AMP INCORPORATED
                            
 DEFERRED STOCK ACCUMULATION PLAN FOR OUTSIDE DIRECTORS


     AMP Incorporated (the "Corporation"), by action of
its Board of Directors taken effective as of January 1,
1996, adopted the AMP Incorporated Deferred Stock
Accumulation Plan for Outside Directors (the "Plan"),
pursuant to which eligible members of its Board of
Directors will receive phantom share credits to a
Deferred Stock Accumulation Account to be maintained
under the Plan. The Plan will be maintained and
administered by the Corporation under the terms and
conditions hereinafter set forth.

     1.   Effective Date.  The Plan shall be effective as
of January 1, 1996.

     2.   Eligibility.  Any member of the Board of
Directors of the Corporation who is not and has never
been an employee of the Corporation or of a subsidiary or
affiliate of the Corporation shall herein be referred to
as an Outside Director.  Any Outside Director serving as
of December 31, 1995 shall be eligible to become a
Participant under the Plan by making the election to
participate described in Section 3 below.  Except as
provided in Section 11 below, any Outside Director who
first becomes a director of the Corporation on or after
January 1, 1996 shall become a Participant hereunder as
of the date first elected to so serve.

     3.   Participation Election.  Each Outside Director
serving as of December 31, 1995 will be required to make
a one time irrevocable election during the first calendar
quarter of 1996 either to become a Participant in the
Plan for the balance of his or her period of service as a
director of the Corporation or to continue during such
period as a participant in the AMP Incorporated
Retirement Plan for Outside Directors (the "Retirement
Plan").  Any such Outside Director who elects to become
a Plan Participant thereby waives any and all claim to
future benefit payments under the terms of the AMP
Incorporated Retirement Plan for Outside Directors, in
consideration for which the Outside Director shall
receive an opening credit to his or her Deferred Stock
Accumulation Account under the Plan determined in
accordance with Section 4(b) below.

     4.   Deferred Stock Accumulation Accounts.  A
Deferred Stock Accumulation Account shall be established
and maintained under the Plan in the name of each
Participant as follows:

          (a)  An Outside Director first elected to the
Corporation's Board of Directors on or after January 1,
1996 shall have 300 phantom shares of Corporation common
stock credited to his or her Deferred Stock Accumulation
Account as of the date so elected.  Thereafter, on each
subsequent January 1 occurring during the Outside
Director's continuing Board service, an additional 300
phantom shares of Corporation common stock shall be
credited to his or her Deferred Stock Accumulation
Account, subject to an overall limitation under the Plan
of ten 300-share allocations.

          (b)  An Outside Director serving as of December
31, 1995 who makes the Plan participation election
described in Section 3 above shall have an opening
phantom share balance in his or her Deferred Stock
Accumulation Account as of January 1, 1996 equal to 300
times the lesser of ten or the Outside Director's number
of full or partial prior calendar years of Board service
(including calendar year 1996).  For example, an Outside
Director first elected in July 1992, would have an
opening balance of 300 times five, or 1500 shares, where
five results from counting 1992, 1993, 1994, 1995 and
1996 as full or partial prior calendar years of Board
service.  An additional 300 phantom shares of Corporation
common stock shall be credited on January 1, 1997 and
each subsequent January 1 during the Outside Director's
continuing Board service, subject to the overall per
Participant limitation under the Plan of ten 300-share
allocations.

          (c)  Phantom shares in an Outside Director's
Deferred Stock Accumulation Account will have no voting
rights or other rights of a shareholder, except that such
phantom shares will be credited with dividends as further
described in Section 4(d) below.

          (d)  As of each of the Corporation's quarterly
dividend payment dates commencing with March 1, 1996, a
Participant shall be deemed entitled to a cash dividend
on each phantom share credited to his or her Deferred
Stock Accumulation Account on the related record date
equal to the per share cash dividend then payable to the
Corporation's shareholders.  The aggregate amount of such
cash dividend equivalents shall be accounted for under
the Plan as having been reinvested by the Participant on
the dividend payment date in further phantom shares of
Corporation common stock, with the Participant's Deferred
Stock Accumulation Account being credited as of the
dividend payment date with the additional number of
phantom shares attributable to such reinvestment of the
dividend equivalents. For this purpose, the mean between
the high and the low prices at which Corporation common
stock traded on the New York Stock Exchange on the
dividend payment date (or, if such date is not a trading
date, the most recent prior trading date) shall be the
per share price at which the dividend equivalents are
reinvested in further phantom shares of Corporation
common stock.

          (e)  In the event of any change in the common
stock of the Corporation by reason of any stock dividend,
recapitalization, reorganization, merger, consolidation,
split-up, combination or exchange of shares, or a rights
offering to purchase common stock at a price
substantially below fair market value, or of any similar
change affecting the common stock, the value and
attributes of each phantom share under the Plan shall be
appropriately adjusted consistent with such change to the
same extent as if such phantom shares were, instead,
issued and outstanding shares of common stock of the
Corporation.

     5.   Vesting.  The value of a Participant's Deferred
Stock Accumulation Account shall be fully vested and
nonforfeitable upon the earliest of the date the
Participant has completed five years of continuous Board
service with the Corporation (i.e., on the fifth
anniversary of the original date of election as an
Outside Director), the date of the Participant's 72nd
birthday, or the date of the Participant's death while
serving on the Corporation's Board of Directors.  The
entire value of a Participant's Deferred Stock Accumulation
Account shall be forfeited if the Participant terminates
Board service with the Corporation (other than on account
of death or retirement upon attainment of age 72) prior to
completion of five years of continuous Board service with the
Corporation.

     6.   Payment of Deferred Stock Accumulation Account.

          (a)  As of any date, the value of a
Participant's Deferred Stock Accumulation Account shall
be equal to the number of phantom shares then credited to
the account times the mean between the high and the low
prices at which Corporation common stock traded on the
New York Stock Exchange on the most recent prior trading
date.  Upon the termination of a Participant's Board
service, the value of the Participant's Deferred Stock
Accumulation Account, if vested, shall be payable in cash
to the Participant either in a single lump sum or in up
to ten annual installments, as elected and placed on file
with the Corporation by the Participant at the time of
first becoming a Plan Participant.  This election as to
form of payment may be changed by the Participant by
filing a new written election with the Corporation at any
time prior to a year and a day before the date of
termination of Board service.
          
          (b) If a single lump sum payment is elected,
payment in cash of the vested value of the Deferred Stock
Accumulation Account as of the date of termination of
Board service shall be made within thirty days of the
termination date.
          
          (c) If installment payments are elected, the
first annual installment payment will be made within 30
days of the date of termination of Board service, and
annual installments subsequent to the initial installment
shall be made in each succeeding January until completed.
The amount of the initial installment payment shall be
equal to the value of the account on the date of
termination of Board service divided by the number of
years in the installment payment period.  The amount of
each subsequent installment payment shall be equal to the
value of the account on the first day of January of the
distribution year divided by the then-remaining number of
years in the installment payment period.  Pending
distribution of the second through final installments of
any installment distribution, the undistributed balance
of the Participant's Deferred Stock Accumulation Account
shall continue to be deemed invested in phantom shares of
the Corporation's common stock, with quarterly dividends
continuing to be reinvested in further phantom shares as
during the Participant's active period of Board service.

     7.   Change in Control.

          (a)  In the event of a "Change in Control" of
the Corporation followed by an Outside Director's
cessation of service to the Corporation, the entire
balance of the Deferred Stock Accumulation Account of the
Outside Director under the Plan shall be immediately due
and payable to the Outside Director in a single lump sum,
notwithstanding the vesting requirements in Section 5
above and form of payment specified pursuant to Section 6
above.

          (b)  The term "Change in Control" shall mean:

               (i)  the acquisition of beneficial
ownership (other than from the Corporation) by any
person, entity or "group", within the meaning of Section
13(d)(3) or Section 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), excluding,
for this purpose, the Corporation or its subsidiaries, or
any employee benefit plan of the Corporation or its
subsidiaries that acquires beneficial ownership of voting
securities of the Corporation (within the meaning of Rule
13d-3 promulgated under the Exchange Act), of 30% or more
of either the then outstanding shares of common stock of
the Corporation or the combined voting power of the
Corporation's then outstanding voting securities entitled
to vote generally in the election of Directors; or

               (ii) a change in the persons constituting
the Board of Directors of the Corporation as it existed
in the immediately preceding calendar year (the
"Incumbent Board") such that the Directors of the
Incumbent Board no longer constitute a majority of the
Board of Directors; provided that any person becoming a
Director in a subsequent year whose election, or
nomination for election, by the Corporation's
shareholders was approved by a vote of at least a
majority of the Directors then comprising the Incumbent
Board (other than an election or nomination of an
individual whose initial assumption of office is in
connection with an actual or threatened election contest
relating to the election of the Directors of the
Corporation, as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) shall
be, for purposes of the Plan, considered as though such
person were a member of the Incumbent Board; or

               (iii) approval by the shareholders of
the Corporation of a reorganization, merger or
consolidation, in each case with respect to which persons
who were the shareholders of the Corporation immediately
prior to such reorganization, merger or consolidation do
not, immediately thereafter, own more than 50% of the
combined voting power entitled to vote generally in the
election of Directors of the reorganized, merged or
consolidated corporation's then outstanding voting
securities; or

               (iv) a liquidation or dissolution of the
Corporation or the sale of all or substantially all of
the assets of the Corporation.

     8.   Designation of Beneficiary.  If an Outside
Director dies prior to receiving the entire balance of
his or her Deferred Stock Accumulation Account under the
Plan, any balance remaining in his or her account shall
be paid in a lump sum as soon as practicable to the
Outside Director's designated beneficiary or, if the
Outside Director has not designated a beneficiary in
writing to the Corporation, to his estate.  Any
designation of beneficiary may be revoked or modified at
any time by the Outside Director.

     9.   Unsecured Obligation of Company.  The
Corporation's obligations to establish and maintain
accounts for each eligible Outside Director and to make
payments to him or her under this Plan shall be general
unsecured obligations of the Corporation, and the Outside
Directors with an account under the Plan shall at all
times be general unsecured creditors of the Corporation.
The Corporation shall be under no obligation to establish
any separate fund, purchase any annuity contract, or in
any other way make special provision or specifically
earmark any funds for the payment of any amounts called
for under this Plan, nor shall this Plan or any actions
taken under or pursuant to this Plan be construed to
create a trust of any kind, or a fiduciary relationship
between the Corporation and any eligible Outside
Director, his designated beneficiary, executors or
administrators, or any other person or entity.  It is the
intention of the Corporation that at all times the Plan
be unfunded for income tax purposes and for purposes of
Title I of the Employee Retirement Income Security Act of
1974, as amended.  If the Corporation chooses to
establish a fund or make any other arrangement to provide
for the payment of any amounts called for under this
Plan, such fund or arrangement shall conform to the terms
of the model trust described in Revenue Procedure 92-64
(1992-33 IRB 16).

     10.  Withholding of Taxes.  The rights of an Outside
Director to payments under this Plan shall be subject to
the Corporation's obligations at any time to withhold
income or other taxes from such payments.

     11.  Designation of Alternate Plan.  If, at the time
an Outside Director is first elected to serve as a
director of the Corporation, he or she requests to be
designated a participant in the Retirement Plan rather
than the Plan, the Nominating and Governance Committee in
its sole and absolute discretion may so designate the
requesting Outside Director as a participant in the
Retirement Plan.  Under such circumstances, the Outside
Director will not become a Participant hereunder.

     12.  Assignability.  No portion of an Outside
Director's account, right or benefit under the Plan is
subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, or attachment
or garnishment by creditors of the Outside Director,
except by will or the laws of descent and distribution or
by such other means as the Committee may approve from
time to time.

     13.  Administration.  The Plan shall be a
administered by the Nominating and Governance Committee
of the Corporation's Board of Directors.  The Committee
shall have full and final authority in its sole and
absolute discretion to: (i) interpret the provisions of
the Plan and to decide all questions of fact arising in
its application, and its interpretation and decisions
shall be in all respects final, conclusive and binding;
(ii) impose such conditions on the payment of Plan
benefits as it deems appropriate; and (iii) make all
other determinations, rules and regulations necessary or
advisable for the administration of the Plan.  No member
of the Committee shall be personally liable for any
action taken or determination made in respect to the
administration of the Plan if made in good faith.

     14.  Amendments and Termination.  This Plan may be
amended or terminated at any time by the Board of
Directors.  No amendment or termination shall affect an
Outside Director's Deferred Stock Accumulation Account
existing on the date such amendment or termination
occurs.

     15.  Governing Law.  The Plan shall be construed in
accordance with and governed by the laws of Pennsylvania.



          To evidence the adoption of the Plan, the
Corporation has caused its authorized officers to execute
this Plan document this 28th day of March 1996.


             
                                   AMP Incorporated
           /s/  D. F. Henschel         /s/  J. E. Marley                     
Attest:  _____________________  By:  ______________________
                                
                                Its:  Chairman of the Board









director\stkaccplan