BAA1 Poor's Or BAA2 By Moody's. By Moody's. By Moody's. ------------------------------------------------------------------------------------------------------------------ APPLICABLE 22.5 bps 27.5 bps 35.0 bps 40.0 bps 52.5 bps 70.0 bps MARGIN ------------------------------------------------------------------------------------------------------------------ UTILIZATION FEE (USAGE 0.0 bps 2.5 bps 2.5 bps 5.0 bps 5.0 bps 5.0 bps (greater than or equal to) 33 1/3% AND (less than) 66 2/3%) ------------------------------------------------------------------------------------------------------------------ UTILIZATION FEE (USAGE (greater than or equal to) 66 2/3%) 2.5 bps 5.0 bps 5.0 bps 10.0 bps 10.0 bps 17.5 bps ------------------------------------------------------------------------------------------------------------------ FULLY DRAWN LIBOR+25.0 bps LIBOR+32.5 bps LIBOR+40.0 bps LIBOR+50.0 bps LIBOR+62.5 bps LIBOR+87.5 bps COST(FN1) ------------------------------------------------------------------------------------------------------------------ --------------------- (1) Applicable Margin plus Utilization Fee. bps = basis points per annum