AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 30, 1995
FILE NO. 33-
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------
TYCO INTERNATIONAL LTD.
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2297459
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
-------------------
ONE TYCO PARK
EXETER, NEW HAMPSHIRE 03833
(603) 778-9700
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
-------------------
IRVING GUTIN
SENIOR VICE PRESIDENT
TYCO INTERNATIONAL LTD.
ONE TYCO PARK
EXETER, NEW HAMPSHIRE 03833
(603) 778-9700
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
-------------------
COPIES TO:
<TABLE>
<S> <C> <C>
HOWARD A. SOBEL, ESQ. VALERIE FORD JACOB, ESQ. DAVID A. BRITTENHAM, ESQ.
KRAMER, LEVIN, NAFTALIS, FRIED, FRANK, HARRIS, DEBEVOISE & PLIMPTON
NESSEN, KAMIN & FRANKEL SHRIVER & JACOBSON 875 THIRD AVENUE
919 THIRD AVENUE ONE NEW YORK PLAZA NEW YORK, NEW YORK 10022
NEW YORK, NEW YORK 10022 NEW YORK, NEW YORK 10004 (212) 909-6000
(212) 715-9100 (212) 859-8000
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, check the following
box. / /
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
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CALCULATION OF REGISTRATION FEE
<TABLE><CAPTION>
TITLE OF EACH CLASS OF PROPOSED MAXIMUM PROPOSED MAXIMUM
SECURITIES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
REGISTERED REGISTERED PER UNIT PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, par value
$.50.................... 7,948,772 $49.125(1) $390,483,424 $134,655.00
</TABLE>
(1) Estimated solely for the purpose of determining the amount of the
registration fee pursuant to Rule 457 under the Securities Act of 1933.
-------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
EXPLANATORY NOTE
This registration statement contains a prospectus relating to a public
offering in the United States and Canada (the "U.S. Offering") of an aggregate
of shares of Common Stock, par value $.50 per share ("Common Stock"), of
Tyco International Ltd. (the "Company" or "Tyco"), together with separate
prospectus pages relating to a concurrent offering outside the United States and
Canada (the "International Offering") of an aggregate of shares of Common
Stock. The complete prospectus for the U.S. Offering follows immediately after
this Explanatory Note. After such prospectus are the alternate pages for the
International Offering: a front cover page, a "Certain United States Tax
Consequences to Non-U.S. Holders of Common Stock" section, an "Underwriting"
section, a "Validity of Shares" section, an "Available Information" section, an
"Incorporation of Certain Information by Reference" section, an "Experts"
section and a back cover page. All other pages of the prospectus for the U.S.
Offering are to be used for both the U.S. Offering and the International
Offering. Ten copies of the complete prospectus for each of the U.S. Offering
and the International Offering in the exact forms in which they are to be used
after effectiveness will be filed with the Securities and Exchange Commission
pursuant to Rule 424(b).
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JANUARY 30, 1995
PROSPECTUS
SHARES
TYCO INTERNATIONAL LTD.
COMMON STOCK
-------------------
Of the shares of Common Stock being offered hereby, shares are being
offered initially in the United States and Canada by the U.S. Underwriters and
shares are being offered initially outside the United States and Canada by
the International Managers. See "Underwriting."
All of the shares of Common Stock offered hereby are being offered by
certain selling shareholders of the Company (the "Selling Shareholders"). See
"Selling Shareholders." The Company will not receive any of the proceeds from
the sale of the shares offered hereby.
The Common Stock is traded on the New York Stock Exchange under the symbol
"TYC." On January 27, 1995, the last reported sale price of the Common Stock, as
reported on the New York Stock Exchange, was $49.125 per share. See "Price Range
of Common Stock and Dividends."
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE><CAPTION>
PROCEEDS TO
PRICE TO UNDERWRITING SELLING
PUBLIC DISCOUNT(1) SHAREHOLDERS(2)
<S> <C> <C> <C>
Per Share........................... $ $ $
Total............................... $ $ $
</TABLE>
(1) The Company and the Selling Shareholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933. See "Underwriting."
(2) The Company has agreed to pay expenses related to the Offerings, estimated
at $ .
-------------------
The shares of Common Stock are offered by the several Underwriters, subject
to prior sale, when, as and if issued to and accepted by them, subject to
approval of certain legal matters by counsel for the Underwriters and certain
other conditions. The Underwriters reserve the right to withdraw, cancel or
modify such offer and to reject any order in whole or in part. It is expected
that delivery of the shares will be made in New York, New York, on or about
, 1995.
-------------------
MERRILL LYNCH & CO.
GOLDMAN, SACHS & CO.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
LEHMAN BROTHERS
-------------------
THE DATE OF THIS PROSPECTUS IS , 1995
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
PHOTOS FOR INSIDE FRONT COVER TO S-3
UPPER LEFT HAND CORNER
FIRE PROTECTION
Fire protection products
including extinguishers, valves
and sprinkler heads.
LOWER LEFT-HAND CORNER
ELECTRICAL/ELECTRONICS
Simplex Fiber Optic Cables
UPPER RIGHT-HAND CORNER
GRINNELL FLOW CONTROL
Assortment of Valves including
Neotecha, Anvil, Grinnell and
Mueller
LOWER RIGHT-HAND CORNER
DISPOSABLE AND SPECIALTY PRODUCTS
Disposable medical products
IN CONNECTION WITH THE OFFERINGS, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
2
<PAGE>
PROSPECTUS SUMMARY
THE COMPANY
Tyco International Ltd. ("Tyco" or the "Company"), through its divisions and
operating subsidiaries, is the world's largest manufacturer and provider of fire
protection systems and maintains strong leadership positions in each of its
segments of its respective markets for flow control products, electrical and
electronic components and disposable medical supplies and other specialty
products. The disposable and specialty products segment includes the results of
Kendall International, Inc. ("Kendall") which was acquired through a merger with
a wholly-owned subsidiary of Tyco on October 19, 1994 (the "Merger"), that has
been accounted for using the pooling of interests method of accounting. The
Company, which operates in more than 50 countries around the world, had combined
sales of over $4 billion during its fiscal year ended June 30, 1994.
The Company's business strategy is to seek to establish and maintain a
leadership position in each of the markets it serves. The Company endeavors to
achieve this objective by attempting to be a low-cost, high-quality producer of
its products and through the acquisition of complementary product lines that can
be effectively integrated into the Company's manufacturing and distribution
operations. The goal of this strategy is to create value for the Company's
shareholders by increasing the Company's earnings per share.
The Company is a Massachusetts corporation. Its executive offices are
located at One Tyco Park, Exeter, New Hampshire 03833, and its telephone number
is (603) 778-9700.
THE OFFERINGS
The offering of shares of common stock, par value $.50 per share, of
the Company (the "Common Stock") being offered in the United States and Canada
(the "U.S. Offering") and the offering of shares of Common Stock being
offered outside the United States and Canada (the "International Offering") are
collectively referred to herein as the "Offerings." The Common Stock is being
sold by certain shareholders who received shares of the Company's Common Stock,
or rights to acquire the same, as a result of the Merger. The number of
outstanding shares of Common Stock was 75,175,434 as of January 26, 1995.
The Company will not receive any proceeds from the Offerings.
3
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
The following table sets forth summary consolidated financial data of the
Company. The summary consolidated financial data should be read in conjunction
with the audited and unaudited Consolidated Financial Statements of the Company
and the Notes thereto, appearing elsewhere in this Prospectus, and the
information contained in "Selected Consolidated Financial Data" and
"Management's Discussion and Analysis of Financial Condition and Operating
Results."
<TABLE>
<CAPTION>
SIX MONTHS ENDED DECEMBER FISCAL YEAR ENDED JUNE
31, 30,
-------------------------- ------------------------
1994 1993 1994 1993
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Sales............................... $2,151,895 $1,997,671 $4,076,383 $3,919,357
Costs and Expenses:
Cost of sales....................... 1,572,626 1,478,851 3,003,194 2,909,947
Nonrecurring inventory charge....... -- -- -- 22,485
Selling, general and
administrative...................... 354,111 336,163 682,568 682,520
Merger and transaction related
costs............................... 37,170(1) -- -- --
Restructuring and severance
charges............................. -- -- -- 39,325
Interest............................ 31,703 33,320 62,431 85,785
---------- ---------- ---------- ----------
1,995,610 1,848,334 3,748,193 3,740,062
---------- ---------- ---------- ----------
Income before income taxes,
extraordinary item and cumulative
effect of accounting changes........ 156,285 149,337 328,190 179,295
Income taxes........................ (76,276) (63,867) (138,999) (84,837)
---------- ---------- ---------- ----------
Net income before extraordinary item
and cumulative effect of
accounting changes................ 80,009 85,470 189,191 94,458
Extraordinary item, net of tax
benefit............................. (2,600)(2) -- -- (2,816)(2)
Cumulative effect of accounting
changes............................. -- -- -- (71,040)
---------- ---------- ---------- ----------
Net income.......................... $ 77,409 $ 85,470 $ 189,191 $ 20,602
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net Income Per Share:
Income before extraordinary item and
cumulative effect of accounting
changes............................. $ 1.07 $ 1.16 $ 2.56 $ 1.30
Extraordinary item.................. (0.03) -- -- (0.04)
Cumulative effect of accounting
changes............................. -- -- -- (0.98)
---------- ---------- ---------- ----------
Net income.......................... $ 1.04 $ 1.16 $ 2.56 $ 0.28
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Cash dividends per common share(3).. $ 0.20 $ 0.20 $ 0.40 $ 0.38
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED DECEMBER FISCAL YEAR ENDED JUNE
31, 30,
-------------------------- ------------------------
1994 1993 1994 1993
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA (at end of
period):
Working capital..................... $ 396,874 $ 329,918 $ 341,154
Total assets........................ 3,186,469 3,140,821 3,164,966
Long-term debt...................... 563,467 588,491 812,585
Shareholders' equity................ 1,486,833 1,367,026 1,138,786
SEGMENT DATA:
Sales:
Fire Protection................... $ 801,944 $ 763,999 $1,525,906 $1,526,079
Flow Control Products............. 480,974 431,789 914,430 806,915
Electrical and Electronic
Components.......................... 205,638 214,578 436,884 413,300
Disposable and Specialty
Products............................ 663,339 587,305 1,199,163 1,173,063
---------- ---------- ---------- ----------
$2,151,895 $1,997,671 $4,076,383 $3,919,357
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Income before income taxes,
extraordinary item and cumulative
effect of accounting changes:
Fire Protection................... $ 39,198 $ 34,269 $ 70,171 $ 43,190(6)
Flow Control Products............. 39,511 33,936 74,125 44,638(6)
Electrical and Electronic
Components.......................... 36,595 36,094 72,510 68,401(6)
Disposable and Specialty
Products............................ 121,400 86,287 191,669 126,280(6)
---------- ---------- ---------- ----------
236,704 190,586 408,475 282,509
Interest expense.................... (31,703) (33,320) (62,431) (85,785)
Corporate and other amounts......... (48,716)(4) (7,929) (17,854)(5) (17,429)(6)
----------- ----------- ----------- -----------
$156,285 $149,337 $328,190 $179,295
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
- ------------
(1) Results for the six months ended December 31, 1994 include a charge of $31.2
million after-tax (or $0.42 per share) for fees and expenses related to the
Merger and integration of Kendall and Tyco. See Note 1 to the unaudited
Consolidated Financial Statements. Excluding the $31.2 million after-tax
charge, net income before extraordinary item would have been $111.2 million
or $1.49 per share for the six months ended December 31, 1994.
(2) Results for the six months ended December 31, 1994 include an extraordinary
charge of $2.6 million after-tax (or $0.03 per share), resulting from the
early extinguishment of $100 million of Kendall debt. See Note 3 to the
unaudited Consolidated Financial Statements. During fiscal 1993, Kendall
refinanced certain notes and borrowings outstanding under its bank
facilities. In connection with the refinancing, the Company recorded an
extraordinary charge of $2.8 million after-tax (or $0.04 per share). See
Note 5 to the Consolidated Financial Statements.
(3) Cash dividends were paid by Tyco in fiscal 1993, 1994 and 1995. Kendall did
not pay dividends to its shareholders during these periods.
(4) Results for the six months ended December 31, 1994 include pre-tax charges
of $37.2 million for merger and transaction related costs. See Note 1 to
the unaudited Consolidated Financial Statements
(5) Fiscal 1994 includes expenses of $4.1 million related to the accounts
receivable program, which cost would have been reflected as interest
expense under previous financing arrangements. See Note 6 to the
Consolidated Financial Statements.
(6) Fiscal 1993 includes restructuring and severance charges of $16.0 million,
$19.0 million, $0.7 million, and $3.6 million, for Fire Protection, Flow
Control Products, Electrical and Electronic Components and Corporate,
respectively, and a nonrecurring inventory charge of $22.5 million in the
Disposable and Specialty Products segment.
5
<PAGE>
THE COMPANY
The Company, through its divisions and operating subsidiaries, is the
world's largest manufacturer and provider of fire protection systems and
maintains strong leadership positions in each of its segments of its respective
markets for flow control products, electrical and electronic components and
disposable medical supplies and other specialty products. The disposable and
specialty products segment includes the results of Kendall, which was acquired
through the Merger, that has been accounted for using the pooling of interests
method of accounting. Tyco, which operates in more than 50 countries around the
world, had combined sales of over $4 billion during its fiscal year ended June
30, 1994. See Notes to the Consolidated Financial Statements for certain
consolidated segment and geographic financial data relating to the Company's
businesses.
The Company's business strategy is to seek to establish and maintain a
leadership position in each of the markets it serves. The Company endeavors to
achieve this objective by attempting to be a low-cost, high-quality producer of
its products and through the acquisition of complementary product lines that can
be effectively integrated into the Company's manufacturing and distribution
operations. The goal of this strategy is to create value for the Company's
shareholders by increasing the Company's earnings per share.
FIRE PROTECTION
The Company engages in fire protection contracting and in the manufacture
and distribution of fire protection products and equipment.
The Company's Grinnell subsidiary ("Grinnell"), whose business was founded
in 1850, is the largest installer, manufacturer and supplier of automatic
sprinkler and fire protection and detection systems in North America. In August
1990, the Company acquired the business and substantially all the operating
assets of Wormald International Limited ("Wormald"). Wormald, whose business was
founded in 1889, operates as a major fire protection company with contracting,
manufacturing and distribution operations throughout Western Europe and
Asia-Pacific. The combination of Grinnell and Wormald has resulted in creating
the largest fire protection company in the world, forming a network of over 200
offices on five continents.
Contracting
As the largest fire protection contractor in the world, the Company designs,
fabricates, installs and services automatic sprinkler and fire suppression
systems in buildings and other installations. Grinnell's fire protection
contracting business in North America operates through a network of offices
located in the United States, Canada, Mexico and Puerto Rico. Internationally,
the Company engages in fire protection contracting through a network of offices
in the United Kingdom, Ireland, France, Spain, Belgium, the Netherlands,
Germany, Italy, Austria, Switzerland, Denmark, Norway, Sweden, Finland, United
Arab Emirates, Saudi Arabia, Australia, New Zealand, Hong Kong, Singapore,
Taiwan, Malaysia, Thailand and Indonesia.
The Company installs fire protection systems in both new and existing
structures. Typically, the contracting businesses bid on contracts for fire
protection installation which are let by owners, architects, construction
engineers and mechanical or general contractors. In recent years, the business
of retrofitting existing buildings in the United States and Canada has grown as
a result of local and state legislation requiring installation of fire
protection systems and the availability of reduced insurance premiums on
structures with automatic sprinkler systems. The retrofitting and servicing of
fire protection systems in existing buildings represented approximately 60% of
Grinnell's North American contracting sales in each of fiscal 1994, 1993 and
1992.
A majority of the fire suppression systems installed by the Company are
water-based, but the Company is also the world's leader in providing custom
designed special hazard fire protection systems
6
<PAGE>
which incorporate various specialized non-water agents such as foams, dry
chemicals and gases. Systems using agents other than water are suited for fire
protection in certain manufacturing, power generation, petrochemical, offshore
oil exploration, transportation, telecommunications, mining and marine
applications. The Company holds exclusive manufacturing and distribution rights
in several regions of the world for INERGEN TM fire suppression products.
INERGEN TM, an alternative to the ozone depleting agent known as Halon, consists
of a mixture of three inert gases designed to effectively extinguish fires
without polluting the environment or damaging costly equipment.
The Company also services, maintains, repairs and inspects fire suppression
systems installed by the Company and other contractors. In Australia, New
Zealand and Asia, the Company, through its O'Donnell Griffin subsidiaries, also
engages in the installation of electrical wire and related electrical equipment
in new and existing structures and offers specialized electrical instrumentation
and mechanical contracting services in these markets including applications for
railroad and bridge construction.
Substantially all the mechanical components (and, in North America, most of
the pipe) used in the fire protection systems installed by the Company are
manufactured in the Company's own facilities. The Company also has fabrication
plants worldwide that cut, thread and weld pipe, which is then shipped with
other prefabricated components to job sites for installation. The Company also
installs alarms, detection and activation devices and centralized monitors. The
Company has developed its own computer-aided-design technology that reduces the
time required to design systems for specific applications and coordinates
fabrication and delivery of system components.
In its fire protection contracting business the Company employs both
non-union and union employees in North America, Europe and Asia-Pacific. Many of
the union employees are employed on an hourly basis for particular jobs. In
North America, the largest number of union employees is represented by a number
of local unions affiliated with the United Association of Plumbers and
Pipefitters ("UAP"). During fiscal 1994, Grinnell's contracts with a number of
locals of the UAP were not renewed following lengthy negotiations. Employees in
those locations, representing 64% of those employees represented by the UAP
unions, went on strike. Grinnell has continued to operate with former union
members who have continued to work for Grinnell and with replacement workers.
The labor action has not had, and is not expected to have, any material adverse
effect on Grinnell's business or results of operations.
Generally, competition in the fire protection business varies by geographic
location. In North America, Grinnell competes with hundreds of smaller
contractors on a regional or local basis for the installation of fire
suppression and alarm and detection systems. Many of the regional and local
competitors employ non-union labor. In Europe, the Company competes with many
regional or local contractors on a country by country basis. In Australia, New
Zealand and Asia, the Company competes with a few large fire protection
contractors as well as with many smaller regional or local companies. The
Company competes for fire protection contracts primarily on the basis of price,
service and quality.
Manufacturing and Distribution
The Company manufactures most of the components used in its own fire
protection contracting business, as well as a variety of products for sale to
other fire protection contractors. In North America, the Company manufactures
pipe and pipe fittings, fire hydrants, sprinkler heads and substantially all of
the other mechanical sprinkler components used in an automatic fire suppression
system. In the United Kingdom, France, Germany and the Asia-Pacific region, the
Company manufactures and sells sprinkler heads, specialty valves, fire doors and
electronic panels for use in fire detection systems. In Mexico, the Company
manufactures fire extinguishers, fire hose and related equipment.
At Ansul Fire Protection (Wisconsin) and Total Parsch (Mexico), the Company
manufactures and sells various lines of dry chemical, liquid and gaseous
portable fire extinguishers and related agents for industrial, government,
commercial and consumer applications. These operating units also manufacture
7
<PAGE>
and sell special hazard fire suppression systems designed for use in
restaurants, earth moving equipment, marine applications, mining applications,
the petrochemical industry, confined industrial spaces and commercial spaces
housing delicate and electronic equipment. Ansul Fire Protection also
manufactures spill control products designed to absorb, neutralize and solidify
spills of various hazardous materials.
Fire protection products are sold in North America primarily through the
Company's flow control products distribution network discussed below and, to a
lesser extent, through independent distributors.
In Europe, the Company distributes fire protection products through
warehouses located in the Netherlands, the United Kingdom, Germany and France.
Products are sold principally to distributors and to fire protection contractors
and in some instances to mechanical and industrial contractors.
In Asia-Pacific, the Company distributes fire protection and flow control
products through warehouses located in Australia, New Zealand and Singapore.
Products are sold directly to fire protection and other contractors as well as
to mechanical and industrial contractors and independent distributors.
Backlog
Fire protection contracting backlog amounted to $527 million at December 31,
1994 and $439 million at June 30, 1994. The increase in backlog is due primarily
to an increase at the European and Asia-Pacific region contracting operations.
FLOW CONTROL PRODUCTS
The Company is a manufacturer and distributor of flow control products in
North America, Europe and Asia-Pacific. Flow control products include pipe,
fittings, valves, meters and related
products which are used to transport, control and measure the flow of liquids
and gases. Products are manufactured at 23 plants in North America, the United
Kingdom, Germany and Switzerland, and distributed through the Company's own
worldwide distribution network and through independent distributors. The
Company's Flow Control Group includes Mueller Co. ("Mueller"), Allied Tube &
Conduit Corporation ("Allied") and Grinnell's flow control operations.
Manufacturing
The Company manufactures and distributes a wide range of flow control
products, including pipe and pipe fittings, tubing, valves, meters, couplings,
pipe hangers, struts and related components. These products are used in
plumbing, heating, ventilation and air conditioning (HVAC) systems, mechanical
contracting, power generation, water and gas utilities, oil and gas exploration
and numerous other industrial applications. The Company also manufactures
certain related products such as steel tubing, custom iron castings and fencing
materials.
Allied is the leading North American manufacturer of pipe and other tubular
products. Allied manufactures a full line of steel pipe for the fire protection
and construction industries and for commercial, residential and institutional
markets. Its mechanical tube division offers steel tubing in a wide assortment
of shapes and sizes for a variety of industrial and commercial applications.
Allied's fence division is a leader in the manufacture of products for the
residential and industrial/commercial fence market.
Mueller, a manufacturer of water and gas distribution products, manufactures
fire hydrants, valves, fittings, water meters, backflow preventers and related
products for sale to independent distributors and, to a lesser extent, directly
to waterworks contractors, municipalities and gas companies throughout the
United States and Canada.
Tyco's Anvil Products, Inc. and Canvil Ltd. subsidiaries manufacture forged
steel fittings and valves. Its Swiss NeoTecha subsidiary manufactures Teflon
lined specialty valves for use in highly corrosive environments. Three
U.K.-based subsidiaries, Hindle Cockburns Limited, Charles Winn
8
<PAGE>
(Valves) Limited and Spensall Engineering Limited, manufacture specialty high
performance butterfly valves and ball valves that are used principally in the
oil and gas, chemical and processing industries.
In May 1994, the Company acquired Preferred Pipe Products, Inc., a
U.S.-based manufacturer of pipe fitting products, primarily for the oilfield and
petrochemical markets. Also, during 1994, the Company acquired the assets of a
U.S. manufacturer of malleable iron pipe fittings.
Distribution
The Company has historically operated through a 47 branch distribution
network for the sale of flow control and fire protection products in North
America. During fiscal 1992, the Company opened a Regional Distribution Center
("RDC") in Harvey, Illinois, and in fiscal 1994 opened a second RDC in Norcross,
Georgia, each of which stocks over 8,500 products. These RDCs support the
inventory needs of the Company's branches in the central, eastern and southern
regions of North America by shipping products directly to customers. As a result
of the RDCs, warehousing and shipping requirements at the branches are reduced,
allowing management to focus on sales and customer service. During fiscal 1995,
the Company opened an additional RDC on the west coast to service and support
the remaining North American branch network. The Company also stocks and sells
products through various distribution centers in Europe, Australia, New Zealand,
the Middle East and Asia. The Company offers its products to distributors and
sprinkler contractors and, to a lesser extent, mechanical and industrial
contractors and original equipment manufacturers. While distribution patterns
vary, most centers stock an extensive line of valves, fittings, pipe and other
products for fire protection systems, components for HVAC installations and
water and gas distribution, and specialized valves and piping for the chemical,
food and beverage processing industries. Products manufactured by the Company
accounted for approximately 74% of its North American distribution sales in
fiscal 1994.
Grinnell's North American distribution network competes with other
manufacturers, independent manufacturers' representatives and, to a lesser
extent, with local and regional supply houses, all of which carry lines of other
domestic or foreign manufacturers. Grinnell competes on the basis of price, the
breadth of its product line, delivery and quality. Grinnell competes for the
sale of gray iron pipe fittings, malleable iron fittings and other flow control
products and fire protection sprinklers and devices principally with other
domestic producers. Grinnell uses an internal sales force for the sale of
certain iron castings not sold through Grinnell's distribution network.
Allied competes for the sale of steel pipe, which is sold through Grinnell's
distribution network discussed above, with pipe from other domestic and foreign
producers. Competition for the sale of pipe is based on price, service and
breadth of product line. Fence and other specialized industrial tubing is sold
to wholesalers, original equipment manufacturers and other distributors.
Competition for the sale of fence products is principally from national and
regional domestic producers and to a lesser extent from foreign companies, on
the basis of price, service and distribution. The Company competes with many
small regional manufacturers for sales of specialized industrial tubing on the
basis of price and breadth of product line.
Mueller's water and natural gas distribution flow control products are sold
through independent distributors, and directly to utilities, municipalities and
gas distribution companies. The Company competes for the sale of these products
on the basis of product quality, service, breadth of product line and conformity
with municipal codes and other engineering standards. The Company competes with
several other manufacturers in the United States and Canada for the sale of iron
and brass flow control devices for water and natural gas distribution systems.
Backlog
Flow Control products backlog amounted to $59 million at December 31, 1994
and $58 million at June 30, 1994.
9
<PAGE>
ELECTRICAL AND ELECTRONIC COMPONENTS
The Company's Electrical and Electronic Components group consists of Simplex
Technologies, Inc. ("Simplex"), the Company's Printed Circuit Group and Allied's
Electrical Conduit division. Simplex manufactures underwater communications
cable and cable assemblies. The Printed Circuit Group manufactures printed
circuit boards and assembles backplanes for the electronics industry. Allied
manufactures and distributes electrical conduit and related components used in
commercial electrical installations.
Simplex
Simplex is the largest U.S. manufacturer of undersea fiber optic
telecommunications cables. Simplex also manufactures cable and cable assemblies
for the U.S. Navy, underwater electric power cable for use by power authorities
and utilities, and electro-mechanical cable for unique field applications.
Simplex's principal customer is AT&T, which accounted for approximately 84% of
its revenues in fiscal 1994.
Under a multi-year engineering development program, Simplex and AT&T Bell
Laboratories, Inc. have developed a proprietary encapsulation process for AT&T
supplied optical fibers used in underwater telecommunications cables. Simplex
manufactures the cable and performs system assembly and has proprietary rights
to the encapsulation process. From 1986 through June 30, 1994, Simplex
manufactured approximately 85,000 kilometers of undersea optical cable deployed
by AT&T. Simplex is developing the next generation of high capacity undersea
systems for deployment in the mid to late 1990s. The next generation of undersea
systems will have enhanced operating capabilities including greater speed,
increased capacity and a new fiber design. Simplex's encapsulation and systems
assembly and testing processes are being adapted to incorporate the new
requirements.
For more than thirty years, Simplex has been the primary supplier of cable
and cable assemblies to the U.S. Navy for use in data-gathering systems. Cable
for U.S. Navy systems is manufactured under various types of contracts,
including cost-plus-incentive fee, time and material and fixed-price.
Simplex, usually in conjunction with AT&T, competes on a worldwide basis
primarily against two other entities: Alcatel-Alsthom, located in France along
with its subsidiary, Standard Telephone Co. ("STC"), located in England; and
KDD, located in Japan. Alcatel/STC is vertically integrated and produces its own
cable, whereas AT&T utilizes Simplex in the manufacture of its underwater cable
and KDD utilizes a Japanese cable manufacturer.
Simplex's backlog was approximately $375 million at December 31, 1994 and
$191 million at June 30, 1994. Simplex normally sells cable under long-term
multi-million dollar contracts, and the amount of its backlog as of any date is
affected by contract issuance for major systems and by timing of completion of
such underwater communications cable systems. During the first quarter of fiscal
1995, Simplex received a $250 million order extension on a multi-year contract.
Simplex owns a special-purpose 500,000 square foot manufacturing facility on
a deep river site in New Hampshire, with direct access to the Atlantic Ocean.
Printed Circuit Group
Tyco's Printed Circuit Group (the "Group") of companies is one of the
largest independent manufacturers of multi-layered printed circuit boards and
assemblers of backplanes in the United States. Printed circuit boards are used
in the electronics industry to mount and interconnect components to create
electronic systems. They are categorized by the number of sides or layers that
contain circuitry, which could be single-sided, double-sided or multi-layer. In
general, single and double-sided boards are less advanced. Multi-layer boards
provide greater interconnection density while decreasing the number of separate
printed circuit boards which are required to accommodate powerful and
sophisticated components. Backplanes include printed circuit boards and are
assemblies of connectors
10
<PAGE>
and other electronic components which distribute power and interconnect printed
circuit boards, power supplies and other system elements.
The Group manufactures highly sophisticated double-sided, mass molded boards
of up to eight layers, precision tooled, custom laminated multi-layer boards of
up to 28 layers and sophisticated flex-rigid circuit boards for use in
environmentally demanding conditions. The majority of the Group's sales are
derived from its high-density multi-layer boards. The Company's backplanes
facility produces fully assembled units utilizing press-fit or soldered
connection technology, custom pin grid array sockets and surface mounted
assembly. The printed circuit boards and backplanes manufactured by the Company
are designed by customers and are manufactured on a job order basis to the
customers' specifications. Backplane sales, inclusive of board content,
accounted for 39% of the Group's sales in fiscal 1994.
The Group markets its products mainly through independent manufacturers'
representatives and, to a lesser extent, through its own internal sales
organization. The Group's customers are generally original equipment
manufacturers in the telecommunications, aircraft, computer, military and other
industrial and consumer electronics industries. The Company competes with
several large companies which manufacture less complex single-sided and
double-sided printed circuit boards in the United States, as well as with many
companies that have their own in-house manufacturing capabilities. The Company
believes that far fewer competitors manufacture the more complex, high density
double-sided and multi-layer boards. The Group competes on the basis of quality,
price, reliability and timeliness of delivery.
As a manufacturer of sophisticated products at the high technological end of
the market, the Company invests approximately $2.5 million per year in
state-of-the-art manufacturing equipment. The Group uses computer-aided-design
equipment, numerically controlled drilling machines and routers, automated gold
plating, computerized electrical testing and automated optical inspection in its
manufacturing operations.
The Group backlog amounted to $11 million at December 31, 1994 and $14
million at June 30, 1994.
Allied
Allied's Electrical Conduit division ("Allied") is one of the leading
producers of steel electrical conduit in the United States. Electrical conduit
is galvanized steel tubing designed to contain current-carrying electrical wires
both inside and outside buildings. Steel conduit also serves as an electrical
ground which ensures proper operation of circuit interruptors and provides a
channel into which additional wires can be inserted or removed as electrical
needs change. Allied manufactures a full line of electrical conduit at plants in
Illinois and Pennsylvania. Allied also manufactures steel strut channel framing
at a plant in Illinois.
Allied's electrical conduit and related products are sold to wholesale
electrical distributors through Allied's distribution facilities by an internal
sales force and a network of commissioned sales agents. Allied competes for the
sale of electrical products primarily with several other large domestic
manufacturers. Competition in the electrical conduit industry is primarily based
upon price, quality, delivery and breadth of product line.
Allied's electrical products backlog amounted to $4 million at December 31,
1994 and $8 million at June 30, 1994.
DISPOSABLE AND SPECIALTY PRODUCTS
Tyco's Disposable and Specialty Products Group consists of Kendall, Ludlow
Corporation ("Ludlow") and Armin Plastics ("Armin"). Kendall manufactures,
markets and distributes medical supplies and adhesive products and tapes. In
addition, Kendall markets and distributes home health care products. Ludlow is a
manufacturer of disposable medical products, laminated and coated products,
11
<PAGE>
extrusion coated polyester yarns and woven fabrics, and deep-drawn metal parts.
Armin is a leading independent manufacturer of polyethylene film and packaging
products.
Kendall
Tyco acquired Kendall in October 1994. Kendall conducts its operations
through four business units: Kendall Healthcare, Kendall International
("International"), Futuro and Polyken. Kendall's products are manufactured at 23
plants in North America, the United Kingdom, Germany, Mexico, China, Thailand
and Malaysia.
In each of its business units, Kendall competes with numerous other
companies, including a number of larger well-established companies. In general,
no single company competes directly with Kendall in all of its product lines.
Kendall relies on its reputation for excellent quality and dependable service,
together with its low cost manufacturing and innovative products to compete in
its markets.
The Kendall Healthcare business unit markets a broad range of wound care,
vascular therapy, urological care, incontinence care, anesthetic care and other
products to U.S. and Canadian hospitals and alternate site health care
customers. Kendall Healthcare leads the industry in gauze production with its
Kerlix(R) and Curity(R) brands. Kendall Healthcare's other core domestic product
category consists of its vascular therapy products, principally anti-embolism
stockings, marketed under the T.E.D.(R) brand name, sequential pneumatic
compression devices sold under the SCD TM brand name and a venous plexus foot
pump marketed under the A-V Impulse System(R) brand name. Kendall Healthcare
pioneered the pneumatic compression form of treatment and continues to be the
dominant participant in the pneumatic compression and elastic stocking segments
of the vascular therapy market.
Kendall Healthcare distributes its products both directly through its sales
force and through a network of over 250 independent distributors. Kendall
Healthcare's sales force is divided into two groups, one promoting its vascular
therapy products and the other promoting all its wound care and other products.
Most of the U.S. distributors also sell similar products made by Kendall's
competitors, a practice common in the industry.
In April 1994, Kendall acquired Superior Healthcare Group, Inc. and its
affiliates, a manufacturer of a broad line of disposable medical supplies
including respiratory, urology and nursing care products. In October 1994,
Kendall acquired Sheridan Catheter Corporation, a manufacturer of airway
management, temperature monitoring and specialty products serving patients in
anesthesia, critical care and emergency medicine.
International is responsible for the manufacturing, marketing, distribution
and export of Kendall products in numerous countries worldwide. International's
operations are organized primarily into three geographic regions--Europe, Latin
America and the Far East. International generally markets a range of products,
similar to those of Kendall Healthcare and, to a lesser extent, Futuro, although
the mix of product lines varies from country to country. International markets
to hospital and medical professionals directly and through independent
distributors.
The Futuro business unit manufactures and distributes Kendall's home health
care products to retail consumers and professional health care providers. The
unit has a broad first-aid line sold under the Curity(R) and Curad brand names,
including products such as Curad adhesive bandages, Telfa(R) pads and "kids
size" bandages with character themes utilizing, under license, Flintstones and
McDonald's trade names. Other home health care products include elastic supports
and braces, graduated compression hosiery, ambulation aids and patient aids such
as canes, crutches and bathroom safety products.
Futuro markets its home health care products primarily through a nationwide
distributor network to more than 35,000 pharmacies and retail outlets, including
food and mass merchandisers. Futuro's direct sales force is responsible for
pharmacy sales and selected key accounts outside the retail pharmacy market. A
separate network of broker sales representatives handles all other sales.
12
<PAGE>
The Polyken division manufactures and markets specialty adhesive products
and tapes for industrial applications, including external corrosion protection
tape products for oil, gas and water pipelines. Other industrial applications
include tapes used in the automotive industry for wire harness wraps, sealing
and other purposes, and tapes used in the aerospace and heating and air
conditioning (HVAC) industries. Polyken also produces duct, packaging and
electrical tapes for consumer applications and bandages and medical tapes for
Kendall's healthcare product units and for third parties.
Polyken generally markets its pipeline products directly, working with local
manufacturing representatives, international engineering and construction
companies, and the owners and operators of pipeline transportation facilities.
Polyken sells its other industrial products either directly to major end users
or through diverse distribution channels, depending on the industry being
served.
Ludlow
Ludlow's Technical Products division manufactures and sells a variety of
disposable medical products, specialized paper and film products. These products
include recording chart papers for medical and industrial instrumentation,
disposable electrodes for medical devices, high quality facsimile paper,
adhesive tapes and pressure sensitive coated papers and films used for business
forms and in printing applications. These products are marketed primarily by the
division's internal sales force. The division's manufacturing plants are located
in Massachusetts, Minnesota and Washington. Competitors vary from small regional
firms to larger firms that compete with the division on a national basis.
Competition is on the basis of price and quality.
In December 1993, the Company acquired Uni-Patch, Inc. ("Uni-Patch") and
Classic Medical Products ("Classic"), both manufacturers and distributors of
medical electrodes and related products. Uni-Patch manufactures and distributes
TENS electrodes and related products which are used primarily in physical
therapy and other forms of rehabilitation medicine. Classic manufactures medical
electrodes for EKGs and similar diagnostic tests. In March 1994, Tyco purchased
the Promeon electrode gel business from Medtronics, Inc. Promeon is a leading
manufacturer of gels which are used with medical electrodes for testing and
other monitoring purposes. All of these businesses have been integrated into
Ludlow's existing facilities except for Uni-Patch, which maintains a
manufacturing facility in Minnesota.
Ludlow's Laminating and Coating division produces protective packaging and
other materials made of coated or laminated combinations of paper, polyethylene
and foil. Coated packaging materials provide barriers against grease, oil,
light, heat, moisture, oxygen and other contaminants that could damage the
contained products. The division produces structural coated and laminated
products such as plastic coated kraft, linerboard and bleached boards for rigid
urethane insulation panels, automotive components and wallboard panels. Other
applications include packaging for photographic film, frozen foods, health care
products, electrical and metallic components, agricultural chemicals, cement and
specialty resins. The division has two manufacturing plants located in Louisiana
and Mississippi.
Ludlow markets its laminated and coated products through its internal sales
force and independent manufacturers' representatives. The Company competes with
many large and specialized manufacturers of laminated and coated products on the
basis of price, service, marketing coverage and custom application engineering.
The Twitchell division of Ludlow manufactures extrusion coated polyester
yarns and woven fabrics and woven and knit paper fabrics. These fabrics are sold
by Twitchell's internal sales force to manufacturers for use principally in
outdoor furniture, awnings, housewares and other specialty products. Non-woven
coated fabric is manufactured and sold for use as disposable medical clothing.
The division's plant is located in Alabama. Competition with a number of U.S.
and foreign manufacturers is on the basis of price, quality and service.
Ludlow's Accurate Forming ("Accurate") division manufactures deep-drawn
metal parts, primarily barrels, caps and clips for pens and pencils and
containers, caps and closures for cosmetics,
13
<PAGE>
pharmaceutical packaging and automotive applications. Accurate sells its
products on a direct basis through its internal sales force and also utilizes
manufacturers' representatives. The Company competes with many small,
independent deep-drawn metal manufacturers and plastic extruders, several of
which have manufacturing locations in the Far East. Competition is on the basis
of price. Accurate's facility is in New Jersey.
Ludlow's backlog amounted to $42 million at December 31, 1994 and $33
million at June 30, 1994.
Armin
Armin manufactures polyethylene film and packaging products in a wide range
of size, gauge, construction strength, stretch capacity, clarity and color. With
purchases of over 300 million pounds of polyethylene per year, Armin extrudes
low density and linear low density polyethylene film from resin in pellet form,
in many cases mixing in coloring, anti-slip, anti-block and other chemical
additives. Examples of Armin's product mix include plastic supermarket
packaging, greenhouse sheeting, shipping covers and liners and a variety of
other packaging configurations for the aerospace, agricultural, automotive,
construction, cosmetics, electronics, food processing, healthcare,
pharmaceutical and shipping industries. Armin also manufactures a number of
other polyethylene products, such as reusable plastic pallets, transformer pads
for electric utilities, and a large variety of disposable gloves for the
cosmetic, medical, foodhandling and pharmaceutical industries. Virtually all
sales are generated through Armin's internal sales force. Armin serves over
6,000 customers in the United States and has 11 plants in New Jersey, Oklahoma,
California, South Carolina, North Carolina and Georgia.
Armin competes with a wide range of manufacturers, including some vertically
integrated companies and companies that manufacture polyethylene resins for
their own use. Competition in many market segments is based upon, in addition to
price, product innovation, specialization and customer service. Armin's backlog
amounted to $19 million at December 31, 1994 and $20 million at June 30, 1994.
ENVIRONMENTAL MATTERS
The Company makes a substantial effort to operate its facilities in
compliance with federal, state and local laws relating to the protection of the
environment. Compliance in any fiscal year has not had and is not expected to
have a material effect upon the capital expenditures, earnings or competitive
position of the Company.
The Company believes that, consistent with applicable laws and regulations,
it exercises due care and takes appropriate precautions in the disposal of
wastes. The Company has received notification from the U.S. Environmental
Protection Agency and certain state environmental agencies that conditions at a
number of sites where hazardous wastes were disposed of by the Company and other
persons require cleanup and other possible remedial action.
The Company has a number of projects underway at several of its
manufacturing facilities in order to comply with current environmental laws. In
addition, the Company remains responsible for certain environmental matters at
manufacturing locations sold by the Company. These projects, which involve both
remediation expenses and capital improvements, relate to a variety of
activities, including solvent contamination clean up, upgrading of underground
storage tanks, surface dredging, oil spill containage and clean up, containment
area upgrades, feasibility studies and equipment upgrades and replacement.
The ultimate cost of the Company's remediation projects is difficult to
predict given the uncertainties regarding the extent of the required cleanup,
the interpretation of applicable laws and regulations and alternative cleanup
methods. Based upon the Company's experience with the foregoing environmental
matters, the Company has concluded that there is a reasonable possibility that
remedial costs will be incurred with respect to these projects in the aggregate
range of $14.0 million to $50.5 million. At June 30, 1994 the Company had
concluded that the most probable amount which will be incurred within this range
is $25.5 million and such amount is included in the caption "accrued expenses"
on the
14
<PAGE>
Company's consolidated balance sheet. Based upon information available to the
Company, at those sites where there has been an allocation of the share of
cleanup and such liability could be joint and several, management believes it is
probable that other responsible parties will fully pay the cost apportioned to
them, except with respect to one site for which the Company has assumed that one
of the identified responsible parties will be unable to pay the cost apportioned
to it and that such party's cost will be reapportioned among the remaining
responsible parties. In view of the Company's financial position and reserves
for environmental matters of $25.5 million, the Company has concluded that its
payment of such estimated amounts will not have a material adverse effect on its
consolidated financial position or results of operations.
USE OF PROCEEDS
All of the shares of Common Stock offered hereby are being offered by
certain Selling Shareholders. See "Selling Shareholders". The Company will not
receive any of the proceeds from the sale of the shares offered hereby.
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
The Common Stock of the Company is traded on the New York Stock Exchange
under the symbol "TYC." The following table sets forth the high and low sale
prices for the Company's Common Stock, as reported on the New York Stock
Exchange, and the quarterly dividends per share declared on the Common Stock for
the periods indicated.
<TABLE>
<CAPTION>
COMMON STOCK
------------------------
DIVIDENDS
HIGH LOW PER SHARE
---- --- ---------
<S> <C> <C> <C>
Fiscal 1993
First Quarter......................................................... $37 1/2 $305/8 $ .09
Second Quarter........................................................ 43 1/8 331/2 .09
Third Quarter......................................................... 48 3/8 41 .10
Fourth Quarter........................................................ 45 1/8 373/8 .10
Fiscal 1994
First Quarter......................................................... $46 7/8 $383/4 $ .10
Second Quarter........................................................ 51 3/4 411/2 .10
Third Quarter......................................................... 55 1/4 487/8 .10
Fourth Quarter........................................................ 50 1/8 44 .10
Fiscal 1995
First Quarter......................................................... $48 3/8 $421/2 $ .10
Second Quarter........................................................ 50 1/3 433/8 .10
Third Quarter (through January 27, 1995).............................. 49 3/4 461/2 .10
</TABLE>
Cash dividends were paid by Tyco in fiscal 1993, 1994, and 1995. Kendall did
not pay dividends to its shareholders during these periods.
On January 26, 1995, the Company had approximately 6,950 Common Stock
holders of record, which does not include beneficial owners holding through
nominee or "street" name. The last reported sale price of the Common Stock on
the New York Stock Exchange on January 27, 1995 was $49.125 per share.
15
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company as of December 31, 1994. This table should be read in conjunction with
the audited and unaudited Consolidated Financial Statements of the Company and
the Notes thereto, appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
AS OF
DECEMBER 31, 1994
--------------------------------
(IN THOUSANDS EXCEPT SHARE DATA)
<S> <C>
Loans payable and current portion of long-term debt:............ $ 104,655
-----------
-----------
Long-term debt:
Credit agreements............................................. $ 0
Uncommitted lines of credit................................... 0
Insurance company notes....................................... 135,000
8.125% public notes due 1999.................................. 144,889
6.375% public debentures due 2004............................. 104,262
9.5% public debentures due 2022............................... 199,568
8.0% public debentures due 2023............................... 49,958
Other......................................................... 34,445
Less current portion...................................... (104,655)
-----------
Total long-term debt...................................... 563,467
-----------
Shareholders' equity:
Preferred stock ($1 par value, authorized 2,000,000 shares,
none outstanding)........................................... --
Common stock ($.50 par value, authorized 180,000,000 shares,
73,901,064 outstanding)......................................... 36,951
Capital in excess of par value (net of deferred compensation
of $25,367)................................................. 603,378
Currency translation adjustment............................... (23,819)
Retained earnings............................................. 870,323
-----------
Total shareholders' equity................................ 1,486,833
-----------
Total capitalization............................................ $2,050,300
-----------
-----------
</TABLE>
16
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA(A)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
The following table sets forth selected consolidated financial information
of the Company for the four years in the period ended June 30, 1994, the year
ended May 31, 1990 and the six month periods ended December 31, 1994 and 1993.
On October 19, 1994, Tyco acquired Kendall in the Merger, which has been
accounted for using the pooling of interests method of accounting. The selected
consolidated financial information reflects the combined financial position,
operating results and cash flows of Tyco and Kendall as if they had been
combined for all periods presented subsequent to June 30, 1992, the date Kendall
consummated a financial restructuring (the "Kendall Restructuring"). Financial
data for the six months ended December 31, 1994 and 1993 is unaudited but, in
the opinion of management, includes all adjustments, consisting only of normal
recurring adjustments, necessary to summarize fairly the Company's financial
position and results of operations. The selected financial information should be
read in conjunction with the audited and unaudited Consolidated Financial
Statements of the Company and the Notes thereto, appearing elsewhere in this
Prospectus, and the information contained in "Management's Discussion and
Analysis of Financial Condition and Operating Results."
<TABLE>
<CAPTION>
SIX MONTHS ENDED FISCAL
DECEMBER 31, FISCAL YEAR ENDED JUNE 30, YEAR ENDED
------------------------ -------------------------------------------------- MAY 31,
1994(B) 1993 1994 1993(C) (D) 1992(E) 1991(F) 1990(G)
---------- ---------- ---------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Sales............................... $2,151,895 $1,997,671 $4,076,383 $ 3,919,357 $3,066,485 $3,107,891 $2,102,740
Costs and Expenses:
Cost of sales....................... 1,572,626 1,478,851 3,003,194 2,909,947 2,390,218 2,406,077 1,603,054
Nonrecurring inventory charge....... -- -- -- 22,485 -- -- --
Selling, general and
administrative...................... 354,111 336,163 682,568 682,520 446,244 422,943 256,827
Merger and transaction related
costs............................... 37,170 -- -- -- -- -- --
Restructuring and severance
charges............................. -- -- -- 39,325 25,612 -- --
Interest............................ 31,703 33,320 62,431 85,785 63,261 73,856 41,256
---------- ---------- ---------- ----------- ---------- ---------- ----------
1,995,610 1,848,334 3,748,193 3,740,062 2,925,335 2,902,876 1,901,137
---------- ---------- ---------- ----------- ---------- ---------- ----------
Income before income taxes,
extraordinary item and cumulative
effect of accounting changes........ 156,285 149,337 328,190 179,295 141,150 205,015 201,603
Income taxes........................ (76,276) (63,867) (138,999) (84,837) (45,884) (87,530) (82,484)
---------- ---------- ---------- ----------- ---------- ---------- ----------
Net income before extraordinary item
and cumulative effect of accounting
changes............................. 80,009 85,470 189,191 94,458 95,266 117,485 119,119
Extraordinary item, net of tax
benefit............................. (2,600) -- -- (2,816) -- -- --
Cumulative effect of accounting
changes............................. -- -- -- (71,040) -- -- --
---------- ---------- ---------- ----------- ---------- ---------- ----------
Net income.......................... $ 77,409 $ 85,470 $ 189,191 $ 20,602 $ 95,266 $ 117,485 $ 119,119
---------- ---------- ---------- ----------- ---------- ---------- ----------
---------- ---------- ---------- ----------- ---------- ---------- ----------
Net Income Per Share:
Income before extraordinary item
and cumulative effect of
accounting changes.................. $ 1.07 $ 1.16 $ 2.56 $ 1.30 $ 2.06 $ 2.57 $ 2.90
Extraordinary item................. (0.03) -- -- (0.04) -- -- --
Cumulative effect of accounting
changes............................. -- -- -- (0.98) -- -- --
---------- ---------- ---------- ----------- ---------- ---------- ----------
Net Income.......................... $ 1.04 $ 1.16 $ 2.56 $ 0.28 $ 2.06 $ 2.57 $ 2.90
---------- ---------- ---------- ----------- ---------- ---------- ----------
---------- ---------- ---------- ----------- ---------- ---------- ----------
Cash dividends per common share..... $ 0.20 $ 0.20 $ 0.40 $ 0.38 $ 0.36 $ 0.35 $ 0.31
---------- ---------- ---------- ----------- ---------- ---------- ----------
---------- ---------- ---------- ----------- ---------- ---------- ----------
BALANCE SHEET DATA:
Working capital..................... $ 396,874 $ 329,918 $ 341,154 $ 274,278 $ 252,021 $ 219,773
Total assets........................ 3,186,469 3,140,821 3,164,966 2,451,537 2,392,966 1,416,556
Long-term debt...................... 563,467 588,491 812,585 534,951 609,255 269,776
Shareholders' equity................ 1,486,833 1,367,026 1,138,786 1,040,551 905,151 607,374
</TABLE>
- ------------
(a) The selected financial statement data reflect the combined results of
operations and financial position of Tyco and Kendall for all periods
subsequent to June 30, 1992. The selected financial data at and for the
years ended June 30, 1992 and 1991 and at and for the year ended May 31,
1990, reflect only the results of operations and financial position of Tyco.
See Note 1 to the Consolidated Financial Statements.
(b) Results for the six months ended December 1994 include a charge of $31.2
million after-tax ($0.42 per share), for fees and expenses related to the
merger and integration of the combined companies and an extraordinary item
of $2.6 million after-tax ($0.03 per share), resulting from the early
extinguishment of $100 million of Kendall debt. See Notes 1 and 3 to the
unaudited Consolidated Financial Statements.
(c) Effective July 1, 1992, Tyco adopted the provisions of Statement of
Financial Accounting Standards ("SFAS") 109 "Accounting for Income Taxes"
and SFAS 106 "Employers' Accounting for Post-Retirement Benefits Other Than
Pensions." Kendall adopted SFAS 109 and SFAS 106 effective with the Kendall
Restructuring (see Note 1 to the Consolidated Financial Statements) and,
accordingly, there is no cumulative effect reflected in the Consolidated
Financial Statements.
(d) Fiscal 1993 results include restructuring and severance charges of $27.3
million after-tax, a non-recurring inventory charge of $22.5 million before
and after-tax, a reduction in tax expense of $6.7 million attributable to
revisions in previous tax estimates, incremental income tax expense due to
tax rates changes of $7.8 million and a special pension charge of $1.2
million after-tax.
(e) Fiscal 1992 results include restructuring and severance charges of $14.9
million after-tax and a reduction in tax expense of $16.9 million
attributable to revisions in previous tax estimates.
(f) Fiscal 1991 results include the results of operations of Wormald from the
date of its acquisition, August 2, 1990.
(g) The Company changed its fiscal year from May 31 to June 30 effective with
the fiscal year ended June 30, 1991. Accordingly, the June 1990 results are
not presented above. The Company's results of operations for the month of
June 1990 reflected net sales of $130.2 million, net loss before income
taxes of $10.5 million, an income tax benefit of $3.5 million, net loss of
$6.9 million and net loss per share of $0.17.
17
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND OPERATING RESULTS
On October 19, 1994, a wholly-owned subsidiary of Tyco merged with Kendall.
The Merger was accounted for as a pooling of interests and the historical
results of Tyco and Kendall have been combined for all periods presented
subsequent to June 30, 1992, the effective date of the Kendall Restructuring.
Accordingly, the unaudited Consolidated Financial Statements at and for the six
months ended December 31, 1994 and 1993 and the Consolidated Financial
Statements for the years ended June 30, 1994 and 1993 reflect the combined
financial position and results of operations and cash flows of Tyco and Kendall.
The Consolidated Financial Statements for the year ended June 30, 1992 reflect
only the results of operations and cash flows of Tyco. See Note 1 to the
Consolidated Financial Statements.
Information for all periods presented below reflects the grouping of the
Company's businesses into four industry segments, consisting of Fire Protection,
Flow Control Products, Electrical and Electronic Components and Disposable and
Specialty Products. Additionally, state income tax expense, previously included
in selling, general and administrative expense, has been reclassified to the
provision for income taxes for all periods presented.
RESULTS OF OPERATIONS FOR THE FIRST SIX MONTHS OF FISCAL 1995 COMPARED WITH THE
FIRST SIX MONTHS OF FISCAL 1994
Overview
Net income before extraordinary item was $80.0 million, or $1.07 per share
for the first six months of fiscal 1995 compared with $85.5 million, or $1.16
per share for the first six months of fiscal 1994. Excluding the $31.2 million,
($0.42 per share), after-tax charge for merger and transaction related costs
related to the Merger in fiscal 1995 (see Note 1 to the unaudited Consolidated
Financial Statements), net income before extraordinary item rose 30% to $111.2
million, or $1.49 per share. The increase was attributable to strong earnings in
the Disposable and Specialty Products group as well as increased income in each
of the Company's other business segments.
Sales
Sales during the first six months of fiscal 1995 were $2.15 billion, an 8%
increase over the first six months of fiscal 1994 sales of $2.0 billion. Sales
of the Fire Protection group increased $37.9 million to $801.9 million, or 5%,
due to increased sales in the North American and Asia-Pacific contracting
business partially offset by slightly lower sales in the European contracting
business. The decline in Europe was principally the result of the sale of
certain fire products businesses in the fourth quarter of fiscal 1994 partially
offset by the impact of changes in average foreign currency exchange rates on
non-U.S. dollar denominated sales in the first six months of fiscal 1995 as
compared to the first six months of fiscal 1994. Had average foreign currency
exchange rates during the first six months of fiscal 1995 remained constant with
the average during the first six months of fiscal 1994, sales would have been
approximately $24 million less in fiscal 1995. Sales of the Flow Control group
increased $49.2 million to $481.0 million, or 11%, reflecting higher volume at
Allied, Mueller and Grinnell's distribution operations. Sales of the Electrical
and Electronic Components group decreased $8.9 million to $205.6 million, or 4%,
resulting principally from lower sales of underwater communications cable
systems at Simplex. Sales of the Disposable and Specialty Products group
increased $76.0 million to $663.3 million, or 13%, due to increased sales
principally at Kendall and, to a lesser extent, at Ludlow and Armin.
Income Before Income Taxes and Extraordinary Item
For the first six months of fiscal 1995 as compared to the first six months
of fiscal 1994, operating profits of the Fire Protection group rose $4.9 million
to $39.2 million, or 14%, due principally to higher
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<PAGE>
margins at the North American and Asia-Pacific fire protection operations
partially offset by slightly lower margins at the European contracting
operations. The operating profits of the Flow Control group increased $5.6
million to $39.5 million, or 16%, resulting principally from increased earnings
at Grinnell's North American distribution operations and at Mueller. Operating
profits of the Electrical and Electronic Components group increased $0.5 million
to $36.6 million, or 1%, due to increased earnings at Simplex somewhat offset by
decreased margins at Allied's electrical business. Operating income of the
Disposable and Specialty Products group increased $35.1 million to $121.4
million, or 41%, reflecting higher earnings at Kendall and, to a lesser extent,
at Ludlow and Armin. The impact on the consolidated results of operations from
changes in foreign exchange rates relative to the value of the U.S. dollar for
the first six months of fiscal 1995 as compared to the same period of fiscal
1994 was not material.
Interest Expense
Interest expense decreased $1.6 million to $31.7 million during the first
six months of fiscal 1995 as compared to the first six months of fiscal 1994 due
principally to the sale of $150 million of accounts receivable late in the
second quarter of fiscal 1994 (see Note 4 to the unaudited Consolidated
Financial Statements) and lower average debt balances partially offset by higher
interest rates.
Extraordinary Item
During the second quarter of fiscal 1995, the Company refinanced $100
million principal amount of Kendall's subordinated notes due 2003. In connection
with the refinancing, the Company recorded a charge of $4.3 million ($2.6
million after-tax) representing unamortized debt issuance fees and a call
premium, as an extraordinary loss.
RESULTS OF OPERATIONS FOR THE THREE YEARS ENDED JUNE 30, 1994
Overview
Net income before extraordinary item and cumulative effect of accounting
changes amounted to $189.2 million, or $2.56 per share for fiscal 1994. This
compares to $94.5 million, or $1.30 per share for fiscal 1993. Fiscal 1993
earnings also reflect restructuring and severance charges ("restructuring
charges") of $39.3 million ($27.3 million after-tax), a non-recurring inventory
charge of $22.5 million before and after-tax, and a special pension charge of
$2.0 million ($1.2 million after-tax). Notes 1 and 4 to the Consolidated
Financial Statements describe these fiscal 1993 charges. Income before income
taxes, extraordinary item and cumulative effect of accounting changes was $328.2
million in fiscal 1994. This compares to $243.1 million in fiscal 1993
(excluding the restructuring, non-recurring inventory and special pension
charges) or an increase of 35%. These fiscal 1994 results reflect strong
increases in the Disposable and Specialty Products segment as well as increases
in each of the Company's other business segments.
Sales
Sales increased 4% during fiscal 1994 to $4.08 billion from $3.92 billion in
fiscal 1993. Sales of the Fire Protection group were approximately the same from
year to year, as increases in the Asia-Pacific and North American contracting
businesses were offset by a decrease in the European contracting business. The
lower sales in Europe reflect the result of changes in average foreign currency
exchange rates on non-U.S. dollar denominated sales in fiscal 1994 as compared
to fiscal 1993, which reduced sales in U.S. dollars for the year by
approximately $53.1 million. This reduction, due to the strengthening of the
U.S. dollar versus European currencies, primarily in the first quarter of fiscal
1994, was partially offset by increased sales in local currencies in the
European contracting businesses. Sales of the Flow Control group increased
$107.5 million to $914.4 million, or 13%, reflecting increased volume at Allied,
Mueller and Grinnell's distribution operations, as well as sales of a U.K. based
manufacturer of
19
<PAGE>
specialty high performance butterfly valves and ball valves ("Winn-Hindle")
acquired by the Company during the fourth quarter of fiscal 1993. Sales of the
Electrical and Electronic Components group increased $23.6 million to $436.9
million, or 6%, resulting principally from higher sales of electrical conduit at
Allied and higher sales of underwater communications cable systems at Simplex,
partially offset by decreased sales at the Company's printed circuit operations.
Sales of the Disposable and Specialty Products group increased $26.1 million to
$1.2 billion, or 2% due to increased sales at Armin, Kendall and Ludlow,
including the disposable medical products businesses acquired by Ludlow during
fiscal 1994.
Sales increased 28% during fiscal 1993 to $3.92 billion from $3.07 billion
in fiscal 1992 due principally to Kendall's operations, which are not included
in fiscal 1992 results (See Note 1 to the Consolidated Financial Statements).
Sales of the Fire Protection group decreased $89.6 million to $1,526.1 million,
or 6%, due to decreased sales in the European and Asia-Pacific contracting
businesses offset by a slight increase in the North American contracting
business. Sales of the Flow Control Products group increased $85.6 million to
$806.9 million, or 12%, reflecting increased volume at Allied, Grinnell's
distribution operations and Mueller. Sales of the Electrical and Electronic
Components group increased $21.0 million to $413.3 million, or 5%, resulting
principally from higher sales of underwater communications cable systems at
Simplex and higher sales of electrical conduit at Allied. Sales of the
Disposable and Specialty Products group increased $835.9 million to $1.17
billion due principally to the inclusion of Kendall's sales in 1993, as well as
increased sales at Armin and Ludlow.
Income Before Income Taxes, Extraordinary Item and Cumulative Effect of
Accounting Changes
Pre-tax income was $328.2 million in fiscal 1994 and $179.3 million in
fiscal 1993. Included in the results for fiscal 1993 are pre-tax charges for
restructuring of $39.3 million, a non-recurring inventory charge of $22.5
million and a special pension charge of $2.0 million. Excluding these charges,
pre-tax income in fiscal 1994 increased $85.1 million, or 35%. The restructuring
charges related to operational and organizational changes in certain of the
Company's businesses. See Notes 1 and 4 to the Consolidated Financial Statements
and a further description of the restructuring charges by segment below.
Management believes that the fiscal 1993 restructuring charges were sufficient
to make the required operational and organizational changes and does not
anticipate additional restructuring charges. The cash requirements for the
remaining restructuring actions are not expected to have a material effect on
the Company's fiscal 1995 cash flow as the cash needs are expected to be
partially offset by reductions in working capital.
The following is a comparison, excluding restructuring and non-recurring
inventory charges, of each of the Company's operating segments for fiscal 1994
and 1993. Operating profits of the Fire Protection group increased $11.0 million
to $70.2 million, or 19%. This was principally due to higher volume and margins
in North America. The impact on the consolidated results of operations from
changes in average foreign exchange rates for fiscal 1994 as compared to fiscal
1993 was not significant. The operating profits of the Flow Control Products
group increased $10.5 million to $74.1 million, or 16%. Improvements in margins
at Grinnell's distribution operations and earnings from Winn-Hindle were
partially offset by decreased margins at Allied's pipe operations. Operating
profits of the Electrical and Electronic Components group increased $3.4 million
to $72.5 million, or 5%, due to increased earnings reflecting higher margins at
Simplex and to a lesser extent electrical conduit at Allied, slightly offset by
a decrease in profits at the Company's printed circuit operations. Operating
profits of the Disposable and Specialty Products group increased $42.9 million
to $191.7 million, or 29%, reflecting increased earnings principally at Kendall
and, to a lesser extent, Armin and Ludlow, including the earnings of the
disposable medical products businesses acquired by Kendall and Ludlow during
fiscal 1994. Included in Corporate and other amounts for fiscal 1994 is an
expense of $4.1 million related to the Company's sale of accounts receivable.
See Note 6 to the Consolidated Financial Statements for a further description of
this transaction.
20
<PAGE>
Pre-tax income before extraordinary item and cumulative effect of accounting
changes for fiscal 1993 was $179.3 million, a 27% increase from the $141.2
million pre-tax income earned in fiscal 1992 due principally to Kendall's
operations, which are not included in fiscal 1992 results (see Note 1 to the
Consolidated Financial Statements). Included in the results for fiscal 1993 are
pre-tax charges for restructuring of $39.3 million ($27.3 million after tax), a
non-recurring inventory charge of $22.5 million, a special pension charge of
$2.0 million ($1.2 million after tax) and the current year effect of SFAS 106
and SFAS 109 of $0.8 million ($5.1 million after tax). Included in fiscal 1992
results are pre-tax charges of $25.6 million ($14.9 million after tax) for
restructuring charges. The Company's fiscal 1993 and 1992 restructuring charges
relate to operational and organizational changes in certain of the Company's
businesses. See Notes 1 and 4 to the Consolidated Financial Statements and a
further description of the restructuring charges and non-recurring inventory
charge by segment below.
The following is a comparison of each of the Company's operating segments
for fiscal 1993 and 1992. Operating profits of the Fire Protection group
decreased $42.0 million to $43.2 million, or 49%. This was due principally to
lower volume and reduced margins in the European and Australian contracting
businesses and to a lesser extent reduced margins in the North American
contracting businesses. In addition, fiscal 1993 included pre-tax restructuring
charges of $16.0 million related principally to reductions of personnel in the
European and Australian contracting businesses. In fiscal 1992, $10.0 million of
pre-tax restructuring charges were recorded. The operating profits of the Flow
Control Products group increased $6.9 million to $44.6 million, or 18%,
resulting principally from significantly increased earnings at Allied as a
result of increased margins and to a lesser extent increased earnings on the
distribution of flow control products in North America. These increases were
partly offset by decreased earnings at Mueller where unit volume was maintained
but margins suffered from competitive pricing as a result of low levels of
housing starts in the United States. In addition, fiscal 1993 included pre-tax
restructuring charges of $19.0 million related to severance and excess
facilities costs associated with a major reorganization of the distribution
system for Grinnell's North American flow control operations and the provision
for an anticipated loss on the sale of a United States pipe manufacturing
facility. In fiscal 1992, $13.4 million of pre-tax restructuring charges were
recorded. Operating profits of the Electrical and Electronic Components group
increased $14.3 million to $68.4 million, or 26%, due primarily to an increase
in earnings at Simplex reflecting higher sales of underwater communication
cables and to increased margins at the Company's printed circuit facilities
somewhat offset by a $0.7 million pre-tax restructuring charge for the shutdown
of a printed circuit board facility. Operating income of the Disposable and
Specialty Products group increased $82.8 million to $126.3 million principally
reflecting the inclusion of Kendall as of the beginning of fiscal 1993, as well
as increased volume and margins at Ludlow and Armin. Included in Corporate and
other amounts for fiscal 1993 are $5.6 million of pre-tax restructuring charges
primarily for personnel reductions and costs for certain pension items. In
fiscal 1992, a $2.2 million pre-tax restructuring charge was recorded. The
impact on the consolidated results of operations from changes in average foreign
exchange rates for fiscal 1993 as compared to fiscal 1992 was not significant.
Interest Expense
Interest expense decreased $23.4 million during fiscal 1994 due to lower
average interest rates, lower average debt levels and the sale of accounts
receivable as described in Note 6 to the Consolidated Financial Statements.
Interest expense increased $22.5 million during fiscal 1993 due to higher
average debt levels as a result of the inclusion of Kendall's debt as of July 1,
1992, and the related interest expense partially offset by lower average
interest rates.
Extraordinary Item
During fiscal 1993, Kendall refinanced certain notes and borrowings
outstanding under its bank facilities. In connection with the refinancing, the
Company recorded a charge of $4.6 million ($2.8
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<PAGE>
million after-tax) representing unamortized bank fees and original issue
discount as an extraordinary loss.
Cumulative Effect of Accounting Changes
Effective July 1, 1992, Tyco adopted two new accounting pronouncements
related to income taxes (SFAS 109) and post-retirement health benefits (SFAS
106). The cumulative effect of these accounting changes was an after-tax charge
of $71.0 million comprised of $16.1 million for SFAS 109 and $54.9 million
($84.5 million pre-tax) for SFAS 106. In addition to the cumulative effect of
the accounting changes, SFAS 109 and SFAS 106 resulted in a fiscal year 1993
reduction in income of $5.1 million after-tax, comprised of $7.8 million of
nonrecurring tax rate changes in certain foreign jurisdictions and $1.6 million
related to additional post-retirement medical costs partially offset by $4.3
million of tax benefits. Kendall adopted SFAS 109 and SFAS 106 effective with
the Kendall Restructuring (see Note 1 to the Consolidated Financial Statements),
and accordingly there is no cumulative effect reflected in the Consolidated
Financial Statements.
Income Tax Expense
Income tax expense was $139.0 million in fiscal 1994. Income tax expense
before extraordinary item and cumulative effect of accounting changes was $84.8
million in fiscal 1993. The higher income tax expense in fiscal 1994 reflects
increased pre-tax income in fiscal 1994 and revisions of certain tax estimates
in fiscal 1993 resulting in a $6.7 million reduction in tax expense. An analysis
of income taxes and the effective income tax rate is presented in Note 8 to the
Consolidated Financial Statements.
LIQUIDITY AND CAPITAL RESOURCES
As presented in the unaudited Consolidated Statement of Cash Flows, net cash
provided by operating activities was $128.0 million during the first six months
of fiscal 1995. The significant changes in working capital accounts were a
decrease of $15.3 million in accounts receivable and contracts in process, an
increase of $24.0 million in inventory and a $25.2 million decrease in accounts
payable and accrued expenses. Net changes in other working capital accounts were
not significant during the period. Working capital requirements for the
remainder of fiscal 1995 are not expected to change significantly.
During the first six months of fiscal 1995, the Company used cash to
purchase $64.3 million of property and equipment, acquire a European fire
products company, a U.S. flow control company and three U.S. disposable health
products companies for an aggregate of $23.6 million, pay dividends of $9.3
million and reduce total debt by $84.5 million. The Company received $34.6
million of cash during the first six months of fiscal 1995 from the exercise of
stock options and warrants.
The level of capital expenditures is expected to increase slightly in fiscal
1995 as compared to fiscal 1994 and the source of funds for such expenditures is
expected to be cash from operations. The amount of total dividends paid is
expected to increase during the remainder of fiscal 1995 due to issuance of
shares of common stock in connection with the Merger with Kendall. The source of
funds for such dividends is expected to be cash from operations.
At December 31, 1994, the Company's total debt was $668.1 million as
compared to $751.7 million at June 30, 1994. In November 1994, the Company
issued $145 million principal amount of 8.125% notes due 1999. The proceeds were
used, in part, to refinance $100 million principal amount of Kendall's
subordinated notes due 2003. The balance was used to refinance, in part, $80
million of insurance company notes that were due on January 30, 1995. In October
1994, the Company replaced its credit agreements with a new credit agreement
which gives the Company the right to borrow $300 million or a portion thereof
until October 1999 (see Note 3 to the unaudited Consolidated Financial
Statements). The Company believes that its funding sources are adequate for its
anticipated requirements through expected cash flows from operations and
established financing arrangements.
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<PAGE>
Shareholders' equity was $1,486.8 million or $20.12 per share at December
31, 1994 compared to $1,367.0 million or $19.23 per share at June 30, 1994. The
increase is due to fiscal 1995 net income and due to the exercise of stock
options and warrants. Total debt as a percent of total capitalization (total
debt and shareholders' equity) was 31% at December 31, 1994 and 35% at June 30,
1994. The change is due principally to the decrease in debt and the increase in
shareholders' equity discussed above.
BACKLOG
The backlog of unfilled orders was approximately $1,037.5 million at
December 31, 1994 and $763.0 million at June 30, 1994. This increase is
principally attributable to a $185 million increase at Simplex, where backlog
was increased by an order extension on a multi-year contract for the manufacture
of underwater communications cable systems. Backlog also increased in each of
the Company's other business segments, most notably in the European and
Asia-Pacific regions of the Fire Protection segment.
ACCOUNTING PRONOUNCEMENTS
In November 1992, the Financial Accounting Standards Board (the "Board")
issued Statement of Financial Accounting Standards ("SFAS") No. 112, "Employer's
Accounting for Post-Employment Benefits." The Company adopted SFAS 112 in the
first quarter of fiscal 1995. The effect of adoption of this standard did not
materially affect the Company's financial position or results of operations. In
May 1993, the Board issued SFAS 114, "Accounting by Creditors for Impairment of
a Loan." This new standard must be adopted no later than fiscal 1996. Adoption
of this standard is not expected to have a material effect on the Company's
financial position or results of operations.
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<PAGE>
SELLING SHAREHOLDERS
The Selling Shareholders named in the table below (collectively, the
"Selling Shareholders") were former shareholders of Kendall that received shares
of Common Stock, or rights to acquire the same, as a result of the Merger.
Parties to the Registration Rights Agreement (as defined below), including the
Selling Shareholders, have certain rights and obligations pursuant thereto. See
"Description of Capital Stock--Registration Rights Agreement."
The following table sets forth certain information with respect to the
Selling Shareholders and their beneficial ownership of Common Stock. Information
with respect to positions, offices or other material relationships of the
Selling Shareholders with the Company or any predecessor or affiliate thereof,
other than as a shareholder thereof, during the past three years is provided
below the table in the notes thereto. Unless otherwise indicated, each Selling
Shareholder named has sole voting and dispositive power with respect to its
shares.
All information with respect to beneficial ownership has been furnished by
the respective Selling Shareholders (except that information pertaining to the
Reallocated Shares (as defined below) has been furnished by the reallocation
agent referred to below).
<TABLE>
<CAPTION>
SHARES TO BE
SHARES BENEFICIALLY BENEFICIALLY
OWNED PRIOR TO OWNED AFTER
OFFERINGS(1) NUMBER OF OFFERINGS(2)
------------------- SHARES BEING -------------------
NUMBER PERCENT OFFERED NUMBER PERCENT
--------- ------- ------------ --------- -------
<S> <C> <C> <C> <C> <C>
The Clayton & Dubilier Private Equity Fund IV
Limited Partnership ("C&D Fund IV")(3).......... 4,719,710 6.3% 4,700,519 -- --
270 Greenwich Avenue
Greenwich, CT 06830
Clayton & Dubilier Associates III Limited
Partnership(3)(4)............................... 25,648 * 25,648 -- --
270 Greenwich Avenue
Greenwich, CT 06830
Joseph Littlejohn & Levy Fund, L.P. ("JLL
Fund")(5)....................................... 3,770,494 5.0% 3,222,605 -- --
--------- ------- ------------ --------- -------
50 Main Street, Suite 1000
White Plains, NY 10606
TOTAL........................................... 8,515,852 11.3% 7,948,772 -- --
</TABLE>
- ------------
* Less than 1%
(1) Pursuant to an Equity Reallocation Agreement dated as of July 7, 1992 among
C&D Fund IV, JLL Fund, FIMA Finance Management Inc. ("FIMA"), Mutual Series
Fund Inc. ("Mutual Fund"), Leeway and Co., Richard A. Gilleland and his
daughter (collectively, the "New Investors"), Kendall and Mellon Bank, N.A.,
as successor reallocation agent, the New Investors delivered certain shares
of Common Stock (the "Reallocated Shares") to the reallocation agent in
exchange for certificates evidencing a residual interest in such shares.
Pursuant to the Equity Reallocation Agreement, the holders of Kendall's
equity securities outstanding immediately prior to July 7, 1992 received, in
partial exchange for such old equity securities, rights to purchase (the
"Reallocation Rights") the Reallocated Shares. Until such time as the
Reallocated Shares are delivered upon exercise of the Reallocation Rights,
the New Investors have the right to vote the Reallocated Shares in which
they have a residual interest.
Shares beneficially owned by C&D Fund IV prior to the Offerings consist of
4,654,000 shares of Common Stock owned by C&D Fund IV, 46,519 shares of
Common Stock that it has the right to
(Footnotes continued on following page)
24
<PAGE>
- ------------
acquire upon the exercise of warrants and Reallocation Rights (including
3,698 Reallocated Shares in which it has a residual interest and which it
would acquire upon the exercise of its Reallocation Rights) and 19,191 other
Reallocated Shares over which it has voting power as of January 25, 1995.
Shares beneficially owned by JLL Fund prior to the Offerings include 22,889
Reallocated Shares over which it has voting power as of January 25, 1995 (as
to which beneficial ownership has been disclaimed by certain persons (see
Note 5)), and approximately 525,000 shares that are expected to be
distributed to its general partner prior to the completion of the Offerings
and which will not be sold in the Offerings.
(2) Assumes exercise of all outstanding Reallocation Rights (as described
above).
(3) C&D Fund IV is an investment partnership, the general partner of which is
Clayton & Dubilier Associates IV Limited Partnership ("Associates IV"). The
general partners of Associates IV are Charles B. Ames, William A. Barbe,
Alberto Cribiore, Donald J. Gogel, Leon J. Hendrix, Jr., Hubbard C. Howe,
Andrall E. Pearson and Joseph L. Rice, III. Messrs. Cribiore and Rice are
also general partners of Clayton & Dubilier Associates III Limited
Partnership ("Associates III"). As such, Messrs. Ames, Barbe, Cribiore,
Gogel, Hendrix, Howe, Pearson and Rice share investment and voting power
with respect to the securities of Tyco that C&D Fund IV owns, and Messrs.
Cribiore and Rice share investment and voting power with respect to
securities of Tyco that Associates III owns. Messrs. Ames, Barbe, Cribiore,
Gogel, Hendrix, Howe, Pearson and Rice have disclaimed beneficial ownership
of such securities. Messrs. Cribiore and Pearson were directors of Kendall
prior to the Merger and Mr. Cribiore is a director of Tyco.
(4) Associates III has the right to acquire 25,648 shares of Common Stock upon
the exercise of warrants and Reallocation Rights.
(5) Peter A. Joseph, Angus C. Littlejohn, Paul S. Levy and Yvonne V. Cliff are
the general partner of JLL Associates, L.P., the general partner of JLL
Fund, and as such, they share investment and voting power with respect to
the shares of Tyco Common Stock that JLL Fund owns. Messrs. Joseph,
Littlejohn and Levy and Ms. Cliff have disclaimed beneficial ownership of
such shares. Mr. Levy was a director of Kendall prior to the Merger and is
a director of Tyco. Mr. Levy is expected to receive approximately 183,000
shares of Tyco Common Stock through the distribution of shares by JLL Fund
to its general partner prior to the completion of the Offerings.
BOARD MEMBERSHIP
Pursuant to the terms of the merger agreement between Tyco and Kendall
relating to the Merger, the Board of Directors of Tyco have elected Alberto
Cribiore and Paul S. Levy to serve as directors of Tyco.
Tyco has agreed that for so long as C&D Fund IV continues to hold at least
20% of the shares of Common Stock received by it in the Merger, Tyco will
include one person designated in writing by C&D Fund IV and reasonably
satisfactory to Tyco in the slate of nominees recommended by the Board of
Directors of Tyco to its shareholders for election at each annual meeting of
shareholders of Tyco and use its reasonable best efforts to cause such designee
to be elected as a director of Tyco. Tyco has also agreed that for so long as
the JLL Fund continues to hold at least 20% of the shares of Common Stock
received by it in the Merger, Tyco will include one person designated in writing
by JLL Fund and reasonably satisfactory to Tyco in the slate of nominees
recommended by the Board of Directors of Tyco to its shareholders for election
at each annual meeting of shareholders of Tyco and use its reasonable best
efforts to cause such designee to be elected as a director of Tyco. At such time
as C&D Fund IV or JLL Fund, as the case may be (together with certain other
persons), ceases to own at least 20% of the shares of Common Stock received by
it in the Merger, upon request of Tyco, C&D Fund IV or JLL Fund, as the case may
be, will request, and use all reasonable means at its disposal to cause, its
designee to tender such designee's resignation as a director of Tyco. Upon
consummation of the Offerings, neither C&D Fund IV nor JLL Fund (together with
the aforementioned persons) will own more than 20% of the shares of Common Stock
received by it in the Merger.
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<PAGE>
DESCRIPTION OF CAPITAL STOCK
The following description does not purport to be complete and is qualified
in its entirety to the applicable provisions of the Company's Restated Articles
of Organization and By-Laws, copies of which are filed as exhibits to the
Registration Statement.
The authorized capital stock of the Company consists of 2,000,000 shares of
preferred stock, par value $1 per share (the "Preferred Stock"), of which no
shares were outstanding at January 26, 1995, and 180,000,000 shares of Common
Stock, of which 75,175,434 shares were issued and outstanding at January 26,
1995. The Preferred Stock is divisible into and issuable in one or more series.
Different series may be established, and the variations in the relative rights
and preferences as between such series may be fixed, by the Board of Directors
of the Company.
Mellon Bank, N.A. is the registrar and transfer agent of the shares of
Common Stock.
The holders of Common Stock are entitled to receive dividends when and as
declared by the Company's Board of Directors but only out of funds legally
available for the payment thereof, subject to restrictions imposed by certain
indebtedness of the Company. No cash payment or distribution may be made to
holders of Common Stock until all accrued dividends on all series of Preferred
Stock, if any, have been declared and set apart for payment through the last
preceding dividend date set for all such securities.
Holders of Common Stock are entitled to one vote per share at any annual or
special meeting of shareholders. Holders of Preferred Stock, if any, are
entitled to the voting rights fixed by the Board of Directors of the Company for
their respective series. Voting rights are not cumulative, and therefore holders
of more than 50% of the voting power of the Company could, if they chose to do
so, elect all directors, in which case holders of the remaining voting power
would be unable to elect any director.
Article I, Section 6 of the Company's By-Laws provides that any person (a
"Related Person") who together with its Affiliates and Associates (each as
defined in the Company's By-Laws) owns 5% or more of the outstanding shares of
Voting Stock (defined in the Company's By-Laws to include all outstanding shares
of capital stock of the Company entitled to vote in the election of directors
upon the occurrence of a specified event or condition) of the Company, and any
Affiliate or Associate of such person (other than the Company and its
Subsidiaries (as defined in the Company's By-Laws)), must comply with certain
minimum price and procedural requirements or, in the alternative, obtain the
advance approval of a majority of the Company's Continuing Directors (as defined
in the Company's By-Laws) or holders of not less than 80% of the Company's
Voting Stock in order to effect a merger or other Business Combination involving
the Company. The various transactions in the definition of "Business
Combination" include: any merger or consolidation of the Company or a Subsidiary
with or into a Related Person; any sale, lease, exchange, transfer, or other
disposition, in one transaction or a series of transactions, (i) to a Related
Person or an Affiliate or Associate of a Related Person of any Substantial Part
(as defined in the Company's By-Laws) of the assets of the Company or a
Subsidiary or (ii) from a Related Person or an Affiliate or Associate of a
Related Person, in an amount that would constitute a Substantial Part of the
assets of the Company; any issuance or sale by the Company or a Subsidiary of
any of its securities to a Related Person or an Affiliate or Associate of a
Related Person other than pursuant to an employee plan approved by a majority of
the Continuing Directors and the shareholders of the Company; any acquisition by
the Company or a Subsidiary of any securities of a Related Person or Affiliate
or Associate of a Related Person; any adoption of any plan for the liquidation
or dissolution of the Company proposed by or on behalf of a Related Person or
any Affiliate or Associate of a Related Person; and any reclassification of
securities, recapitalization of the Company or any other transaction that has
the effect of increasing the proportion of the outstanding shares of any class
of the Company's or any Subsidiary's equity securities owned by a Related Person
or any Affiliate or Associate of a Related Person. The By-Laws of the Company
confer upon a majority of the Continuing Directors the authority to determine,
among other things, whether a person is a Related
26
<PAGE>
Person and whether any proposed Business Combination complies with the minimum
price and procedural requirements. This section of the By-Laws cannot be
repealed or amended, nor may an inconsistent provision be adopted, without the
affirmative vote of a majority of the Continuing Directors or holders of not
less than 80% of the outstanding shares of the Voting Stock of the Company.
Upon the dissolution of the Company or upon any distribution of the
Company's assets, holders of Common Stock are entitled to all of the Company's
assets available for distribution to shareholders after the holders of all
series of Preferred Stock, if any, have received the preference fixed by the
Board of Directors for their respective series. Holders of Common Stock do not
have any preemptive rights to subscribe for additional issues of capital stock,
and they are not liable to further calls or to assessment by the Company.
REGISTRATION RIGHTS AGREEMENT
Tyco has agreed generally to assume and perform the obligations of Kendall
under the Registration Rights Agreement, dated as of July 7, 1992, as amended
(the "Registration Rights Agreement"), among Kendall and certain securityholders
of Kendall, including C&D Fund IV, JLL Fund, Mutual Series Fund, Inc., FIMA
Finance Management, Inc. (each, an "Institutional Investor"), Mr. Gilleland and
certain members of his family, C&D Fund III, as a warrant holder, and certain
permitted transferees (collectively, the "Holders"). The following description
of certain terms of the Registration Rights Agreement does not purport to be
complete and is subject in all respect to the detailed provisions of the
Registration Rights Agreement, a copy of which is filed as an exhibit to the
Registration Statement, to which reference is hereby made for a complete
statement of such provisions. The Registration Statement, of which this
Prospectus constitutes a part, is being filed pursuant to the Registration
Rights Agreement.
Demand Registration. The Registration Rights Agreement gives the right to
each Institutional Investor to request that Tyco file a registration statement
under the Securities Act covering the Registrable Securities (as defined in the
Registration Rights Agreement) requested by such Institutional Investor and to
use its best efforts to cause such registration statement to become effective.
Piggyback Registration. The Registration Rights Agreement provides that if
Tyco proposes to register any of its equity securities, whether or not for its
own account (subject to certain exceptions), Tyco will give notice of such
registration to the Holders together with certain information concerning the
proposed offering. Upon the written request of any Holder delivered within 15
business days of the notice, Tyco will use its best efforts to effect the
registration under the Securities Act of all the Registrable Securities that the
Holder requests Tyco to register, provided that Tyco will be permitted not to
register or to delay the registration of such Registrable Securities if it
determines not to register or to delay the registration of the securities
otherwise intended to be registered.
If the registration involves an underwritten offering and the managing
underwriter advises Tyco that, in its opinion, the number of securities proposed
to be registered must be limited due to market conditions, Tyco will include in
such registration first, the number of securities Tyco proposes to sell, and
second, the number of Registrable Securities of the Holders and securities of
other persons ("Other Persons") requested to be included in such registration
that, in the opinion of such managing underwriter, can be sold, allocated pro
rata among all such requesting Holders and Other Persons on the basis of the
relative number of securities as to which registration has been requested by
each such Holder and Other Person.
Tyco may not enter into any agreement that will grant any person piggyback
rights with respect to any demand registration of the Holders that fails to give
effect or diminishes the rights of Holders with respect to piggyback
registration as provided in the Registration Rights Agreement or that grants
registration rights to any person and does not require such person expressly to
recognize the rights of the Holders under the holdback provisions referred to
below.
27
<PAGE>
Holdback Agreements. The Registration Rights Agreement provides that if any
registration of Common Stock constituting Registrable Securities is made in
connection with an underwritten offering, the Holders will not effect any sale
or distribution, including in a private placement or pursuant to Rule 144 under
the Securities Act, of any Common Stock during the seven days prior to and
during the 180-day period following the effective date of such registration
statement.
If any registration of Registrable Securities is made in connection with an
underwritten offering, Tyco will, and will use reasonable efforts to cause other
persons holding 5% or more of the Common Stock (other than institutional
investment managers) to agree, not to effect any sale or distribution of any of
Tyco's equity securities or of any security convertible into or exchangeable or
exercisable for any equity security of Tyco during the period beginning seven
days prior to the effective date of such registration statement and ending on
the earlier of (1) 180 days after such effective date, and (2) 90 days after
such effective date, if the managing underwriter in such underwritten offering
permits such sale or distribution as not materially adversely affecting the
offering. The Registration Rights Agreement provides that the Holders
participating in any such offering will use their reasonable efforts to obtain
such permission from the managing underwriter.
Certain Other Provisions. All expenses incident to Tyco's performance of its
registration obligations under the Registration Rights Agreement, including the
reasonable fees and expenses of one counsel retained by the Holders of a
majority of the Registrable Securities being registered, will be paid by Tyco.
The foregoing does not include underwriting commissions or discounts or transfer
taxes, if any, attributable to the sale of Registrable Securities by the
Holders.
The Registration Rights Agreement contains customary indemnification
provisions whereby Tyco is obligated to indemnify and hold harmless the Holders
and certain related parties, and the Holders are obligated under certain
circumstances to indemnify and hold harmless Tyco and certain related parties,
in each case in connection with liabilities relating to the registration of the
Registrable Securities. The Registration Rights Agreement also provides for
certain rights of contribution in the event that such indemnity is unavailable.
28
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the United States purchase
agreement (the "U.S. Purchase Agreement") among the Company, the Selling
Shareholders and each of the Underwriters named below (the "U.S. Underwriters"),
and concurrently with the sale of shares of Common Stock to the
International Managers (as defined below), the Selling Shareholders have agreed
to sell to each of the U.S. Underwriters, and each of the U.S. Underwriters
severally has agreed to purchase from the Selling Shareholders, the number of
shares of Common Stock set forth opposite its name below:
NUMBER OF
SHARES OF
U.S. UNDERWRITERS COMMON STOCK
- ------------------------------------------------------------- -------------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated......................................
Goldman, Sachs & Co..........................................
Donaldson, Lufkin & Jenrette Securities Corporation..........
Lehman Brothers Inc..........................................
Total.............................................
-------------
-------------
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Goldman, Sachs & Co.,
Donaldson, Lufkin & Jenrette Securities Corporation and Lehman Brothers Inc. are
acting as representatives (the "U.S. Representatives") of the U.S. Underwriters.
The Company and the Selling Shareholders have also entered into a purchase
agreement (the "International Purchase Agreement" and, together with the U.S.
Purchase Agreement, the "Purchase Agreements") with Merrill Lynch International
Limited, Goldman Sachs International, Donaldson, Lufkin & Jenrette Securities
Corporation and Lehman Brothers International (Europe) acting as Lead Managers
and certain other underwriters outside the United States and Canada (the
"International Managers" and, together with the U.S. Underwriters, the
"Underwriters"). Subject to the terms and conditions set forth in the
International Purchase Agreement and concurrently with the sale of shares
of Common Stock to the U.S. Underwriters pursuant to the U.S. Purchase
Agreement, the Selling Shareholders have agreed to sell to the International
Managers, and the International Managers have severally agreed to purchase, an
aggregate of shares of Common Stock. The initial public offering price per
share and total underwriting discounts per share are identical under the U.S.
Purchase Agreement and the International Purchase Agreement.
In each Purchase Agreement, the several U.S. Underwriters and the several
International Managers have agreed, respectively, subject to the terms and
conditions set forth in such Purchase Agreement, to purchase all of the shares
of Common Stock being sold pursuant to such Purchase Agreement if any of such
shares of Common Stock being sold pursuant to such Purchase Agreement are
purchased. Under certain circumstances, the commitments of non-defaulting U.S.
Underwriters or International Managers (as the case may be) may be increased.
The sale of Common Stock to the U.S. Underwriters is conditioned upon the sale
of shares of Common Stock to the International Managers.
The U.S. Representatives have advised the Selling Shareholders that the U.S.
Underwriters propose to offer the shares of Common Stock offered hereby to the
public initially at the public offering price set forth on the cover page of
this Prospectus and to certain dealers at such price less a concession not in
excess of $ per share of Common Stock. The U.S. Underwriters may allow,
and such dealers may reallow, a discount not in excess of $ per share of
Common Stock on sales to
29
<PAGE>
certain other dealers. After the Offerings, the initial public offering price,
concession and discount may be changed.
The Selling Shareholders have been informed that the U.S. Underwriters and
the International Managers have entered into an agreement (the "Intersyndicate
Agreement") providing for the coordination of their activities. Under the terms
of the Intersyndicate Agreement, the U.S. Underwriters and the International
Managers are permitted to sell shares of Common Stock to each other for purposes
of resale at the initial public offering price, less an amount not greater than
the selling concession. Under the terms of the Intersyndicate Agreement, the
International Managers and any dealer to whom they sell shares of Common Stock
will not offer to sell or sell shares of Common Stock to persons who are United
States persons or Canadian persons or to persons they believe intend to resell
to persons who are United States persons or Canadian persons, and the U.S.
Underwriters and any dealer to whom they sell shares of Common Stock will not
offer to sell or sell shares of Common Stock to persons who are non-United
States and non-Canadian persons or to persons they believe intend to resell to
non-United States and non-Canadian persons, except in each case for transactions
pursuant to such agreement.
The Company and the Selling Shareholders have agreed, subject to certain
exceptions relating to employee benefit arrangements, that they will not,
directly or indirectly, for a period of 90 days following the date of this
Prospectus, except with the prior consent of Merrill Lynch, Pierce, Fenner &
Smith Incorporated, on behalf of the Underwriters, sell, offer to sell, grant
any option for the sale of, or otherwise dispose of, any Common Stock or any
securities convertible into or exercisable for Common Stock.
The Company and the Selling Shareholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act.
VALIDITY OF SHARES
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company and the Selling Shareholders by M. Brian Moroze, Esq.,
General Counsel of the Company, Exeter, New Hampshire. Certain other legal
matters will be passed upon for the Company by Kramer, Levin, Naftalis, Nessen,
Kamin & Frankel. Certain legal matters will be passed upon for the Underwriters
by Fried, Frank, Harris, Shriver & Jacobson (a partnership including
professional corporations), One New York Plaza, New York, New York 10004. Fried,
Frank, Harris, Shriver & Jacobson will rely on the opinion of Mr. Moroze as to
all matters of Massachusetts law. As of the date of this Prospectus, Mr. Moroze
holds 8,322 shares of the Company's Common Stock.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"), all of which may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington,
D.C. 20549, and at the following Regional Offices of the Commission: Chicago
Regional Office, Suite 1400, Northwestern Atrium Center, 500 West Madison
Street, Chicago, Illinois 60661; and New York Regional Office, Seven World Trade
Center, 13th Floor, New York, New York 10048. Copies of such material can be
obtained at prescribed rates from the Public Reference Section of the Commission
at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549. Such
material can also be inspected at the offices of the New York Stock Exchange, 20
Broad Street, New York, New York 10005, where the Common Stock is listed.
This Prospectus constitutes part of a Registration Statement on Form S-3
filed by the Company with the Commission under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the shares of Common Stock
offered in the Offerings. This Prospectus omits certain of the
30
<PAGE>
information contained in the Registration Statement in accordance with the rules
and regulations of the Commission. Reference is hereby made to the Registration
Statement and related exhibits for further information with respect to the
Company and the Common Stock. Statements contained herein concerning the
provisions of any document are not necessarily complete and, in each instance,
where a copy of such document has been filed as an exhibit to the Registration
Statement or otherwise has been filed with the Commission, reference is made to
the copy of the applicable document so filed. Each such statement is qualified
in its entirety by such reference.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents, which have been filed by the Company with the
Commission pursuant to the Exchange Act, are hereby incorporated by reference in
this Prospectus:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 1994;
(b) The Company's Quarterly Reports on Form 10-Q for the quarters ended
September 30, 1994, and December 31, 1994; The Company's Quarterly Report on
Form 10-Q/A for the quarter ended December 31, 1994;
(c) The Company's Current Report on Form 8-K, dated July 26, 1994;
(d) The Company's Current Report on Form 8-K, dated August 17, 1994, and
the Company's Current Report on Form 8-K/A, dated September 19, 1994;
(e) The Company's Current Report on Form 8-K, dated October 28, 1994,
and the Company's Current Reports on Form 8-K/A, dated November 1, 1994,
November 2, 1994 and November 3, 1994; and
(f) The Company's Current Report on Form 8-K, dated January 10, 1995.
All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus
and prior to the termination of the offering of the Common Stock made hereby
shall be deemed to be incorporated by reference into this Prospectus from the
date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, including any beneficial owner of Common Stock,
upon the written or oral request of any such person, a copy of any and all of
the documents that have been or may be incorporated by reference herein other
than exhibits to such documents (unless such exhibits are specifically
incorporated by reference into such documents). Such requests should be directed
to Irving Gutin, Senior Vice President, Tyco International Ltd., One Tyco Park,
Exeter, New Hampshire 03833 (telephone: (603) 778-9700).
31
<PAGE>
EXPERTS
The Consolidated Financial Statements of the Company giving retroactive
effect to the Merger of the Company and Kendall for the year ended June 30, 1994
and the combination of the financial statements of the Company and Kendall for
the year ended June 30, 1993 included in this Prospectus have been so included
in reliance on the report of Coopers & Lybrand L.L.P., independent accountants,
given on the authority of that firm as experts in accounting and auditing.
The Consolidated Financial Statements of the Company as of June 30, 1993 and
for the years ended June 30, 1993 and 1992 (prior to retroactive restatement to
account for the pooling of interests with Kendall International, Inc. on October
19, 1994) included in this Prospectus have been so included in reliance on the
report (which includes an explanatory paragraph relating to the fact that the
Company changed its method of accounting for income taxes and for
post-retirement benefits other than pensions in fiscal 1993) of Price Waterhouse
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
32
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
AUDITED CONSOLIDATED FINANCIAL STATEMENTS
<S> <C>
TYCO INTERNATIONAL LTD.
Report of Independent Accountants, Coopers & Lybrand L.L.P......................... F-2
Report of Independent Accountants, Price Waterhouse LLP............................ F-3
Consolidated Balance Sheet at June 30, 1994 and 1993............................... F-4
Consolidated Statement of Income for each of the three years in the
period ended June 30, 1994....................................................... F-5
Consolidated Statement of Shareholders' Equity for each of the three years
in the period ended June 30, 1994................................................ F-6
Consolidated Statement of Cash Flows for each of the three years in the
period ended June 30, 1994....................................................... F-7
Notes to Consolidated Financial Statements......................................... F-8
<CAPTION>
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
<S> <C>
TYCO INTERNATIONAL LTD.
Consolidated Balance Sheet at December 31, 1994.................................... F-25
Consolidated Statement of Income for the Six Months Ended December 31,
1994 and 1993.................................................................... F-26
Consolidated Statement of Shareholders' Equity for the Six Months Ended
December 31, 1994 and 1993....................................................... F-27
Consolidated Statement of Cash Flows for the Six Months Ended December 31,
1994 and 1993.................................................................... F-28
Notes to Interim Financial Statements.............................................. F-29
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Shareholders of
TYCO INTERNATIONAL LTD.
We have audited the consolidated balance sheet of Tyco International Ltd. as
of June 30, 1994 and the related consolidated statements of income,
shareholders' equity and cash flows for the year ended June 30, 1994. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Tyco
International Ltd. at June 30, 1994, and the consolidated results of operations
and cash flows for the year ended June 30, 1994, in conformity with generally
accepted accounting principles.
We have audited the consolidated balance sheet of Kendall International,
Inc. and subsidiaries as of June 30, 1993 and the related consolidated
statements of income and cash flows for the year ended June 30, 1993, prior to
their restatement for the 1994 pooling of interests. The contribution of Kendall
International, Inc. and subsidiaries to total assets, revenues and net income
before cumulative effect of accounting changes represented 22 percent, 21
percent and 21 percent of the respective restated totals. Separate financial
statements of Tyco International Ltd. included in the 1993 restated consolidated
balance sheet and statements of income and cash flows were audited and reported
on separately by other auditors. In addition, the financial statements of Tyco
International Ltd. for the year ended June 30, 1992, which represents 100% of
the combined restated financial statements for that period, were audited and
reported on by other auditors. We also audited the combination of the
accompanying consolidated balance sheet as of June 30, 1993 and the consolidated
statements of income and cash flows for the year ended June 30, 1993, after
restatement for the 1994 pooling of interests; in our opinion, such consolidated
statements have been properly combined on the basis described in Note 1 of Notes
to Consolidated Financial Statements.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
December 22, 1994
F-2
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Shareholders of
TYCO INTERNATIONAL LTD.
(formerly Tyco Laboratories, Inc.)
In our opinion, the consolidated balance sheet and the related consolidated
statements of income, of cash flows and of changes in stockholders' equity (not
presented separately herein) present fairly, in all material respects, the
financial position of Tyco International Ltd., formerly Tyco Laboratories, Inc.,
and its subsidiaries at June 30, 1993 and the results of their operations and
their cash flows for each of the two years in the period ended June 30, 1993
(prior to the retroactive restatement to account for the pooling of interests),
in conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above. We have not audited the consolidated financial statements of Tyco
International Ltd. for any period subsequent to June 30, 1993.
As discussed in Notes 1, 8 and 12, the Company changed its method of
accounting for income taxes and for post-retirement benefits other than pensions
in fiscal 1993.
PRICE WATERHOUSE LLP
Boston, Massachusetts
August 3, 1993
F-3
<PAGE>
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
AT JUNE 30
------------------------
1994 1993
---------- ----------
(IN THOUSANDS EXCEPT
SHARE DATA)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents.......................................... $ 75,843 $ 50,041
Receivables, less allowance for doubtful accounts of $29,311 in
1994 and $28,981 in 1993......................................... 515,160 622,178
Contracts in process............................................... 79,475 77,925
Inventories........................................................ 517,068 502,338
Deferred income taxes.............................................. 101,837 82,663
Prepaid expenses................................................... 54,904 54,763
---------- ----------
1,344,287 1,389,908
---------- ----------
PROPERTY AND EQUIPMENT:
Land............................................................... 33,235 34,718
Buildings.......................................................... 257,485 253,645
Machinery and equipment............................................ 647,058 630,479
Leasehold improvements............................................. 15,166 13,037
Construction in progress........................................... 42,648 47,656
Accumulated depreciation........................................... (385,719) (362,537)
---------- ----------
609,873 616,998
---------- ----------
GOODWILL AND OTHER INTANGIBLE ASSETS............................... 918,791 868,151
REORGANIZATION VALUE IN EXCESS OF IDENTIFIABLE ASSETS.............. 115,201 185,892
DEFERRED INCOME TAXES.............................................. 112,691 80,493
OTHER ASSETS....................................................... 39,978 23,524
---------- ----------
TOTAL ASSETS....................................................... $3,140,821 $3,164,966
---------- ----------
---------- ----------
CURRENT LIABILITIES:
Loans payable and current maturities of long-term debt............. $ 163,164 $ 239,601
Accounts payable................................................... 332,004 290,256
Accrued expenses................................................... 382,576 411,877
Contracts in process--billings in excess of costs.................. 63,324 49,676
Income taxes....................................................... 73,301 57,344
---------- ----------
1,014,369 1,048,754
DEFERRED INCOME TAXES.............................................. 13,698 8,032
LONG-TERM DEBT..................................................... 588,491 812,585
OTHER LIABILITIES.................................................. 157,237 156,809
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, $1 par value, authorized 2,000,000 shares; none
outstanding........................................................ -- --
Common stock, $.50 par value, authorized 180,000,000 shares;
outstanding 71,084,293 shares in 1994 and 70,924,026 shares
in 1993, net of reacquired shares of 7,600,747 in 1994 and
7,614,092 in 1993................................................ 35,542 35,462
Capital in excess of par value, net of deferred compensation of
$9,318 in 1994 and $12,314 in 1993............................... 567,476 558,481
Currency translation adjustment.................................... (40,874) (89,386)
Retained earnings.................................................. 804,882 634,229
---------- ----------
1,367,026 1,138,786
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY......................... $3,140,821 $3,164,966
---------- ----------
---------- ----------
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30(1)
--------------------------------------
1994 1993 1992
---------- ---------- ----------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
SALES.................................................. $4,076,383 $3,919,357 $3,066,485
---------- ---------- ----------
COSTS AND EXPENSES:
Cost of sales.......................................... 3,003,194 2,909,947 2,390,218
Nonrecurring inventory charge.......................... -- 22,485 --
Selling, general and administrative.................... 682,568 682,520 446,244
Restructuring and severance charges.................... -- 39,325 25,612
Interest............................................... 62,431 85,785 63,261
---------- ---------- ----------
3,748,193 3,740,062 2,925,335
---------- ---------- ----------
Income before income taxes, extraordinary item and
cumulative effect of accounting changes................ 328,190 179,295 141,150
Income taxes........................................... 138,999 84,837 45,884
---------- ---------- ----------
Net income before extraordinary item and cumulative
effect of accounting changes........................... 189,191 94,458 95,266
Extraordinary item..................................... -- 2,816 --
---------- ---------- ----------
Net income before cumulative effect of accounting
changes................................................ 189,191 91,642 95,266
Cumulative effect of accounting changes................ -- 71,040 --
---------- ---------- ----------
NET INCOME............................................. $ 189,191 $ 20,602 $ 95,266
---------- ---------- ----------
---------- ---------- ----------
NET INCOME PER SHARE:
Before extraordinary item and cumulative effect of
accounting changes..................................... $ 2.56 $ 1.30 $ 2.06
Extraordinary item..................................... -- (.04) --
Cumulative effect of accounting changes................ -- (.98) --
---------- ---------- ----------
NET INCOME............................................. $ 2.56 $ .28 $ 2.06
---------- ---------- ----------
---------- ---------- ----------
COMMON EQUIVALENT SHARES............................... 73,770 72,316 46,290
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
- ------------
(1) The consolidated financial statements reflect the combined results of
operations of Tyco and Kendall for the years ended June 30, 1994 and 1993.
Results for the year ended June 30, 1992 reflect only the results of Tyco.
See Note 1 to these financial statements.
See notes to consolidated financial statements.
F-5
<PAGE>
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
FOR THE THREE YEARS ENDED
JUNE 30, 1994(1)
-----------------------------------------------------
COMMON CAPITAL IN CURRENCY
STOCK, $.50 EXCESS OF TRANSLATION RETAINED
PAR VALUE PAR VALUE ADJUSTMENT EARNINGS
------------ ---------- ----------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
BALANCE AT JUNE 30, 1991...................... $ 23,527 $ 370,628 $ (42,351) $553,347
Net income.................................. 95,266
Dividends................................... (16,934)
Restricted stock grants, cancellations,
tax benefits and other.................... (24) 2,974
Currency translation adjustment............. 50,086
Amortization of deferred compensation....... 4,032
------------ ---------- ----------- --------
BALANCE AT JUNE 30, 1992...................... 23,503 377,634 7,735 631,679
Effect of Kendall Merger.................... 12,301 190,077
Net income.................................. 20,602
Dividends................................... (18,052)
Management equity compensation.............. 2,126
Restricted stock grants, cancellations,
tax benefits and other.................... (82) 3,015
Purchase of treasury stock.................. (260) (16,705)
Currency translation adjustment............. (97,121)
Amortization of deferred compensation....... 2,334
------------ ---------- ----------- --------
BALANCE AT JUNE 30, 1993...................... 35,462 558,481 (89,386) 634,229
Net income.................................. 189,191
Dividends................................... (18,538)
Management equity compensation.............. 1,273
Restricted stock grants, cancellations,
tax benefits and other.................... 15 2,409
Warrants, options exercised................. 65 2,215
Purchase of warrant......................... (600)
Currency translation adjustment............. 48,512
Amortization of deferred compensation....... 3,698
------------ ---------- ----------- --------
BALANCE AT JUNE 30, 1994...................... $ 35,542 $ 567,476 $ (40,874) $804,882
------------ ---------- ----------- --------
------------ ---------- ----------- --------
</TABLE>
- ------------
(1) The consolidated financial statements reflect the combined equity of Tyco
and Kendall for the years ended June 30, 1994 and 1993. Results for the year
ended June 30, 1992 reflect only the equity of Tyco. See Note 1 to these
financial statements.
See notes to consolidated financial statements.
F-6
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30(1)
-----------------------------------
1994 1993 1992
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income............................................... $ 189,191 $ 20,602 $ 95,266
Adjustments to reconcile net income to net cash provided
by operating activities:
Extraordinary item..................................... -- 2,816 --
Cumulative effect of accounting changes................ -- 71,040 --
Depreciation........................................... 83,027 79,076 66,501
Amortization of intangibles............................ 40,621 42,505 28,107
Amortization of debt discount and issue costs.......... 1,232 6,768 --
Provision for management equity plans.................. 6,325 7,256 --
Non-recurring inventory charge......................... -- 22,485 --
Deferred income taxes.................................. 31,459 (2,547) (13,832)
Provision for losses on accounts receivable and
inventory
writedowns........................................... 14,823 12,663 11,809
Changes in assets and liabilities net of effects from
acquisitions:
Decrease (increase) in accounts receivable........... 108,847 (28,040) 27,573
Decrease (increase) in contracts in process.......... 12,471 (8,016) 681
(Increase) decrease in inventory..................... (11,766) 1,204 10,461
(Decrease) increase in accounts payable and accrued
expenses................................................. (26,189) 47,277 (48,127)
Increase (decrease) in income taxes payable.......... 15,389 (3,588) (5,527)
Other, net........................................... 26,998 8,543 2,067
--------- --------- ---------
Net cash provided by operating activities.............. 492,428 280,044 174,979
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of acquired assets................... 18,054 -- 14,289
Capital expenditures..................................... (89,802) (94,399) (67,650)
Purchases of businesses, net of cash acquired............ (72,640) (72,008) (18,835)
--------- --------- ---------
Net cash used in investing activities.................. (144,388) (166,407) (72,196)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt............................. 104,628 49,955 199,528
Payments on long-term debt and lines of credit........... (409,692) (126,960) (275,951)
Purchase of warrant and treasury stock................... (600) (16,965) --
Dividends paid........................................... (18,510) (17,640) (16,934)
Financial restructuring and financing fees paid.......... (344) (5,631) --
Issuance of stock and warrants........................... 2,280 -- --
--------- --------- ---------
Net cash used in financing activities.................. (322,238) (117,241) (93,357)
--------- --------- ---------
Net change in cash and cash equivalents.................. 25,802 (3,604) 9,426
Cash and cash equivalents at beginning of year........... 50,041 32,135 22,709
Kendall cash and cash equivalents at beginning of year... -- 21,510 --
--------- --------- ---------
Cash and cash equivalents at end of year................. $ 75,843 $ 50,041 $ 32,135
--------- --------- ---------
--------- --------- ---------
SUPPLEMENTARY CASH FLOW DISCLOSURE:
Interest paid............................................ $ 72,640 $ 82,952 $ 77,823
--------- --------- ---------
--------- --------- ---------
Income taxes paid (net of refunds)....................... $ 73,751 $ 55,112 $ 34,980
--------- --------- ---------
--------- --------- ---------
</TABLE>
- ------------
(1) The consolidated financial statements reflect the combined cash flows of
Tyco and Kendall for the years ended June 30, 1994 and 1993. Results for the
year ended June 30, 1992 reflect only the cash flows of Tyco. See Note 1 to
these financial statements.
See notes to consolidated financial statements.
F-7
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation--The consolidated financial statements include the
accounts of Tyco International Ltd. ("Tyco" or the "Company") and its
subsidiaries. As described more fully in Note 2, on October 19, 1994 a wholly
owned subsidiary of Tyco merged with Kendall International, Inc. ("Kendall").
These consolidated financial statements have been prepared following the pooling
of interests method of accounting and reflect the combined financial position,
operating results and cash flows of Tyco and Kendall as if they had been
combined for all periods presented subsequent to June 30, 1992, the date on
which Kendall undertook a financial restructuring.
During the first half of calendar 1992, Kendall undertook a financial
restructuring (the "Restructuring") which reduced its debt and associated
interest expense to a level supportable by its operations. The Restructuring was
consummated through a prepackaged plan of reorganization under Chapter 11 of the
U.S. Bankruptcy Code. For accounting purposes, the Restructuring was effective
as of June 30, 1992, the date Kendall adopted "fresh-start" accounting pursuant
to the American Institute of Certified Public Accountants Statement of Position
No. 90-7 ("SOP 90-7"). At that date, Kendall's assets and liabilities were
adjusted to their reorganization or fair market values, and a new reporting
entity was created with no retained earnings or accumulated deficit.
Accordingly, Kendall's results prior to June 30, 1992 have not been combined
with those of Tyco in these financial statements.
Investments--All highly liquid investments purchased with a maturity of
three months or less are considered to be cash equivalents.
Inventories and Contracts--Inventories are recorded at the lower of cost
(first-in, first-out) or market. The non-recurring inventory charge reflected in
the accompanying consolidated statement of income for the year ended June 30,
1993 represents the cost of sales impact of the inventory write-up required by
the asset valuation requirements of fresh-start reporting.
Contract sales for installation of fire protection systems are recorded on
the percentage-of-completion method. Profits recognized on contracts in process
are based upon estimated contract revenue and related cost at completion.
Revisions in cost estimates as contracts progress have the effect of increasing
or decreasing profits in the current period. Provisions for anticipated losses
are made in the period in which they first become determinable. Sales of
underwater cable systems are also recorded on the percentage-of-completion
method. Selling, general and administrative expenditures are expensed as
incurred. Accounts receivable include amounts not yet billed because of
retainage provisions for fire protection contracts. Retention balances of $24.8
million at June 30, 1994 which become due upon contract completion and
acceptance are expected to be substantially collected during fiscal 1995.
Property and Equipment--Property and equipment are principally recorded at
cost, except that in accordance with fresh-start reporting, all property, plant
and equipment of Kendall was restated to reflect reorganization value on June
30, 1992, which approximated fair value on a continued use basis. Maintenance
and repair expenditures are charged to expense when incurred. The straight-line
method of depreciation is used over the estimated useful lives of the related
assets, which range from 3 to 45 years.
Goodwill and Other Intangible Assets--Goodwill is being amortized on a
straight-line basis over 40 years. Accumulated amortization amounted to $112.5
million at June 30, 1994 and $88.9 million at June 30, 1993. Impairment of
goodwill, if any, is measured on the basis of whether anticipated undiscounted
operating cash flows generated by the acquired businesses will recover the
recorded goodwill balances over the remaining amortization period. At June 30,
1994 and 1993, no impairment of such assets was indicated.
F-8
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Other intangible assets include patents, trademarks and other intangibles,
which are being amortized on a straight line basis over lives ranging from 2 to
30 years. At June 30, 1994 and 1993, accumulated amortization amounted to $12.7
million and $6.9 million respectively.
Reorganization Value in Excess of Identifiable Assets--The reorganization
value of Kendall was determined based on the purchase price paid for new Kendall
common stock issued as part of Kendall's Restructuring (See Note 1). Based on
the allocation of reorganization value in conformity with procedures specified
by SOP 90-7, the portion of reorganization value which could not be attributed
to specific tangible or identifiable intangible assets has been reported as
reorganization value in excess of identifiable assets. See Note 8.
Reorganization value is being amortized using the straight line method over
20 years. Accumulated amortization amounted to $17.0 million and $9.7 million at
June 30, 1994 and 1993, respectively.
Research and Development--Company funded research and development
expenditures are expensed when incurred.
Translation of Foreign Currency--Assets and liabilities of the Company's
foreign subsidiaries, other than those operating in highly inflationary
environments, are translated into U.S. dollars using year-end exchange rates.
Revenues and expenses of foreign subsidiaries are translated at the average
exchange rates effective during the year. Foreign currency translation gains and
losses are included as a separate component of shareholders' equity. For
subsidiaries operating in highly inflationary environments, inventories and
property, plant and equipment, including related expenses, are translated at the
rate of exchange in effect on the date the assets were acquired, while other
assets and liabilities are translated at year-end exchange rates. Translation
adjustments for these operations are included in net income.
Gains and losses resulting from foreign currency transactions, the amounts
of which are not significant, are included in net income.
Interest Rate Swaps, Currency Options and Other Contracts--The Company
enters into a variety of interest rate swaps, currency options, and other
contracts in its management of interest costs and foreign currency exposures.
The interest rate swaps, which hedge interest rates on certain indebtedness,
involve the exchange of fixed and floating rate interest payment obligations
over the life of the related agreement without the exchange of the notional
payment obligation. The differential to be paid or received is accrued as
interest rates change and recognized over the life of the agreement as an
adjustment to interest expense.
Foreign currency options, acquired for the purpose of hedging foreign
operating income generally for periods not exceeding twelve months, are marked
to market with any realized and unrealized gains or losses reflected in selling,
general and administrative expense. The Company also enters into forward
exchange contracts to hedge certain foreign currency transactions for periods
consistent with the terms of the underlying transactions. The forward exchange
contracts generally have maturities that do not exceed one year. Gains and
losses on contracts qualifying as hedges are deferred and included in the
measurement of the related foreign currency transaction. Losses are not deferred
if it is estimated that deferral would lead to recognizing losses in a later
period. At June 30, 1994, the total amount of foreign currency transactions
covered by hedging contracts was $26.4 million. Such hedging contracts
approximate fair value.
F-9
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Income Per Share--Net income per share is calculated on the basis of the
weighted average number of shares outstanding plus common equivalent shares
arising from the effect of stock options and warrants using the treasury stock
method.
Accounting Changes--Effective July 1, 1992 Tyco adopted the provisions of
Statement of Financial Accounting Standards ("SFAS") 109 "Accounting for Income
Taxes" and SFAS 106 "Employers' Accounting for Post-Retirement Benefits Other
Than Pensions" (see Notes 8 and 12, respectively, to the consolidated financial
statements.) At July 1, 1992 the cumulative effect of the accounting changes was
to reduce net income by $71.0 million ($.98 per share). Kendall adopted SFAS 109
and SFAS 106 effective with its Restructuring (See Basis of Presentation,
above), and accordingly there is no cumulative effect reflected in the financial
statements.
Reclassifications--Certain prior year amounts have been reclassified to
conform with current year presentation.
2. THE MERGER
On October 19, 1994, a wholly-owned subsidiary of Tyco merged with Kendall.
Shareholders of Kendall received 1.29485 shares of Tyco common stock for each
share of Kendall common stock. The transaction qualifies for pooling of
interests accounting treatment, which is intended to present as a single
interest, common shareholder interests which were previously independent.
Accordingly, the historical financial statements for periods prior to the
consummation of the combination are restated as though the companies had been
combined during such periods. Financial statements for all periods prior to
Kendall's Restructuring (see Note 1) include only Tyco's results of operations
and cash flows.
All fees and expenses related to the merger and to the integration of the
combined companies will be expensed as required under the pooling of interests
accounting method. These expenses have not been reflected in the consolidated
statement of income, but will be reflected in the consolidated statement of
income of the Company for the quarter ended December 31, 1994. Such fees and
expenses are presently estimated to be $37.2 million ($31.2 million after-tax).
The charge includes $18.6 million for financial advisory, legal, accounting and
other direct transaction fees, $14.9 million for payments under severance and
employment agreements and other costs associated with certain compensation
plans, and $3.7 million for other acquisition related and integration costs.
3. ACQUISITIONS
During fiscal 1994, the Company acquired a manufacturer of disposable
medical supplies, three manufacturers and distributors of medical electrodes and
related products, the assets of a flexible packaging business, the assets of a
manufacturer of malleable and cast iron fittings, a manufacturer of pipe
fittings products and a distributor and servicer of fire extinguishers and
related products for an aggregate of $72.6 million in cash and a note payable of
$3.6 million. Also during fiscal 1994, the Company sold certain of its European
fire products manufacturing and distribution businesses for cash proceeds of
$18.1 million and notes receivable of $14.8 million. The effect of these
transactions on the Company's financial position and earnings was not
significant.
During fiscal 1993, the Company acquired three flow control companies for an
aggregate of $67.1 million, and five fire protection companies for an aggregate
of $4.9 million. The effect of these acquisitions on the Company's financial
position and earnings was not significant.
F-10
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
3. ACQUISITIONS--(CONTINUED)
The acquisitions were accounted for by the purchase method, and the results
of operations have been consolidated with the Company's results from their
respective acquisition dates.
4. RESTRUCTURING AND SEVERANCE CHARGES
During fiscal 1993 and fiscal 1992, the Company recorded restructuring and
severance charges of $39.3 million ($27.3 million after-tax) and $25.6 million
($14.9 million after-tax), respectively. These charges include severance costs,
facilities consolidation costs, writedown of assets to net realizable value, and
professional fees and other costs associated with the restructurings. The fiscal
1993 charges were principally for personnel reductions in the European and
Australian fire protection contracting businesses, as well as severance and
excess facilities costs associated with the reorganization of Grinnell flow
control distribution operations into regional distribution centers in the United
States to reduce inventory levels, lower operating costs and improve customer
service. Fiscal 1993 charges also included a loss provision associated with the
Company's determination to dispose of a U.S. flow control pipe manufacturing
facility and severance and other costs associated with the shutdown of a printed
circuit board facility. The fiscal 1992 charges were principally for costs
associated with the temporary shutdown of a U.S. flow control pipe manufacturing
facility and personnel reductions at a European fire products manufacturing
facility. Fiscal 1992 charges also included personnel reductions in North
American fire protection operations and corporate headquarters and the
reorganization of certain North American Grinnell flow control distribution
operations. At June 30, 1994, $10.3 million of the fiscal 1993 restructuring
charge is accrued. This relates primarily to the reorganization of Grinnell flow
control distribution operations, European facilities rationalization and
remaining severance payments. The Company will complete the reorganization
process in fiscal 1995.
5. INDEBTEDNESS
Long-term debt is as follows:
AT JUNE 30
----------------------
1994 1993
-------- ----------
(IN THOUSANDS)
Credit agreements................................... $ 94,447 $ 181,395
Uncommitted lines of credit......................... 22,000 164,000
Accounts receivable facility........................ -- 83,000
Insurance company notes............................. 135,000 240,000
8.25% subordinated debt due 2003.................... 100,000 100,000
6.375% public debentures due 2004................... 104,644 --
9.5% public debentures due 2022..................... 199,559 199,543
8% public debentures due 2023....................... 49,957 49,955
Other............................................... 46,048 34,293
-------- ----------
Total debt.......................................... 751,655 1,052,186
Less current portion................................ 163,164 239,601
-------- ----------
Long-term debt...................................... $588,491 $ 812,585
-------- ----------
-------- ----------
Under Tyco's credit agreement with a group of commercial banks, Tyco had the
right until July 1997 to borrow $200 million or a portion thereof for its
general corporate purposes. Interest payable on borrowings was variable based
upon Tyco's option of selecting a certificate of deposit rate
F-11
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
5. INDEBTEDNESS--(CONTINUED)
plus 0.5%, a Eurodollar rate plus 0.375% or a base rate, as defined. Kendall had
a $100 million revolving credit facility which was available through December
1998. Interest was variable based upon the option of selecting LIBOR plus 1.75%
or a bank rate, as defined, plus 0.5%. Kendall's borrowings under the facility
were collateralized by substantially all of its assets. In October 1994, the
Company replaced those agreements with a new credit agreement which gives the
Company the right to borrow $300 million or a portion thereof until October
1999. The principal amount then outstanding will be due and payable at that
time. Interest payable on borrowings is variable based upon the Company's option
of selecting a Eurodollar rate plus 0.325%, a certificate of deposit rate plus
0.45% or a base rate, as defined.
The Company's uncommitted lines of credit are borrowings from commercial
banks on an "as offered" basis. The borrowings and repayments occur daily and
contain no specific terms other than due dates and interest rates. The due dates
generally range from overnight to 90 days and interest rates approximate those
available under the Company's credit agreement.
The Company had an accounts receivable facility which expired in August
1993. Interest was variable based upon a defined commercial paper market rate
plus a facility fee of 0.5%. The facility was repaid with borrowings from
uncommitted lines of credit.
The insurance company notes consist of $80 million due in January 1995 and
$55 million due in June 1996, and bear interest at rates of 8.98% and 8.90%,
respectively.
In November 1994, the Company issued $145 million principal amount of 8.125%
debentures due 1999. The net proceeds from the sale of the notes were used, in
part, to refinance $100 million principal amount of Kendall's subordinated notes
due 2003. The balance will be used to refinance, in part, the $80 million
insurance company note due January 1995. Pending repayment of these notes, the
proceeds will be used to repay outstanding borrowings under various uncommitted
lines of credit.
In connection with the refinancing of Kendall's notes, unamortized bank fees
and a call premium related to the refinanced debt of approximately $4.3 million
will be reported, net of a $1.7 million tax benefit, as an extraordinary loss
for the Company's quarter ended December 31, 1994.
In January 1994, the Company issued $105 million principal amount of 6.375%
debentures due 2004. The net proceeds of the issuance were used to repay
insurance company notes of $105 million due in January 1994.
In April 1992, the Company issued $200 million principal amount of 9.5%
debentures due 2022. In March 1993, the Company issued $50 million principal
amount of 8% debentures due 2023. The net proceeds of the issuances were used to
refinance existing debt.
At June 30, 1994, the Company had interest rate swap agreements with a
number of financial institutions, having a total notional amount of $355
million, which effectively convert fixed rate debt to variable rate debt. Under
these agreements, the Company will receive payments at an average fixed rate of
6.09% and will make payments based on six month LIBOR which, at June 30, 1994,
was 5.25%. These agreements expire in the amounts of $100 million in each of
April 1995 and April 1997, $55 million in February 1996, $50 million in April
1996 and $50 million in March 1998. The impact of the Company's hedging
activities on its weighted average borrowing rate was a decrease of 1.1%, 0.8%
and an increase of 0.2% for fiscal 1994, 1993 and 1992, respectively. The impact
on reported interest was income of $7.0 million, $6.1 million and expense of
$1.7 million for fiscal 1994, 1993 and 1992, respectively.
F-12
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
5. INDEBTEDNESS--(CONTINUED)
During fiscal 1993, Kendall refinanced certain notes and borrowings
outstanding under its bank facilities. In connection with the refinancing, the
Company recorded a charge of approximately $4.6 million ($2.8 million after tax)
representing unamortized bank fees and original issue discount as an
extraordinary loss.
Under its various loan and credit agreements the Company is required to meet
certain covenants, none of which is considered restrictive to the operations of
the Company.
The aggregate amounts of total debt maturing during the next five fiscal
years are as follows (in thousands):
1995............................................................ $163,164
1996............................................................ 87,271
1997............................................................ 27,352
1998............................................................ 16,473
1999............................................................ 636
6. SALE OF ACCOUNTS RECEIVABLE
On November 1, 1993, the Company entered into an agreement pursuant to which
it sold a percentage ownership interest in a defined pool of the Company's trade
receivables. As collections reduce accounts receivable included in the pool, the
Company sells participating interests in new receivables to bring the amount
sold up to the $150 million maximum permitted by the related agreement. Under
terms of the agreement the Company has retained substantially the same risk of
credit loss as if the receivables had not been sold and, accordingly, the full
amount of the allowance for doubtful accounts has been retained. Proceeds of
$150 million from the sale were used to reduce borrowings under uncommitted
lines of credit and are reported as operating cash flows in the Company's
consolidated statement of cash flows and a reduction of receivables in the
Company's consolidated balance sheet. The proceeds of sale are less than the
face amount of accounts receivable sold by an amount which approximates the
purchaser's financing cost of issuing its own commercial paper backed by these
accounts receivable. The discount from the face amount was $4.1 million during
the year ended June 30, 1994, and has been included in selling, general and
administrative expense in the Company's consolidated statement of income. The
Company, as agent for the purchaser, retains collection and administrative
responsibilities for the participating interests of the defined pool.
7. FINANCIAL INSTRUMENTS
The Company's financial instruments consist primarily of cash in banks,
temporary investments, accounts receivable and debt. In addition, the Company
has foreign currency options that hedge its exposure on net foreign income, as
well as interest rate swaps that effectively convert fixed rate debt to variable
rate debt. At June 30, 1994 the fair value of interest rate swaps was a $2.1
million liability, and the fair value of long-term debt was approximately $598
million, based on current interest rates. The fair value of financial
instruments in working capital approximated book value.
None of the Company's financial instruments represent a concentration of
credit risk as the Company deals with a variety of major banks worldwide and its
accounts receivable are spread among a number of major industries, customers and
geographic areas. None of the Company's off-balance sheet financial instruments
would result in a significant loss to the Company if the counterparty failed to
perform according to the terms of its agreement.
F-13
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
7. FINANCIAL INSTRUMENTS--(CONTINUED)
In May 1993, the Financial Accounting Standards Board issued SFAS 114,
"Accounting by Creditors for Impairment of a Loan." This new standard must be
adopted no later than fiscal 1996. Adoption of this standard is not expected to
have a material effect on the Company's financial position or results of
operations.
8. INCOME TAXES
Provision for federal income taxes and differences between the provision at
the statutory rate and the amounts provided are as follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
-------------------------------
1994 1993 1992
-------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Provision at statutory rate.................................. $114,866 $60,961 $ 47,991
State taxes.................................................. 11,511 5,783 6,377
Depreciation and amortization under purchase accounting...... 10,787 11,281 10,879
Foreign earnings taxed at different rates.................... 6,723 4,202 1,250
Revision of certain tax estimates............................ -- (6,739) (16,904)
Effect of rate changes....................................... (3,649) 7,752 --
Completed contract deferred tax adjustment................... -- -- (5,133)
Research and Development and Foreign Sales Corporation
benefits..................................................... (2,710) (500) (500)
Other........................................................ 1,471 2,097 1,924
-------- ------- --------
Provision for income taxes on earnings before cumulative
effect of accounting changes............................... 138,999 84,837 45,884
Benefit of cumulative effect of accounting changes........... -- (12,273) --
-------- ------- --------
Provision for income taxes................................... 138,999 72,564 45,884
Deferred provision........................................... (21,113) (7,011) 13,832
-------- ------- --------
Current provision............................................ $117,886 $65,553 $ 59,716
-------- ------- --------
-------- ------- --------
</TABLE>
The provisions for fiscal 1994, 1993 and 1992 include $23.9 million, $14.3
million and $8.3 million, respectively, for foreign income taxes. The foreign
component of income (loss) before income taxes was $35.7 million, $(1.9)
million, and $10.7 million for fiscal 1994, 1993 and 1992, respectively.
Generally, no provision has been made for U.S. or additional foreign income
taxes on the undistributed earnings of foreign subsidiaries as such earnings are
expected to be permanently reinvested. A liability has been recorded for U.S.
taxes attributable to certain undistributed earnings in selected jurisdictions
where repatriation to the U.S. may be desirable. It is not practicable to
estimate the additional taxes related to the permanently reinvested earnings.
During fiscal 1993 and 1992, the Company resolved various tax issues and,
accordingly, revised certain tax estimates which resulted in reductions in tax
expense of $6.7 million and $16.9 million, respectively.
During fiscal 1993, the Company recorded additional nonrecurring tax expense
of $7.8 million due to tax rate decreases in certain foreign jurisdictions. The
expense results principally from reducing the carrying value of deferred tax
assets.
F-14
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
8. INCOME TAXES--(CONTINUED)
The completed contract deferred tax adjustment results from the completion
during fiscal 1992 of all contracts on the completed contract method for United
States tax purposes. Accordingly, the provision for fiscal 1992 reflects the
non-recurring reversal of the related deferred taxes originally provided at
higher rates.
Effective July 1, 1992 Tyco adopted the provisions of SFAS 109. At July 1,
1992 the cumulative effect of adopting this standard was to reduce net income by
$16.1 million ($0.22 per share). The impact on fiscal 1993's results was to
reduce net income by $3.5 million ($0.05 per share). Kendall had adopted the
provisions of SFAS 109 effective with its Restructuring (See Note 1) and,
accordingly, there is no cumulative impact reflected in the financial
statements.
The deferred income tax balance sheet accounts result from temporary
differences between the amount of assets and liabilities recognized for
financial reporting and tax purposes. The components of the net deferred income
tax asset at June 30, 1994 and 1993 are as follows:
1994 1993
-------- --------
(IN THOUSANDS)
Deferred tax assets:
Accrued liabilities and reserves.................... $122,382 $125,529
Accrued post-retirement benefit obligation.......... 35,248 34,084
Tax loss carryforwards.............................. 188,142 146,716
Other............................................... 3,142 1,473
Deferred tax liabilities:
Property, plant and equipment....................... (72,954) (80,206)
Contracts........................................... (9,027) (12,207)
Accrued liabilities and reserves.................... (6,793) (10,069)
Accrued interest.................................... -- (10,547)
Other............................................... (7,960) (2,378)
-------- --------
Net deferred income tax asset before valuation
allowance............................................. 252,180 192,395
Valuation allowance................................... (51,350) (37,271)
-------- --------
Net deferred income tax asset......................... $200,830 $155,124
-------- --------
-------- --------
During fiscal 1994, Kendall recorded certain adjustments to its deferred tax
assets for the valuation of underlying tax attributes as of the effective date
of its Restructuring, primarily net operating loss carryforwards. These
adjustments resulted in an increase to the deferred tax asset accounts of
approximately $63.6 million, with a corresponding reduction in reorganization
value in excess of net identifiable assets.
As of June 30, 1994 the Company had approximately $185.9 million of net
operating loss carryforwards in certain foreign jurisdictions. Of these, $165.4
million have no expiration, with the remaining $20.5 million expiring between
fiscal year 1995 and 2002. Domestic operating loss carryforwards at June 30,
1994 were approximately $266.3 and will expire in the years 2003 to 2007. A
valuation allowance has been provided for operating loss carryforwards which are
not expected to be utilized.
Under the previous method of accounting for income taxes, the deferred
income tax provision resulted primarily from timing differences between
financial and income tax reporting. The significant components of the deferred
tax provision in fiscal 1992 were $5.1 million for completed contracts, $8.9
million for revision of tax estimates and $7.9 million for restructuring and
severance charges. No other additional component of the deferred tax provision
was material in fiscal 1992.
F-15
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
9. KEY EMPLOYEE LOAN PROGRAMS
Loans are made to employees under the 1981 and 1983 Key Employee Loan
Programs for the payment of taxes upon the vesting of shares granted under the
Company's Restricted Stock Ownership Plans. The loans are unsecured and
principally bear interest, payable annually, at prime rate except for loans
prior to September 1987 under the 1981 Employee Loan Program which bear interest
at 2%. Loans are generally repayable in ten years, except that earlier payments
are required under certain circumstances. Loans under these programs were $6.4
million and $5.7 million at June 30, 1994 and 1993, respectively.
10. CAPITAL STOCK
In July 1994, the Company's Board of Directors authorized the repurchase of
up to 2.9 million of its common shares.
In June 1994, the Company repurchased for $600,000 a warrant which entitled
the holder, Tyco Investments (Australia) Limited, formerly Wormald International
Limited, to purchase five million Tyco shares at a price of $70 per share.
In August 1992, the Company repurchased 520,000 shares of its common stock
at $32.625 per share from its former Chairman of the Board for an aggregate
purchase price of $17.0 million. The total cost of reacquired shares at June 30,
1994 and 1993 was $70.0 million and $70.1 million, respectively.
The Company's 1978 Restricted Stock Ownership Plan (the "1978 Plan")
provided for the award of 2,400,000 shares of common stock to key employees
through November 30, 1988. Under the 1978 Plan, 2,392,000 shares were granted,
net of surrenders. The 1983 Restricted Stock Ownership Plan (the "1983 Plan")
provided for the award of 3,400,000 shares of common stock to key employees
through October 18, 1993. Under the 1983 Plan, 2,918,533 shares were awarded,
net of surrenders. The Company's 1994 Restricted Stock Ownership Plan provides
for the award of 462,542 shares of common stock, all of which were reserved for
issuance as of June 30, 1994. Common stock is awarded subject to certain
restrictions with vesting varying over periods of one to ten years.
The fair market value of the shares at the time of the grant is amortized
(net of tax benefit for the deduction of such value) to expense over the period
of vesting. The unamortized portion of deferred compensation expense is recorded
as a reduction of shareholders' equity. Recipients of the restricted shares have
the right to vote such shares and receive dividends. Income tax benefits
resulting from compensation for the vesting of restricted shares, including a
deduction for the excess, if any, of the fair market value of restricted shares
at the time of vesting over their fair market value at the time of the grant and
from the payment of dividends on unvested shares are credited to capital in
excess of par value.
In connection with the Restructuring, Kendall issued to holders of old
equity securities, warrants to purchase common stock at per share exercise
prices of $15.46 (the "A Warrants") and $20.62 (the "B Warrants" and together
with the A Warrants, the "Warrants). As a result of the Merger, these Warrants
became exercisable for the Company's stock at per share prices of $11.94 and
$15.92, respectively. The Warrants expire on July 7, 1999. During fiscal 1994,
25,336 A Warrants and 26,475 B Warrants were exercised. As of June 30, 1994
1,378,527 A Warrants and 1,414,321 B Warrants were issued and outstanding.
Kendall maintains a number of stock incentive plans under which officers,
directors and key employees have been granted options and other awards to
purchase common stock, generally, at prices
F-16
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
10. CAPITAL STOCK--(CONTINUED)
equal to at least 100% of the market price on the date of grant. As a result of
the Merger, these options became exercisable for the Company's stock.
Transactions under these plans during fiscal 1994 and 1993 were as follows:
1994 1993
--------- ---------
(IN THOUSANDS)
Outstanding at beginning of period................... 1,336,933 1,285,139
Awards exercised..................................... (78,986) --
Awards granted....................................... 329,539 51,794
Awards cancelled..................................... (31,076) --
--------- ---------
Outstanding at June 30............................... 1,556,410 1,336,933
--------- ---------
--------- ---------
Exercisable at June 30............................... 252,496 --
--------- ---------
--------- ---------
The exercise prices per share of the Company's common stock for options
outstanding at June 30, 1994 ranged in price from $7.96 to $39.19 per share.
Kendall has a restricted stock grant agreement which provides for the
issuance of up to 1,000,000 shares of common stock to a key executive. As a
result of the Merger, up to 1,294,850 shares of the Company's common stock
became issuable under the agreement. Rights under the grant agreement fully vest
on July 7, 2002, subject to accelerated vesting if Kendall achieves certain
annual financial operating targets, as specified in the grant agreement. As of
June 30, 1994 rights for 1,294,850 shares were outstanding under the grant
agreement. As of December 31, 1994 1,035,880 shares under the grant agreement
had vested. Compensation expense of $1.3 million and $2.1 million was recorded
for the grant during fiscal 1994 and 1993, respectively. Unamortized
compensation expense was $0.7 million at June 30, 1994.
Tyco paid cash dividends of $0.40, $0.38 and $0.36 per share in fiscal 1994,
1993 and 1992, respectively. Kendall did not pay dividends to its shareholders.
11. COMMITMENTS AND CONTINGENCIES
The Company occupies certain facilities under leases which expire at various
dates through the year 2021. Rental expense under these leases and leases for
equipment was $60.4 million, $63.7 million, and $47.6 million for fiscal 1994,
1993 and 1992, respectively. At June 30, 1994 the minimum lease payments under
noncancellable leases were as follows (in thousands):
1995............................................................. $52,300
1996............................................................. 40,299
1997............................................................. 30,931
1998............................................................. 23,780
1999............................................................. 16,643
2000-2021........................................................ 85,574
In the normal course of business, the Company is liable for contract
completion and product performance. In the opinion of management, such
obligations will not significantly affect the Company's financial position or
results of operations.
F-17
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
11. COMMITMENTS AND CONTINGENCIES--(CONTINUED)
The Company is involved in various stages of investigation and cleanup
related to environmental remediation matters. The ultimate cost of site cleanup
is difficult to predict given the uncertainties regarding the extent of the
required cleanup, the interpretation of applicable laws and regulations and
alternative cleanup methods. Based upon the Company's experience with the
foregoing environmental matters, the Company has concluded that there is a
reasonable possibility that remedial costs will be incurred with respect to
these sites in the aggregate amount in a range of $14.0 million to $50.5
million. At June 30, 1994, the Company has concluded that the most probable
amount which will be incurred within this range is $25.5 million, and such
amount is included in the caption accrued expenses in the accompanying
consolidated balance sheet. Based upon information available to the Company, at
those sites where there has been an allocation of the share of cleanup and such
liability could be joint and several, management believes it is probable that
other responsible parties will fully pay the cost apportioned to them, except
with respect to one site for which the Company has assumed that one of the
identified responsible parties will be unable to pay the cost apportioned to it
and that such party's cost will be reapportioned among the remaining responsible
parties. In view of the Company's financial position and reserves for
environmental matters of $25.5 million, the Company has concluded that its
payment of such estimated amounts will not have a material adverse effect on its
financial position or results of operations.
12. RETIREMENT PLANS
The Company has a number of noncontributory defined benefit retirement plans
covering certain of its domestic and foreign employees. The Company's funding
policy is to make annual contributions to the extent such contributions are tax
deductible as actuarially determined. The benefits under the defined benefit
plans are based on years of service and compensation.
The net periodic pension cost for all defined benefit pension plans include
the following components:
YEAR ENDED JUNE 30
-------------------------------
1994 1993 1992
-------- -------- -------
(IN THOUSANDS)
Service cost................................. $ 12,523 $ 11,451 $ 7,478
Interest..................................... 26,747 26,426 16,437
Actual return on assets...................... (7,717) (50,675) (9,358)
Net amortization and deferral................ (19,454) 24,467 (4,990)
-------- -------- -------
Net periodic pension cost.................... $ 12,099 $ 11,669 $ 9,567
-------- -------- -------
-------- -------- -------
F-18
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
12. RETIREMENT PLANS--(CONTINUED)
Accrued (prepaid) pension cost at June 30, 1994 for defined benefit plans is
as follows:
<TABLE>
<CAPTION>
ASSETS EXCEED ACCUMULATED
ACCUMULATED BENEFITS
BENEFITS EXCEED ASSETS TOTAL
------------- -------------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Actuarial present value of accumulated benefit
obligations:
Vested............................................... $ 87,847 $223,462 $311,309
Non-vested........................................... 4,012 13,039 17,051
------------- -------------- --------
Total.............................................. 91,859 236,501 328,360
Effect of future salary increases...................... 7,214 11,831 19,045
------------- -------------- --------
Projected benefit obligations.......................... 99,073 248,332 347,405
Plan assets at fair value.............................. 113,597 185,976 299,573
------------- -------------- --------
Plan assets (in excess of) less than projected benefit
obligations............................................ (14,524) 62,356 47,832
Unrecognized transition asset (liability).............. 292 (1,096) (804)
Unrecognized prior service cost........................ (617) (7,583) (8,200)
Additional minimum liability........................... -- 15,545 15,545
Unrecognized net loss.................................. (14,953) (17,115) (32,068)
------------- -------------- --------
Accrued (prepaid) pension cost......................... $ (29,802) $ 52,107 $ 22,305
------------- -------------- --------
------------- -------------- --------
</TABLE>
Accrued (prepaid) pension cost at June 30, 1993 for defined benefit plans is
as follows:
<TABLE>
<CAPTION>
ASSETS EXCEED ACCUMULATED
ACCUMULATED BENEFITS
BENEFITS EXCEED ASSETS TOTAL
------------- -------------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Actuarial present value of accumulated benefit
obligations:
Vested............................................... $ 209,528 $101,959 $311,487
Non-vested........................................... 7,665 8,021 15,686
------------- -------------- --------
Total.............................................. 217,193 109,980 327,173
Effect of future salary increases...................... 15,232 4,812 20,044
------------- -------------- --------
Projected benefit obligations.......................... 232,425 114,792 347,217
Plan assets at fair value.............................. 253,139 61,503 314,642
------------- -------------- --------
Plan assets (in excess of) less than projected benefit
obligations............................................ (20,714) 53,289 32,575
Unrecognized transition asset (liability).............. 341 (1,209) (868)
Unrecognized prior service cost........................ (628) (6,389) (7,017)
Additional minimum liability........................... -- 12,400 12,400
Unrecognized net loss.................................. (13,603) (6,138) (19,741)
------------- -------------- --------
Accrued (prepaid) pension cost......................... $ (34,604) $ 51,953 $ 17,349
------------- -------------- --------
------------- -------------- --------
</TABLE>
The Company has terminated certain defined benefit pension plans and is in
the process of distributing the plans' assets to the participants. Also, in
connection with the sale of the European fire products businesses as described
in Note 3, there was a settlement of a pension plan in Germany. Gains and losses
resulting from the above were not material.
F-19
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
12. RETIREMENT PLANS--(CONTINUED)
Of the total plan obligations, 59% relate to domestic plans and 41% relate
to foreign plans. The average discount rate used in determining the actuarial
present value of the projected benefit obligation, weighted in relation to plan
obligations, was 8.5% and 8.2%, respectively, at June 30, 1994 and 1993. The
average rate of increase in future compensation levels was 5.7% at both June 30,
1994 and 1993. The weighted average long-term rate of return on assets was 9.4%
and 10.0%, respectively, at June 30, 1994 and 1993. Plan assets are invested
principally in equity and fixed income instruments.
The Company also has several defined contribution plans. Pension expense for
the defined contribution plans is computed as a percentage of participants'
compensation and was $15.6 million, $14.7 million and $10.9 million for fiscal
1994, 1993 and 1992, respectively. The Company also participates in a number of
multi-employer defined benefit plans on behalf of certain employees. Pension
expense related to multi-employer plans was $6.7 million, $6.9 million, and $6.6
million for fiscal 1994, 1993 and 1992, respectively.
Effective July 1, 1992 the Company adopted the provisions of SFAS 106. SFAS
106 requires the accrual method of accounting for post-retirement health care
and life insurance benefits based on actuarially determined costs. The Company
generally does not provide post-retirement benefits other than pensions for its
employees. Certain of the Company's acquired operations provide these benefits
to employees who were eligible at the date of acquisition. As of July 1, 1992
the Company recognized the full amount of its estimated accumulated
post-retirement benefit obligation. The effect on the date of adoption was to
reduce fiscal 1993 earnings by $54.9 million ($84.5 pre-tax) or $0.76 per share.
The charge has been reflected as a cumulative effect of an accounting change.
Net periodic post-retirement benefit cost for the years ended June 30, 1994
and 1993 reflects the following components:
1994 1993
------- ------
(IN THOUSANDS)
Cost attributable to service during the period........... $ 372 $ 389
Interest cost on accumulated post-retirement benefit
obligation............................................... 5,822 7,635
Net amortization and deferral............................ (1,275) --
------- ------
Net periodic post-retirement benefit cost................ $ 4,919 $8,024
------- ------
------- ------
For measurement purposes, in fiscal 1994 a 12% composite annual rate of
increase in the per capita cost of covered health care benefits was assumed,
which approximates the Company's current experience. The rate was assumed to
decrease gradually to 6% by the year 2008 and remains at that level thereafter.
The health care cost trend rate assumption may have a significant effect on the
amounts reported. To illustrate, increasing the assumed health care cost trend
rates by a percentage point would increase the accumulated post-retirement
benefit obligation as of June 30, 1994 by $6.3 million and the aggregate of the
service and interest cost component of net periodic post-retirement benefit cost
for the year then ended by $0.6 million. The weighted average discount rate used
in determining the accumulated post-retirement benefit obligation was 8.3% at
June 30, 1994 and 7.3% at June 30, 1993.
The incremental cost in fiscal 1993 of accounting for post-retirement health
and life insurance benefits under the new accounting method amounted to $2.3
million pre-tax. Under the previous accounting method, expense for benefits
aggregated $4.3 million pre-tax in fiscal 1992.
F-20
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
12. RETIREMENT PLANS--(CONTINUED)
Presented below are the components of the accrued post-retirement benefit
obligation, all of which are unfunded:
<TABLE>
<CAPTION>
JUNE 30
-------------------
1994 1993
------- --------
(IN THOUSANDS)
<S> <C> <C>
Accumulated post-retirement benefit obligation:
Retirees.............................................................. $46,347 $ 82,300
Fully eligible active plan participants............................... 10,986 14,926
Other active plan participants........................................ 5,905 7,692
------- --------
63,238 104,918
Unrecognized prior service benefit...................................... 25,648 --
Unrecognized net gain (loss)............................................ 10,715 (4,719)
------- --------
Accrued post-retirement benefit cost.................................... $99,601 $100,199
------- --------
------- --------
</TABLE>
In fiscal 1994 the Company amended certain of its post-retirement health
care programs, principally to adjust the cost-sharing provisions. The amendment
resulted in a reduction of the Company's accumulated post-retirement benefit
obligation of $27.8 million, which created an unrecognized prior service
benefit. The unrecognized prior service benefit is being amortized over
approximately 16 years.
In November 1992, the Financial Accounting Standards Board issued SFAS 112
"Employers' Accounting for Post-Employment Benefits." The Company is required to
adopt SFAS 112 in fiscal 1995. Adoption of this standard is not expected to have
a material effect on the Company's financial position or results of operations.
F-21
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
13. CONSOLIDATED SEGMENT DATA
Selected information by industry segment is presented below.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
--------------------------------------
1994 1993 1992
---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Sales:
Fire Protection.............................. $1,525,906 $1,526,079 $1,615,723
Flow Control Products........................ 914,430 806,915 721,338
Electrical and Electronic Components......... 436,884 413,300 392,283
Disposable and Specialty Products............ 1,199,163 1,173,063 337,141
---------- ---------- ----------
$4,076,383 $3,919,357 $3,066,485
---------- ---------- ----------
---------- ---------- ----------
Income before income taxes, extraordinary item
and cumulative effect of accounting changes:
Fire Protection.............................. $ 70,171 $ 43,190(2) $ 85,189(4)
Flow Control Products........................ 74,125 44,638(2) 37,704(4)
Electrical and Electronic Components......... 72,510 68,401(2) 54,093
Disposable and Specialty Products............ 191,669 126,280(3) 43,432
---------- ---------- ----------
Income from operations......................... 408,475 282,509 220,418
Interest expense............................. (62,431) (85,785) (63,261)
Corporate and other amounts.................. (17,854)(1) (17,429)(2) (16,007)(4)
---------- ---------- ----------
$ 328,190 $ 179,295 $ 141,150
---------- ---------- ----------
---------- ---------- ----------
Total assets:
Fire Protection.............................. $1,135,128 $1,180,123 $1,337,690
Flow Control Products........................ 861,362 890,134 749,746
Electrical and Electronic Components......... 178,336 192,919 187,048
Disposable and Specialty Products............ 886,759 863,197 149,898
Corporate assets, including cash............. 79,236 38,593 27,155
---------- ---------- ----------
$3,140,821 $3,164,966 $2,451,537
---------- ---------- ----------
---------- ---------- ----------
Depreciation and amortization:
Fire Protection.............................. $ 29,513 $ 30,975 $ 37,612
Flow Control Products........................ 39,409 34,225 31,846
Electrical and Electronic Components......... 11,313 10,889 11,810
Disposable and Specialty Products............ 40,618 48,278 8,990
Corporate.................................... 4,027 3,982 4,350
---------- ---------- ----------
$ 124,880 $ 128,349 $ 94,608
---------- ---------- ----------
---------- ---------- ----------
Capital expenditures:
Fire Protection.............................. $ 17,445 $ 24,931 $ 22,582
Flow Control Products........................ 33,941 37,667 25,580
Electrical and Electronic Components......... 11,728 9,278 13,340
Disposable and Specialty Products............ 26,341 22,281 6,112
Corporate.................................... 347 242 36
---------- ---------- ----------
$ 89,802 $ 94,399 $ 67,650
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
- ------------
(1) Fiscal 1994 includes expense of $4.1 million related to the accounts
receivable program, which cost would have been reflected as interest expense
under previous financing arrangements. See Note 6.
(Footnotes continued on following page)
F-22
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
13. CONSOLIDATED SEGMENT DATA--(CONTINUED)
(Footnotes continued from preceding page)
(2) Fiscal 1993 includes restructuring and severance charges of $16.0 million,
$19.0 million, $0.7 million, and $3.6 million, for Fire Protection, Flow
Control Products, Electrical and Electronic Components and Corporate,
respectively. See Note 4.
(3) Fiscal 1993 includes a non-recurring inventory charge of $22.5 million
related to the asset valuation requirements of fresh-start reporting. See
Note 1.
(4) Fiscal 1992 includes restructuring and severance charges of $10.0 million,
$13.4 million and $2.2 million for Fire Protection, Flow Control Products
and Corporate, respectively. See Note 4.
14. CONSOLIDATED GEOGRAPHIC DATA
Selected information by geographic area for the three years in the period
ended June 30, 1994 are presented below. Fiscal 1993 income from operations
includes restructuring and severance charges of $20.9 million, $8.5 million and
$6.3 million for North America, Europe and Asia-Pacific, respectively. Fiscal
1992 income from operations includes restructuring and severance charges of
$14.4 million and $9.0 million for North America and Europe, respectively.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
--------------------------------------
1994 1993 1992
---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C>
Sales:
North America........................................ $3,011,678 $2,878,686 $2,102,299
Europe............................................... 705,240 714,536 651,118
Asia-Pacific......................................... 359,465 326,135 313,068
---------- ---------- ----------
$4,076,383 $3,919,357 $3,066,485
---------- ---------- ----------
---------- ---------- ----------
Income From Operations:
North America........................................ $ 362,764 $ 256,940 $ 173,111
Europe............................................... 34,519 24,620 34,108
Asia-Pacific......................................... 11,192 949 13,199
---------- ---------- ----------
$ 408,475 $ 282,509 $ 220,418
---------- ---------- ----------
---------- ---------- ----------
Total Assets:
North America........................................ $2,106,391 $2,232,463 $1,591,141
Europe............................................... 684,508 664,859 600,353
Asia-Pacific......................................... 270,686 229,051 232,888
Corporate assets, including cash..................... 79,236 38,593 27,155
---------- ---------- ----------
$3,140,821 $3,164,966 $2,451,537
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
15. SUPPLEMENTARY BALANCE SHEET INFORMATION
JUNE 30
--------------------
1994 1993
-------- --------
(IN THOUSANDS)
Inventories:
Purchased materials and manufactured parts............ $145,965 $128,510
Work in process....................................... 92,786 87,865
Finished goods........................................ 278,317 285,963
-------- --------
$517,068 $502,338
-------- --------
-------- --------
Accrued salaries and vacations........................ $ 57,246 $ 55,328
-------- --------
-------- --------
F-23
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
16. SUPPLEMENTARY INCOME STATEMENT INFORMATION
YEAR ENDED JUNE 30
-----------------------------
1994 1993 1992
------- ------- -------
(IN THOUSANDS)
Maintenance and repairs....................... $71,498 $71,388 $52,017
------- ------- -------
------- ------- -------
Research and development...................... $32,170 $30,268 $15,805
------- ------- -------
------- ------- -------
17. SUMMARIZED QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED JUNE 30, 1994(1)
------------------------------------------------
1ST 2ND 3RD 4TH
-------- -------- ---------- ----------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales..................................... $999,598 $998,073 $1,003,730 $1,074,982
-------- -------- ---------- ----------
-------- -------- ---------- ----------
Gross profit.................................. $259,133 $259,687 $ 260,327 $ 294,042
-------- -------- ---------- ----------
-------- -------- ---------- ----------
Net income.................................... $ 42,068 $ 43,402 $ 49,516 $ 54,205
-------- -------- ---------- ----------
-------- -------- ---------- ----------
Net Income Per Share.......................... $ .57 $ .59 $ .67 $ .73
-------- -------- ---------- ----------
-------- -------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED JUNE 30, 1993(1)
------------------------------------------------
1ST(1)(3) 2ND(1) 3RD(1) 4TH(2)
---------- -------- -------- ----------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales..................................... $1,009,195 $958,018 $946,387 $1,005,757
---------- -------- -------- ----------
---------- -------- -------- ----------
Gross profit.................................. $ 257,289 $245,973 $245,050 $ 261,098
---------- -------- -------- ----------
---------- -------- -------- ----------
Income Before Extraordinary Item and
Cumulative Effect of Accounting Changes..... $ 17,308 $ 31,359 $ 36,468 $ 9,323
---------- -------- -------- ----------
---------- -------- -------- ----------
Income Per Share Before Extraordinary Item and
Cumulative Effect of Accounting Changes..... $ .24 $ .43 $ .50 $ .13
---------- -------- -------- ----------
---------- -------- -------- ----------
Net Income Per Share.......................... $ (.75) $ .43 $ .50 $ .09
---------- -------- -------- ----------
---------- -------- -------- ----------
</TABLE>
Income per share amounts are calculated independently for each of the
quarters presented. The sum of the quarters may not equal the full year earnings
per share amounts.
- ------------
(1) During the fourth quarter of fiscal 1993, the Company changed its method of
accounting for income taxes and post-retirement benefits other than
pensions, effective as of July 1, 1992 (the Company's first quarter). The
results presented for the first three quarters of fiscal 1993 have been
restated for the impact of the new accounting methods. The impact on income
per share before extraordinary item and cumulative effect of accounting
changes for the first three quarters was not material.
(2) Included in the fourth quarter of fiscal 1993 are after-tax restructuring
and severance charges of $27.3 million and a special pension charge of $1.2
million.
(3) Included in the first quarter of fiscal 1993 is after-tax non-recurring
inventory charge of $22.5 million.
F-24
<PAGE>
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
(UNAUDITED)
DECEMBER 31, 1994 JUNE 30, 1994
----------------- -------------
(IN THOUSANDS EXCEPT SHARE DATA)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents..................................... $ 56,781 $ 75,843
Receivables, less allowance for doubtful accounts of $31,209
in fiscal 1995 and $29,311 in fiscal 1994................... 511,224 515,160
Contracts in process.......................................... 90,839 79,475
Inventories................................................... 544,254 517,068
Deferred income taxes......................................... 115,266 101,837
Prepaid expenses and other.................................... 53,442 54,904
----------------- -------------
1,371,806 1,344,287
----------------- -------------
PROPERTY AND EQUIPMENT:
Land.......................................................... 33,203 33,235
Buildings..................................................... 267,794 257,485
Machinery and equipment....................................... 699,681 647,058
Leasehold improvements........................................ 16,374 15,166
Construction in progress...................................... 73,019 42,648
Accumulated depreciation...................................... (456,987) (385,719)
----------------- -------------
633,084 609,873
----------------- -------------
GOODWILL AND OTHER INTANGIBLE ASSETS.......................... 932,638 918,791
REORGANIZATION VALUE IN EXCESS OF IDENTIFIABLE ASSETS......... 112,271 115,201
DEFERRED INCOME TAXES......................................... 95,151 112,691
OTHER ASSETS.................................................. 41,519 39,978
----------------- -------------
TOTAL ASSETS.................................................. $ 3,186,469 $ 3,140,821
----------------- -------------
----------------- -------------
CURRENT LIABILITIES:
Loans payable and current maturities of long-term debt........ $ 104,655 $ 163,164
Accounts payable.............................................. 324,258 332,004
Accrued expenses.............................................. 390,537 382,576
Contracts in process--billings in excess of costs............. 76,977 63,324
Income taxes.................................................. 78,505 73,301
----------------- -------------
974,932 1,014,369
----------------- -------------
DEFERRED INCOME TAXES......................................... 7,986 13,698
LONG-TERM DEBT................................................ 563,467 588,491
OTHER LIABILITIES............................................. 153,251 157,237
COMMITMENTS AND CONTINGENCIES.................................
SHAREHOLDERS' EQUITY:
Preferred stock, $1 par value, authorized 2,000,000 shares;
none outstanding............................................ -- --
Common stock, $.50 par value, authorized 180,000,000 shares;
outstanding 73,901,064 shares in fiscal 1995 and 71,084,293
shares in fiscal 1994, net of reacquired shares of 7,594,427
in fiscal 1995 and 7,600,747 in fiscal 1994................. 36,951 35,542
Capital in excess of par value, net of deferred compensation
of $25,367 in fiscal 1995 and $9,318 in fiscal 1994......... 603,378 567,476
Currency translation adjustment............................... (23,819) (40,874)
Retained earnings............................................. 870,323 804,882
----------------- -------------
1,486,833 1,367,026
----------------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.................... $ 3,186,469 $ 3,140,821
----------------- -------------
----------------- -------------
</TABLE>
See notes to unaudited consolidated financial statements.
F-25
<PAGE>
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
DECEMBER 31
------------------------
1994 1993
---------- ----------
(IN THOUSANDS EXCEPT PER
SHARE DATA)
<S> <C> <C>
SALES.............................................................. $2,151,895 $1,997,671
---------- ----------
COSTS AND EXPENSES:
Cost of sales...................................................... 1,572,626 1,478,851
Selling, general and administrative................................ 354,111 336,163
Merger and transaction related costs............................... 37,170 --
Interest........................................................... 31,703 33,320
---------- ----------
1,995,610 1,848,334
---------- ----------
Income before income taxes and extraordinary item.................. 156,285 149,337
Income taxes....................................................... (76,276) (63,867)
---------- ----------
Net income before extraordinary item............................... 80,009 85,470
Extraordinary item, net of tax benefit............................. (2,600) --
---------- ----------
NET INCOME......................................................... $ 77,409 $ 85,470
---------- ----------
---------- ----------
NET INCOME PER SHARE:
Before extraordinary item.......................................... $ 1.07 $ 1.16
Extraordinary item................................................. (.03) --
---------- ----------
Net income......................................................... $ 1.04 $ 1.16
---------- ----------
---------- ----------
CASH DIVIDENDS PER COMMON SHARE.................................... $ .20 $ .20
---------- ----------
---------- ----------
COMMON EQUIVALENT SHARES........................................... 74,732 73,624
---------- ----------
---------- ----------
</TABLE>
See notes to unaudited consolidated financial statements.
F-26
<PAGE>
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED DECEMBER 31, 1994 AND 1993
-------------------------------------------------------
CAPITAL IN CURRENCY
COMMON STOCK, EXCESS OF TRANSLATION RETAINED
$.50 PAR VALUE PAR VALUE ADJUSTMENT EARNINGS
-------------- ---------- ----------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
BALANCE AT JUNE 30, 1993...................... $ 35,462 $ 558,481 $ (89,386) $634,229
Net income.................................... 85,470
Dividends..................................... (9,269)
Management equity compensation................ 809
Restricted stock grants, cancellations, tax
benefits and other.......................... 16 1,294
Warrants, options exercised................... 319
Currency translation adjustment............... (2,939)
Amortization of deferred compensation......... 1,810
-------------- ---------- ----------- --------
BALANCE AT DECEMBER 31, 1993.................. $ 35,478 $ 562,713 $ (92,325) $710,430
-------------- ---------- ----------- --------
-------------- ---------- ----------- --------
BALANCE AT JUNE 30, 1994...................... $ 35,542 $ 567,476 $ (40,874) $804,882
Net income.................................... 77,409
Dividends..................................... (11,968)
Management equity compensation................ 404
Restricted stock grants, cancellations, tax
benefits and other.......................... 174 255
Warrants, options exercised................... 1,235 33,392
Currency translation adjustment............... 17,055
Amortization of deferred compensation......... 1,851
-------------- ---------- ----------- --------
BALANCE AT DECEMBER 31, 1994.................. $ 36,951 $ 603,378 $ (23,819) $870,323
-------------- ---------- ----------- --------
-------------- ---------- ----------- --------
</TABLE>
See notes to unaudited consolidated financial statements.
F-27
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED
DECEMBER 31,
----------------------
1994 1993
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income........................................................... $ 77,409 $ 85,470
Adjustments to reconcile net income to net cash provided by operating
activities:
Extraordinary item................................................. 2,600 --
Depreciation....................................................... 43,721 40,900
Amortization of intangibles........................................ 20,498 21,903
Provision for management equity plans.............................. -- 7,195
Deferred income taxes.............................................. (1,426) 22,390
Provision for losses on accounts receivable and inventory
writedowns......................................................... 6,845 7,328
Changes in assets and liabilities net of effects from acquisitions
and divestitures:
Decrease in accounts receivable and contracts in process......... 15,280 182,950
Increase in inventory............................................ (23,966) (15,575)
Decrease in accounts payable and accrued expenses................ (25,203) (46,663)
Increase in income taxes payable................................. 6,492 323
Other............................................................ 5,753 3,024
--------- ---------
Net cash provided by operating activities.......................... 128,003 309,245
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures................................................. (64,292) (41,754)
Purchase of businesses, net of cash acquired......................... (23,601) (15,015)
--------- ---------
Net cash used in investing activities.............................. (87,893) (56,769)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt......................................... 144,889
Payments on long-term debt and lines of credit....................... (229,430) (251,092)
Dividends paid....................................................... (9,258) (9,262)
Exercise of stock options and warrants............................... 34,627 319
Other................................................................ -- (344)
--------- ---------
Net cash used in financing activities.............................. (59,172) (260,379)
--------- ---------
Decrease in cash and cash equivalents................................ (19,062) (7,903)
Cash and cash equivalents at beginning of year....................... 75,843 50,041
--------- ---------
Cash and cash equivalents at end of period........................... $ 56,781 $ 42,138
--------- ---------
--------- ---------
SUPPLEMENTARY CASH FLOW DISCLOSURE:
Interest paid...................................................... $ 33,636 $ 36,058
--------- ---------
--------- ---------
Income taxes paid.................................................. $ 56,234 $ 35,603
--------- ---------
--------- ---------
</TABLE>
See notes to unaudited consolidated financial statements.
F-28
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. On October 19, 1994, a wholly-owned subsidiary of Tyco merged with
Kendall International, Inc. ("Kendall"). Shareholders of Kendall received
1.29485 shares of Tyco common stock for each share of Kendall common stock. The
transaction qualified for pooling of interests accounting treatment, which is
intended to present as a single interest the common shareholder interests which
were previously independent. Accordingly, the historical financial statements
for periods prior to the consummation of the combination are restated as though
the companies had been combined during such periods. All fees and expenses
related to the merger and to the integration of the combined companies have been
expensed as required under the pooling of interests accounting method. Such fees
and expenses amounted to $37.2 million ($31.2 million after-tax). The charge
includes $18.6 million for financial advisory, legal, accounting and other
direct transaction fees, $14.9 million for payments under severance and
employment agreements and other costs associated with certain compensation
plans, and $3.7 million for other acquisition and integration costs.
2. The unaudited financial statements presented herein have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X as promulgated by the Securities and Exchange Commission. Accordingly, said
financial statements do not include all of the information and note disclosures
required by generally accepted accounting principles for complete financial
statements. These statements should be read in conjunction with the financial
statements and notes thereto for the year ended June 30, 1994 included in the
Company's Current Report on Form 8-K dated January 10, 1995 and elsewhere in
this Prospectus. The accompanying financial statements have not been examined by
independent accountants in accordance with generally accepted auditing
standards, but in the opinion of management such financial statements include
all adjustments, consisting only of normal recurring adjustments, necessary to
summarize fairly the Company's financial position and results of operations.
3. Long-term debt is as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1994 JUNE 30, 1994
----------------- -------------
(IN THOUSANDS)
<S> <C> <C>
Credit agreement.............................. $-- $ 94,447
Uncommitted lines of credit................... -- 22,000
Insurance company notes....................... 135,000 135,000
8.25% subordinated notes due 2003............. -- 100,000
8.125% public notes due 1999.................. 144,889 --
6.375% public debentures due 2004............. 104,262 104,644
9.5% public debentures due 2022............... 199,568 199,559
8.0% public debentures due 2023............... 49,958 49,957
Other, including industrial revenue bonds..... 34,445 46,048
----------------- -------------
668,122 751,655
Less current portion and loans payable........ 104,655 163,164
----------------- -------------
$ 563,467 $ 588,491
----------------- -------------
----------------- -------------
</TABLE>
Under Tyco's credit agreement with a group of commercial banks, Tyco had the
right until July 1997 to borrow $200 million or a portion thereof for its
general corporate purposes. Kendall also had a $300 million revolving credit
facility which was available through July 1999. In October 1994, the Company
replaced those agreements with a new credit agreement which gives the Company
the right to borrow $300 million or a portion thereof until October 1999. The
principal amount then outstanding will be due and payable at that time. Interest
payable on borrowings is variable based upon the
F-29
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)--(CONTINUED)
Company's option of selecting a Eurodollar rate plus 0.325%, a certificate of
deposit rate plus 0.45% or a base rate, as defined.
The Company's uncommitted lines of credit are arrangements which allow the
Company to borrow from commercial banks on an "as offered" basis. The borrowings
and repayments occur daily and contain no specific terms other than due dates
and interest rates. The due dates generally range from overnight to 90 days and
interest rates approximate those available under the credit agreement.
In November 1994, the Company issued $145 million principal amount of 8.125%
notes due 1999. The net proceeds from the sale of notes were used, in part, to
refinance $100 million principal amount of Kendall's subordinated notes due
2003. The balance was used to refinance, in part, the $80 million of insurance
company notes that were due on January 30, 1995. In the interim, the proceeds
were used to repay outstanding borrowings under various uncommitted lines of
credit.
In connection with the refinancing of Kendall's notes, the Company recorded
a charge of $4.3 million ($2.6 million after-tax) representing unamortized debt
issuance fees and a call premium, as an extraordinary loss for the Company's
quarter ended December 31, 1994.
Under its various loan agreements, the Company is required to meet certain
covenants, none of which is considered restrictive to the operations of the
Company.
4. The Company has an agreement under which it sells participating interests
in a defined pool of trade accounts receivable. Proceeds of $150 million from
the sale are less than the face amount of accounts receivable sold by an amount
which approximates the purchaser's financing cost of issuing its own commercial
paper backed by these accounts receivable. The discount from the face amount was
$3.6 million and $1.3 million for the first six months of fiscal 1995 and 1994,
respectively, and has been included in selling, general and administrative
expense in the Company's Consolidated Statement of Income.
5. Selected information for the Company's four industry segments follows (in
thousands):
SIX MONTHS ENDED
DECEMBER 31,
------------------------
1994 1993
---------- ----------
SALES:
Fire Protection................................... $ 801,944 $ 763,999
Flow Control Products............................. 480,974 431,789
Electrical and Electronic Components.............. 205,638 214,578
Disposable and Specialty Products................. 663,339 587,305
---------- ----------
$2,151,895 $1,997,671
---------- ----------
---------- ----------
INCOME BEFORE INCOME TAXES AND EXTRAORDINARY ITEM:
Fire Protection................................... $ 39,198 $ 34,269
Flow Control Products............................. 39,511 33,936
Electrical and Electronic Components.............. 36,595 36,094
Disposable and Specialty Products................. 121,400 86,287
---------- ----------
Total operations................................ 236,704 190,586
Interest expense.................................. (31,703) (33,320)
Corporate and other amounts(1).................... (48,716) (7,929)
---------- ----------
$ 156,285 $ 149,337
---------- ----------
---------- ----------
- ------------
(1) The six months ended December 31, 1994 includes charges of $37.2 million for
merger and transaction related costs. See Note 1 to these unaudited
consolidated financial statements.
F-30
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)--(CONTINUED)
6. Differences between the provision for federal income taxes at the
statutory rate and the amounts provided are as follows (in thousands):
SIX MONTHS ENDED
DECEMBER 31,
------------------
1994 1993
------- -------
Provision at statutory rate............................. $54,700 $52,268
State income taxes...................................... 7,446 5,424
Non-deductible merger and transaction related costs..... 7,009 --
Depreciation and amortization under purchase
accounting.............................................. 5,705 5,606
Foreign earnings taxed at different rates............... 1,942 2,687
Effect of rate changes.................................. -- (3,224)
Other................................................... (526) 1,106
------- -------
Provision for income taxes.............................. $76,276 $63,867
------- -------
------- -------
In the normal course, the Company's federal income tax returns are examined
by the Internal Revenue Service and in connection with such examinations,
significant assessments could arise. Currently, the Company's fiscal 1991 and
1992 returns are under examination. Ultimate resolution of such assessments, if
any, are not expected to have a material adverse effect on the Company's
financial position or results of operations.
7. Inventories are classified as follows (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, 1994 JUNE 30, 1994
----------------- -------------
<S> <C> <C>
Purchased materials and manufactured parts.... $ 160,132 $ 145,965
Work in process............................... 99,883 92,786
Finished goods................................ 284,239 278,317
----------------- -------------
$ 544,254 $ 517,068
----------------- -------------
----------------- -------------
</TABLE>
8. In November 1992, the Financial Accounting Standards (the "Board") issued
Statement of Financial Accounting Standards ("SFAS") No. 112, "Employer's
Accounting for Post-Employment Benefits." The Company adopted SFAS 112 in the
first quarter of fiscal 1995. The effect of adoption of this standard did not
materially affect the Company's financial position or results of operations. In
May 1993, the Board issued SFAS 114, "Accounting by Creditors for Impairment of
a Loan." This new standard must be adopted no later than fiscal 1996. Adoption
of this standard is not expected to have a material effect on the Company's
financial position or results of operations.
9. In the normal course of business, the Company is liable for contract
completion and product performance. In addition, the Company is in receipt of
notifications from various environmental agencies that conditions at a number of
sites where hazardous wastes of the Company and other persons were disposed of
may require cleanup and other possible remedial action. In the opinion of
management, these obligations will not materially affect the Company's financial
position or results of operations.
F-31
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING
SHAREHOLDERS OR ANY UNDERWRITER, DEALER OR AGENT. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF ANY OFFER TO BUY, THE COMMON
STOCK TO ANY PERSON IN ANY JURISDICTION WHERE, OR IN ANY CIRCUMSTANCE IN WHICH,
SUCH OFFER OR SOLICITATION MAY NOT BE LEGALLY MADE. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE AN IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN THE AFFAIRS OF THE
COMPANY OR THE INFORMATION SET FORTH IN THE PROSPECTUS SINCE THE DATE HEREOF.
-------------------
TABLE OF CONTENTS
PROSPECTUS
PAGE
----
Prospectus Summary.................... 3
The Offerings......................... 3
Summary Consolidated Financial Data... 4
The Company........................... 6
Use of Proceeds....................... 15
Price Range of Common Stock and
Dividends............................. 15
Capitalization........................ 16
Selected Consolidated Financial
Data.................................. 17
Management's Discussion and Analysis
of Financial Condition and Operating
Results............................... 18
Selling Shareholders.................. 24
Description of Capital Stock.......... 26
Underwriting.......................... 29
Validity of Shares.................... 30
Available Information................. 30
Incorporation of Certain Information
by Reference........................ 31
Experts............................... 32
Consolidated Financial Statements..... F-1
SHARES
TYCO INTERNATIONAL LTD.
COMMON STOCK
--------------
PROSPECTUS
--------------
MERRILL LYNCH & CO.
GOLDMAN, SACHS & CO.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
LEHMAN BROTHERS
, 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
ALTERNATE INTERNATIONAL
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JANUARY 30, 1995
PROSPECTUS
SHARES
TYCO INTERNATIONAL LTD.
COMMON STOCK
-------------------
Of the shares of Common Stock being offered hereby, shares are being
offered initially outside the United States and Canada by the International
Managers and shares are being offered initially in the United States and
Canada by the U.S. Underwriters. See "Underwriting."
All of the shares of Common Stock offered hereby are being offered by
certain selling shareholders of the Company (the "Selling Shareholders"). See
"Selling Shareholders." The Company will not receive any of the proceeds from
the sale of the shares offered hereby.
The Common Stock is traded on the New York Stock Exchange under the symbol
"TYC." On January 27, 1995, the last reported sale price of the Common Stock, as
reported on the New York Stock Exchange, was $49.125 per share.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
PROCEEDS TO
PRICE TO UNDERWRITING SELLING
PUBLIC DISCOUNT(1) SHAREHOLDERS(2)
<S> <C> <C> <C>
Per Share........................... $ $ $
Total............................... $ $ $
</TABLE>
(1) The Company and the Selling Shareholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933. See "Underwriting."
(2) The Company has agreed to pay expenses related to the Offerings, estimated
at $ .
----------------------
The shares of Common Stock are offered by the several Underwriters subject
to prior sale, when, as and if issued to and accepted by them, subject to
approval of certain legal matters by counsel for the Underwriters and certain
other conditions. The Underwriters reserve the right to withdraw, cancel or
modify such offer and to reject any order in whole or in part. It is expected
that delivery of the shares will be made in New York, New York, on or about
, 1995.
-------------------
MERRILL LYNCH INTERNATIONAL LIMITED
GOLDMAN SACHS INTERNATIONAL
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
LEHMAN BROTHERS
-------------------
THE DATE OF THIS PROSPECTUS IS , 1995
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
ALTERNATE INTERNATIONAL
CERTAIN UNITED STATES TAX CONSEQUENCES
TO NON-U.S. HOLDERS OF COMMON STOCK
GENERAL
The following is a general discussion of certain anticipated United States
federal income tax consequences of the ownership and disposition of Common Stock
by a person that, for United States federal income tax purposes, is not a
"United States Person" (a "Non-U.S. Holder"). For these purposes, a "United
States Person" means a citizen or resident of the United States, a corporation,
a partnership or other entity created or organized in or under the laws of the
United States or any state thereof, or an estate or trust, the income of which
is subject to United States federal income taxation regardless of its source.
The following discussion does not consider specific facts and circumstances
that may be relevant to a particular Non-U.S. Holder's tax position, including
the benefits that may be available to any person under an applicable tax treaty
to which the United States is a party. Specifically, without limitation, this
discussion does not address the United States tax consequences to any Non-U.S.
Holder who at any time owns (directly or through attribution) more than 5% of
the Common Stock or to any Non-U.S. Holder that is a controlled foreign
corporation, a foreign personal holding company, a foreign private foundation or
a foreign government. Furthermore, the following discussion is based on current
provisions of the U.S. Internal Revenue Code of 1986, as amended (the "Code"),
and on administrative and judicial pronouncements thereunder, all of which are
subject to change. Each Non-U.S. Holder is urged to consult a tax advisor with
respect to the United States tax consequences of acquiring, holding and
disposing of Common Stock, as well as any tax consequences that may arise under
the laws of any foreign, state, local or other tax jurisdiction.
DIVIDENDS
Dividends paid on shares of Common Stock will be treated as dividends for
United States federal income tax purposes to the extent of the Company's current
or accumulated earnings and profits (as determined pursuant to the Code). Any
portion of a payment that exceeds such earnings and profits will be treated as a
return of capital to the extent of each Non-U.S. Holder's adjusted tax basis in
his or her Common Stock. Any portion of a payment that exceeds the sum of a
stockholder's proportionate share of earnings and profits and his or her
adjusted tax basis will be treated as a gain from the sale or exchange of his or
her Common Stock to the extent of any such excess, with the consequences
described below under "Gain on Disposition of Common Stock."
Each Non-U.S. Holder who receives a payment treated as a dividend for United
States federal income tax purposes (including, for this purpose, payments
representing a return of capital) will be subject to withholding of United
States federal income tax at a rate of 30% of such payment unless either (i)
such holder is eligible for a reduced tax rate or a tax exemption under an
applicable income tax treaty or (ii) such holder is engaged in the conduct of a
trade or business within the United States and the dividend is effectively
connected with that trade or business. If the dividend is effectively connected
with the conduct of a trade or business within the United States by a Non-U.S.
Holder, the dividend (as adjusted by any applicable deductions) will be subject
to United States federal income tax at regular rates generally applicable to
United States Persons. Any such effectively connected dividends received by a
corporate Non-U.S. Holder may, under certain circumstances, be subject to an
additional "branch profits tax" at a 30% rate or such lower rate as may be
specified by an applicable income tax treaty. Certain certification requirements
may have to be satisfied to claim treaty benefits or exemption from withholding
under the foregoing rules. A Non-U. S. Holder of Common Stock that is eligible
for a reduced rate of U.S. federal withholding tax pursuant to a tax treaty may
obtain a refund of any excess amounts currently withheld by filing an
appropriate claim for refund with the U.S. Internal Revenue Service. Non-U.S.
Holders that are partnerships or trusts may be subject to certain additional
withholding requirements and are urged to consult their tax advisors as to the
application of such requirements.
29
<PAGE>
ALTERNATE INTERNATIONAL
GAIN ON DISPOSITION OF COMMON STOCK
Except as described below, a Non-U.S. Holder will generally not be subject
to United States federal income tax (and no tax will generally be withheld) with
respect to gain recognized on a sale or other disposition of the Common Stock
unless the gain is effectively connected with a trade or business conducted by
the Non-U.S. Holder in the United States or the Company is, or has been during
the five year period ending on the date of disposition, a United States real
property holding corporation for United States federal income tax purposes (a
"USRPHC").
The Company believes that it has not been and is not currently a USRPHC.
Notwithstanding the foregoing, even if the Company were treated as a USRPHC, the
Common Stock would not be treated as an interest in a USRPHC if (i) a Non-U.S.
Holder has not owned (directly or through attribution) more than 5% of the
Common Stock for the five year period ending on the date of disposition, and
(ii) the Common Stock is regularly traded on an established securities exchange.
If the gain is effectively connected with the conduct of a trade or business
within the United States by the Non-U.S. holder, the gain (other than from the
disposition of an interest in a USRPHC) as adjusted by any applicable deductions
will be subject to United States federal income tax at rates generally
applicable to United States Persons (and may, in the case of a corporate
Non-U.S. Holder, also be subject to "branch profits tax"). Otherwise, an
individual Non-U.S. Holder will generally be taxed at a rate of 30% on any gain
recognized during any year on the sale of Common Stock (as offset by U.S.
capital losses, if any) if he or she (i) holds such stock as a capital asset and
(ii) is present in the United States for 183 days or more in the taxable year of
the disposition and either (a) has a tax home in the United States within the
meaning of Section 911(d)(3) of the Code or (b) the gain is attributable to an
office or other fixed place of business maintained by such individual in the
United States.
FEDERAL ESTATE TAXES
Common Stock held by an individual Non-U.S. Holder at the date of his or her
death will be included in his or her gross estate for United States federal
estate tax purposes, unless an applicable estate tax treaty provides otherwise.
UNITED STATES INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING TAX
The Company must report annually to the Internal Revenue Service the total
amount of United States federal income taxes withheld from dividends paid to
Non-U.S. Holders. In addition, the Company must report annually to the Internal
Revenue Service and each Non-U.S. Holder the amount of dividends and other
payments distributed to and the tax withheld with respect to such holder. These
information reporting requirements apply regardless of whether withholding is
reduced or eliminated by an applicable treaty or is not required because the
dividends are effectively connected with a U.S. trade or business of a Non-U.S.
Holder. Under certain treaties, the Internal Revenue Service may make this
information available to the tax authorities in the country of a Non-U.S.
Holder's residence.
Backup withholding tax (which generally is a withholding tax imposed at the
rate of 31% on certain payments to persons that are not "exempt recipients" and
that fail to furnish certain information under United States information
reporting requirements) and information reporting relating thereto generally
will not apply to dividends and other payments paid to Non-U.S. Holders that are
either (i) subject to the 30% withholding discussed above or (ii) not so subject
because a tax treaty applies that reduces or eliminates such withholding. In
addition, under current temporary United States Treasury regulations, dividends
payable at an address located outside of the United States to a Non-U.S. Holder
are generally not subject to the backup withholding and information reporting
rules. These backup withholding requirements and information reporting rules
will apply to the gross proceeds paid by or through a United States office of a
broker to a Non-U.S. Holder upon the disposition of shares of Common Stock,
unless the Non-U.S. Holder certifies under penalty of perjury that it is a
foreign person or the Non-U.S. Holder otherwise establishes an exemption. Under
existing regulations, information
30
<PAGE>
ALTERNATE INTERNATIONAL
reporting and backup withholding will also apply to the payment of gross
proceeds of a sale or other disposition of Common Stock by or through a foreign
office of a broker with certain United States connections, unless the broker has
documentary evidence that the holder is a Non-U.S. Holder and the broker has no
actual knowledge to the contrary. Proposed regulations generally provide that
backup withholding will not apply to reportable payments where the payee may
have a United States connection, unless the broker has actual knowledge that the
payee is United States Person. Any amounts withheld under the backup withholding
rules from a payment to a Non-U.S. Holder will be refunded (or credited against
the Non-U.S. Holder's United States federal income tax liability, if any),
provided that the required information is furnished to the Internal Revenue
Service. These backup withholding and information reporting requirements are
under review by the United States Treasury Department. Their application to the
ownership and disposition of shares of Common Stock could be changed by future
regulations.
31
<PAGE>
ALTERNATE INTERNATIONAL
UNDERWRITING
Subject to the terms and conditions set forth in an international purchase
agreement (the "International Purchase Agreement") among the Company, the
Selling Shareholders and each of the underwriters named below (the
"International Managers") and concurrently with the sale of shares of
Common Stock to the U.S. Underwriters (as defined below), the Selling
Shareholders have agreed to sell to the International Managers, and each of the
International Managers severally has agreed to purchase from the Selling
Shareholders, the aggregate number of shares of Common Stock set forth opposite
its name below.
NUMBER OF
INTERNATIONAL MANAGERS SHARES
- ---------------------------------------------------------------- ---------
Merrill Lynch International Limited.............................
Goldman Sachs International.....................................
Donaldson, Lufkin & Jenrette Securities Corporation.............
Lehman Brothers International (Europe)..........................
---------
Total..................................................
---------
---------
Merrill Lynch International Limited, Goldman Sachs International, Donaldson,
Lufkin & Jenrette Securities Corporation and Lehman Brothers International
(Europe) are acting as lead managers (the "Lead Managers") of the International
Managers.
The Company and the Selling Shareholders have also entered into a purchase
agreement (the "U.S. Purchase Agreement" and, together with the International
Purchase Agreement, the "Purchase Agreements") with certain underwriters in the
United States and Canada (the "U.S. Underwriters" and, together with the
International Managers, the "Underwriters") for whom Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Goldman, Sachs & Co., Donaldson, Lufkin & Jenrette
Securities Corporation and Lehman Brothers Inc. are acting as U.S.
Representatives. Subject to the terms and conditions set forth in the U.S.
Purchase Agreement, and concurrently with the sale of shares of Common
Stock to the International Managers pursuant to the International Purchase
Agreement, the Selling Shareholders have agreed to sell to the U.S.
Underwriters, and the U.S. Underwriters severally have agreed to purchase from
the Selling Shareholders, an aggregate of shares of Common Stock. The
initial public offering price per share and the total underwriting discount per
share are identical under the International Purchase Agreement and the U.S.
Purchase Agreement.
In each Purchase Agreement, the several International Managers and the
several U.S. Underwriters, respectively, have agreed, subject to the terms and
conditions set forth in such Purchase Agreement, to purchase all of the shares
of Common Stock being sold pursuant to such Purchase Agreement if any such
shares of Common Stock being sold pursuant to such Purchase Agreement are
purchased. Under certain circumstances, the commitments of non-defaulting
International Managers or U.S. Underwriters (as the case may be) may be
increased. The sale of Common Stock to the International Managers is conditioned
upon the sale of the shares of Common Stock to the U.S. Underwriters.
The Lead Managers have advised the Selling Shareholders that the
International Managers propose initially to offer the shares of Common Stock to
the public at the initial public offering price set
32
<PAGE>
ALTERNATE INTERNATIONAL
forth on the cover page of this Prospectus and to certain dealers at such price
less a concession not in excess of $ per share of Common Stock. The
International Managers may allow, and such dealers may reallow, a discount not
in excess of $ per share of Common Stock on sales to certain other dealers.
After the Offerings, the initial public offering price, concession and discount
may be changed.
The Selling Shareholders have been informed that the International Managers
and the U.S. Underwriters have entered into an agreement (the "Intersyndicate
Agreement") providing for the coordination of their activities. Under the terms
of the Intersyndicate Agreement, the International Managers and the U.S.
Underwriters are permitted to sell shares of Common Stock to each other for
purposes of resale at the initial public offering price, less an amount not
greater than the selling concession. Under the terms of the Intersyndicate
Agreement, the U.S. Underwriters and any dealer to whom they sell shares of
Common Stock will not offer to sell or sell shares of Common Stock to persons
who are non-United States and non-Canadian persons or to persons they believe
intend to resell to persons who are non-United States and non-Canadian persons,
and the International Managers and any dealer to whom they sell shares of Common
Stock will not offer to sell or sell shares of Common Stock to persons who are
United States persons or Canadian persons or to persons they believe intend to
resell to United States persons or Canadian persons, except in each case for
transactions pursuant to such agreement.
Each International Manager has agreed that (i) it has not offered to sell or
sold, and it will not offer to sell or sell, in the United Kingdom by means of
any document any shares of Common Stock other than to persons whose ordinary
business it is to buy or sell shares or debentures, whether as principal or
agent, except in circumstances which do not constitute an offer to the public
within the meaning of the Companies Act of 1985, (ii) it has complied and will
comply with all applicable provisions of the Financial Services Act of 1986 (the
"Financial Services Act") with respect to anything done by it in relation to the
Common Stock in, from or otherwise involving the United Kingdom and (iii) it has
only issued or passed on and will only issue or pass on to any person in the
United Kingdom any document received by it in connection with the issuance of
Common Stock if that person is of a kind who is described in Article 9(3) of the
Financial Services Act of 1986 (Investment Advertisements) (Exemptions) Order
1988.
Purchasers of the shares offered hereby may be required to pay stamp taxes
and other charges in accordance with the laws and practice of the country of
purchase, in addition to the offering price set forth on the cover page hereof.
The Company and the Selling Shareholders have agreed, subject to certain
exceptions relating to employee benefit arrangements, that they will not,
directly or indirectly, for a period of 90 days following the date of this
Prospectus, except with the prior consent of Merrill Lynch, Pierce, Fenner &
Smith Incorporated, on behalf of the Underwriters, sell, offer to sell, grant
any option for the sale of, or otherwise dispose of, any Common Stock or any
securities convertible into or exercisable for Common Stock.
The Company and the Selling Shareholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act.
VALIDITY OF SHARES
The validity of the shares of Common Stock offered hereby will be passed
upon for the Company and the Selling Shareholders by M. Brian Moroze, Esq.,
General Counsel of the Company, Exeter, New Hampshire. Certain other legal
matters will be passed upon for the Company by Kramer, Levin, Naftalis, Nessen,
Kamin & Frankel. Certain legal matters will be passed upon for the Underwriters
by Fried, Frank, Harris, Shriver & Jacobson (a partnership including
professional corporations), One New
33
<PAGE>
ALTERNATE INTERNATIONAL
York Plaza, New York, New York 10004. Fried, Frank, Harris, Shriver & Jacobson
will rely on the opinion of Mr. Moroze as to all matters of Massachusetts law.
As of the date of this Prospectus, Mr. Moroze holds 8,322 shares of the
Company's Common Stock.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"), all of which may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington,
D.C. 20549, and at the following Regional Offices of the Commission: Chicago
Regional Office, Suite 1400, Northwestern Atrium Center, 500 West Madison
Street, Chicago, Illinois 60661; and New York Regional Office, Seven World Trade
Center, 13th Floor, New York, New York 10048. Copies of such material can be
obtained at prescribed rates from the Public Reference Section of the Commission
at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549. Such
material can also be inspected at the offices of the New York Stock Exchange, 20
Broad Street, New York, New York 10005, where the Common Stock is listed.
This Prospectus constitutes part of a Registration Statement on Form S-3
filed by the Company with the Commission under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the shares of Common Stock
offered in the Offerings. This Prospectus omits certain of the information
contained in the Registration Statement in accordance with the rules and
regulations of the Commission. Reference is hereby made to the Registration
Statement and related exhibits for further information with respect to the
Company and the Common Stock. Statements contained herein concerning the
provisions of any document are not necessarily complete and, in each instance,
where a copy of such document has been filed as an exhibit to the Registration
Statement or otherwise has been filed with the Commission, reference is made to
the copy of the applicable document so filed. Each such statement is qualified
in its entirety by such reference.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents, which have been filed by the Company with the
Commission pursuant to the Exchange Act, are hereby incorporated by reference in
this Prospectus:
<TABLE>
<S> <C>
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 1994;
(b) The Company's Quarterly Reports on Form 10-Q for the quarters ended
September 30, 1994, and December 31, 1994; The Company's Quarterly
Report on Form 10-Q/A for the quarter ended December 31, 1994;
(c) The Company's Current Report on Form 8-K, dated July 26, 1994;
(d) The Company's Current Report on Form 8-K, dated August 17, 1994,
and the Company's Current Report on Form 8-K/A, dated September
19, 1994;
(e) The Company's Current Report on Form 8-K, dated October 28, 1994,
and the Company's Current Reports on Form 8-K/A, dated November
1, 1994, November 2, 1994 and November 3, 1994; and
(f) The Company's Current Report on Form 8-K, dated January 10, 1995.
</TABLE>
All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus
and prior to the termination of the offering of the Common Stock made hereby
shall be deemed to be incorporated by reference into this Prospectus from the
date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for
34
<PAGE>
ALTERNATE INTERNATIONAL
purposes of this Prospectus to the extent that a statement contained herein or
in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, including any beneficial owner of Common Stock,
upon the written or oral request of any such person, a copy of any and all of
the documents that have been or may be incorporated by reference herein other
than exhibits to such documents (unless such exhibits are specifically
incorporated by reference into such documents). Such requests should be directed
to Irving Gutin, Senior Vice President, Tyco International Ltd., One Tyco Park,
Exeter, New Hampshire 03833 (telephone: (603) 778-9700).
EXPERTS
The Consolidated Financial Statements of the Company giving retroactive
effect to the merger of the Company and Kendall for the year ended June 30, 1994
and the combination of the financial statements of the Company and Kendall for
the year ended June 30, 1993 included in this Prospectus have been so included
in reliance on the report of Coopers & Lybrand L.L.P., independent accountants,
given on the authority of that firm as experts in accounting and auditing.
The Consolidated Financial Statements of the Company as of June 30, 1993 and
for the years ended June 30, 1993 and 1992 (prior to retroactive restatement to
account for the pooling of interests with Kendall International, Inc. on October
19, 1994) included in this Prospectus have been so included in reliance on the
report (which includes an explanatory paragraph relating to the fact that the
Company changed its method of accounting for incomes taxes and for
post-retirement benefits other than pensions in fiscal 1993) of Price Waterhouse
LLP, independent accountants, given on the authority of said firm as experts in
auditing and accounting.
35
<PAGE>
[ALTERNATE INTERNATIONAL]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING
SHAREHOLDERS OR ANY UNDERWRITER, DEALER OR AGENT. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF ANY OFFER TO BUY, THE
COMMON STOCK TO ANY PERSON IN ANY JURISDICTION WHERE, OR IN ANY CIRCUMSTANCE
IN WHICH, SUCH OFFER OR SOLICITATION MAY NOT BE LEGALLY MADE. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS NOT BEEN ANY CHANGE IN
THE AFFAIRS OF THE COMPANY OR THE INFORMATION SET FORTH IN THE PROSPECTUS SINCE
THE DATE HEREOF.
THERE ARE RESTRICTIONS ON THE OFFER AND SALE OF COMMON STOCK OFFERED HEREBY IN
THE UNITED KINGDOM. ALL APPLICABLE PROVISIONS OF THE FINANCIAL SERVICES ACT OF
1986 AND THE COMPANIES ACT OF 1985 WITH RESPECT TO ANYTHING DONE BY ANY
PERSON IN RELATION TO THE COMMON STOCK IN, FROM OR OTHERWISE INVOLVING THE
UNITED KINGDOM MUST BE COMPLIED WITH. SEE "UNDERWRITING."
IN THE PROSPECTUS, REFERENCES TO "DOLLARS" AND "$" ARE TO UNITED STATES
DOLLARS.
-------------------
TABLE OF CONTENTS
PROSPECTUS
PAGE
----
Prospectus Summary.................... 3
The Offerings......................... 3
Summary Consolidated Financial Data... 4
The Company........................... 6
Use of Proceeds....................... 15
Price Range of Common Stock and
Dividends............................. 15
Capitalization........................ 16
Selected Consolidated Financial
Data.................................. 17
Management's Discussion and Analysis
of Financial Condition and Operating
Results............................. 18
Selling Shareholders.................. 24
Description of Capital Stock.......... 26
Certain United States Tax Consequences
to Non-U.S. Holders of Common
Stock............................... 29
Underwriting.......................... 32
Validity of Shares.................... 33
Available Information................. 34
Incorporation of Certain Information
by Reference........................ 34
Experts............................... 35
Consolidated Financial Statements..... F-1
SHARES
TYCO INTERNATIONAL LTD.
COMMON STOCK
--------------
PROSPECTUS
--------------
MERRILL LYNCH INTERNATIONAL
LIMITED
GOLDMAN SACHS INTERNATIONAL
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
LEHMAN BROTHERS
, 1995
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses in connection with the issuance and distribution of
the Common Stock covered by this Registration Statement are as follows:
SEC registration fee (actual).................................... $
NASD filing fee.................................................. 30,500
Blue Sky fees and expenses.......................................
Printing and engraving expenses..................................
Legal fees and expenses..........................................
Accounting fees and expenses.....................................
Miscellaneous....................................................
-------
Total...................................................... $
-------
-------
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Restated Articles of Organization of the Company provide that the
Company shall indemnify certain persons, including directors and officers,
against liabilities, amounts paid in settlement and professional fees and other
disbursements incurred by each such person in connection with any action, suit
or proceeding, civil or criminal, brought or threatened in or before any court,
tribunal, administrative or legislative body or agency in which he is involved
as a result of his serving or having served in such position or, at the request
of the Company, in certain positions of any other corporation in which the
Company owns shares or of which it is a creditor. No indemnification shall be
provided to an individual with respect to a matter as to which it shall have
been adjudicated that he did not act in good faith in the reasonable belief that
his action was in the best interests of the Company. In the event that any
action, suit or proceeding is compromised or settled so as to impose any
liability or obligation upon a person eligible for indemnification by the
Company, no indemnification shall be provided to him with respect to such matter
if the Company has obtained an opinion of its counsel that with respect to said
matter he did not act in good faith in the reasonable belief that his action was
in the best interests of the Company. The Restated Articles of Organization of
the Company further provide that nothing in them shall limit any lawful rights
to indemnification existing independently of them.
Section 67 of Chapter 156B of the General Laws of the Commonwealth of
Massachusetts provides that a corporation may indemnify any director or officer
(among others) except as to any matter as to which he is adjudicated in any
proceeding not to have acted in good faith in the reasonable belief that his
action was in the best interests of the corporation. Section 67 further provides
that a corporation has the power to purchase and maintain insurance policies on
behalf of any such officer or director against liability incurred by him in such
capacity or arising out of his status as such, whether or not the corporation
has the power to indemnify such officer or director against such liability.
The Company maintains $35,000,000 of insurance to reimburse its directors
and officers for charges and expenses incurred by them for wrongful acts claimed
against them by reason of their being or having been directors or officers of
the Company or any subsidiary thereof. Such insurance specifically excludes
reimbursement of any director or officer for any charge or expense incurred in
connection with various designated matters, including libel or slander,
illegally obtained personal profits, profits recovered by the Company pursuant
to Section 16(b) of the Exchange Act and deliberate dishonesty.
II-1
<PAGE>
The forms of Purchase Agreements contained in Exhibits 1(a) and 1(b) provide
for indemnification of the directors and officers signing the Registration
Statement and certain controlling persons of the Company against certain
liabilities under the Securities Act, under certain circumstances, by the
Underwriters.
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
<S> <C>
EXHIBIT
NUMBER EXHIBIT
- -------- ----------------------------------------------------------------------------------
*1(a) -- Form of U.S. Purchase Agreement among Registrant, the Selling Shareholders and
the Underwriters.
*1(b) -- Form of International Purchase Agreement among Registrant, the Selling
Shareholders and the International Underwriters.
3(a) -- Restated Articles of Organization, as amended (incorporated by reference to
Exhibit 3(a) to the Company's Annual Report on Form 10-K for the fiscal year
ended May 31, 1987).
3(b) -- Articles of Amendment dated November 9, 1993; effective November 10, 1993
(incorporated by reference to Exhibit 3 to Registrant's Current Report on Form
8-K filed on November 12, 1993).
3(c) -- By-laws (incorporated by reference to Exhibit 3 to the Registrant's Current
Report on Form 8-K filed on August 17, 1990).
4 -- Form of Common Stock certificate (incorporated by reference to Exhibit 7 of the
Company's Registration Statement on Form 8-A filed on December 10, 1973).
**5 -- Opinion of M. Brian Moroze, General Counsel of the Registrant, as to the
validity of the securities being registered hereunder.
10(a) -- Registration Rights Agreement, dated as July 7, 1992 (the "Registration Rights
Agreement"), among Kendall International, Inc. (formerly CDK Holding
Corporation; "Kendall") and certain holders of Kendall securities (incorporated
by reference to Exhibit 4.42 of the Registration Statement on Form 10 of
Kendall, as amended).
*10(b) -- Amendment No. 1 to the Registration Rights Agreement, dated July 11, 1994.
*10(c) -- Assignment and Assumption Agreement, dated October 19, 1994, among Kendall, the
securityholders named therein and the Registrant.
10(c) -- Stockholders Agreements between Registrant and each of C&D Fund IV and JLL Fund
(incorporated by reference to Exhibits 10.1 and 10.2 to Registrant's Current
Report on From 8-K, dated July 26, 1994, file No. 1-5482).
*23(a) --Consent of Coopers & Lybrand L.L.P.
*23(b) --Consent of Price Waterhouse LLP.
**23(c) --Consent of Mr. Brian Moroze (included in Exhibit 5).
*24 --Power of Attorney (contained on the signature page).
</TABLE>
- ------------
* Filed herewith.
** To be filed by amendment.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
II-2
<PAGE>
whether such indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or(4)
or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Town of Exeter, State of New Hampshire, on the 30th day of
January, 1995.
TYCO INTERNATIONAL LTD.
By /s/ TERRY L. HALL
...............................
Terry L. Hall
Vice President--Chief Financial
Officer
(Principal Financial
and Accounting Officer)
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned constitutes and
appoints L. DENNIS KOZLOWSKI AND IRVING GUTIN, and each of them, his true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign this Registration Statement (including all pre-effective and
post-effective amendments), and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto such attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that such attorneys-in-fact and agents or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS ON JANUARY 30,
1995 IN THE CAPACITIES INDICATED BELOW.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- -------------------------------------------- --------------------------------------------
<S> <C>
/s/ L. DENNIS KOZLOWSKI Chairman of the Board, President, Chief
............................................ Executive Officer and Director (Principal
L. Dennis Kozlowski Executive Officer)
/s/ JOSHUA M. BERMAN Director
............................................
Joshua M. Berman
/s/ RICHARD S. BODMAN Director
............................................
Richard S. Bodman
/s/ ALBERTO CRIBIORE Director
............................................
Alberto Cribiore
/s/ JOHN F. FORT Director
............................................
John F. Fort
/s/ STEPHEN W. FOSS Director
............................................
Stephen W. Foss
/s/ RICHARD A. GILLELAND Senior Vice President and Director
............................................
Richard A. Gilleland
/s/ PHILIP M. HAMPTON Director
............................................
Philip M. Hampton
/s/ PAUL S. LEVY Director
............................................
Paul S. Levy
/s/ FRANK E. WALSH, JR. Director
............................................
Frank E. Walsh, Jr.
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
- -------- ---------------------------------------------------------------------- ------------
<S> <C> <C>
*1(a) -- Form of U.S. Purchase Agreement among Registrant, the Selling
Shareholders and the Underwriters.
*1(b) -- Form of International Purchase Agreement among Registrant, the
Selling Shareholders and the International Underwriters.
3(a) -- Restated Articles of Organization, as amended (incorporated by
reference to Exhibit 3(a) to the Company's Annual Report on Form
10-K for the fiscal year ended May 31, 1987).
3(b) -- Articles of Amendment dated November 9, 1993; effective November
10, 1993 (incorporated by reference to Exhibit 3 to Registrant's
Current Report on Form 8-K filed on November 12, 1993).
3(c) -- By-laws (incorporated by reference to Exhibit 3 to the Registrant's
Current Report on Form 8-K filed on August 17, 1990).
4 -- Form of Common Stock certificate (incorporated by reference to
Exhibit 7 of the Company's Registration Statement on Form 8-A filed
on December 10, 1973).
**5 -- Opinion of M. Brian Moroze, General Counsel of the Registrant, as
to the validity of the securities being registered hereunder.
10(a) -- Registration Rights Agreement, dated as July 7, 1992 (the
"Registration Rights Agreement"), among Kendall International, Inc.
(formerly CDK Holding Corporation; "Kendall") and certain holders of
Kendall securities (incorporated by reference to Exhibit 4.42 of the
Registration Statement on Form 10 of Kendall, as amended).
*10(b) -- Amendment No. 1 to the Registration Rights Agreement, dated July
11, 1994.
*10(c) -- Assignment and Assumption Agreement, dated October 19, 1994, among
Kendall, the securityholders named therein and the Registrant.
10(c) -- Stockholders Agreements between Registrant and each of C&D Fund IV
and JLL Fund (incorporated by reference to Exhibits 10.1 and 10.2 to
Registrant's Current Report on From 8-K, dated July 26, 1994, file
No. 1-5482).
*23(a) --Consent of Coopers & Lybrand L.L.P.
*23(b) --Consent of Price Waterhouse LLP.
**23(c) --Consent of Mr. Brian Moroze (included in Exhibit 5).
*24 --Power of Attorney (contained on the signature page).
</TABLE>
- ------------
* Filed herewith.
** To be filed by amendment.
Exhibit 1(a)
DRAFT 1/27/95
================================================================================
TYCO INTERNATIONAL LTD.
(a Massachusetts corporation)
Shares of Common Stock
------
U.S. PURCHASE AGREEMENT
-----------------------
Dated: , 1995
-----------------
================================================================================
<PAGE>
TYCO INTERNATIONAL LTD.
(a Massachusetts corporation)
Shares of Common Stock
------------------
U.S. PURCHASE AGREEMENT
-----------------------
, 1995
--------------------------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Goldman, Sachs & Co.
Donaldson, Lufkin & Jenrette Securities Corporation
Lehman Brothers Inc.
As Representatives of the several U.S. Underwriters
c/o Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
Tyco International Ltd., a Massachusetts corporation (the "Company"),
and each of the stockholders of the Company listed in Schedule A hereto (the
"Selling Stockholders"), confirm their respective agreements with Merrill Lynch,
Pierce, Fenner & Smith Incorporated, Goldman, Sachs & Co., Donaldson, Lufkin &
Jenrette Securities Corporation, Lehman Brothers Inc., and each of the other
Underwriters named in Schedule B hereto (collectively, the "U.S. Underwriters,"
which term shall also include any underwriter substituted as hereinafter
provided in Section 10), for whom Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Goldman, Sachs & Co., Donaldson, Lufkin & Jenrette Securities
Corporation and Lehman Brothers Inc. are acting as representatives (in such
capacity, the "U.S. Representatives"), with respect to the sale by the Selling
Stockholders, acting severally and not jointly, of the respective number of
shares of Common Stock set forth opposite such Selling Stockholder's name in
Schedule A hereto
<PAGE>
and the purchase by the U.S. Underwriters, acting severally and not jointly, of
the respective number of shares opposite such U.S. Underwriter's name in
Schedule B hereto. The shares of Common Stock to be purchased by the U.S.
Underwriters are collectively hereinafter called the "U.S. Shares."
It is understood that the Company and the Selling Stockholders are
entering into an agreement, dated the date hereof (the "International Purchase
Agreement"), providing for the sale by the Selling Stockholders of an aggregate
of shares of Common Stock (the "International Shares"), through
---------
arrangements with certain underwriters outside the United States and Canada (the
"Managers" and, together with the U.S. Underwriters, the "Underwriters"), for
whom Merrill Lynch International Limited, Goldman Sachs International,
Donaldson, Lufkin & Jenrette Securities Corporation, and Lehman Brothers
International (Europe) are acting as lead managers (the "Lead Managers"). It
is understood that the Selling Stockholders are not obligated to sell, and the
U.S. Underwriters are not obligated to purchase, any U.S. Shares unless all of
the International Shares are contemporaneously purchased by the Managers. The
U.S. Shares and the International Shares are hereinafter collectively referred
to as the "Offered Shares."
The Company and the Selling Stockholders understand that the U.S.
Underwriters will simultaneously enter into an agreement with the Managers dated
the date hereof (the "Intersyndicate Agreement") providing for the coordination
of certain transactions among the U.S. Underwriters and the Managers.
You have advised us that you and the other U.S. Underwriters, acting
severally and not jointly, desire to purchase the U.S. Shares and that you have
been authorized by the other U.S. Underwriters to execute this Agreement and the
U.S. Price Determination Agreement referred to below on their behalf.
Prior to the purchase and public offering of the U.S. Offered Shares
by the several U.S. Underwriters, the Company, the Selling Stockholders and the
U.S. Representatives, acting on behalf of the U.S. Underwriters shall enter into
a separate written instrument substantially in the form of Exhibit A hereto (the
"U.S. Price Determination Agreement"). The U.S. Price Determination Agreement
may take the form of an exchange of any standard form of written
telecommunication between the Company, the Selling Stockholders and the U.S.
Representatives and shall specify such applicable information as included in
Exhibit A hereto. The offering of the U.S. Shares will be governed by this
Agreement, as supplemented by the U.S. Price Determination Agreement. From and
after the date of the execution and delivery of the U.S. Price Determination
Agreement, this Agreement shall be deemed to incorporate, and all references
herein to "this Agreement" or "herein" shall be deemed to include, the U.S.
Price Determination Agreement.
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<PAGE>
The initial public offering price per share and the purchase price per
share for the International Shares to be paid by the Managers pursuant to the
International Purchase Agreement shall be set forth in a separate agreement (the
"International Price Determination Agreement"), the form of which is attached to
the International Purchase Agreement. The purchase price per share for the
International Shares to be paid by the several Managers shall be identical to
the purchase price per share for the U.S. Shares to be paid by the several U.S.
Underwriters hereunder. This Agreement (including the related U.S. Price
Determination Agreement) and the International Purchase Agreement (including the
related International Price Determination Agreement) are collectively referred
to herein as the "Purchase Agreements."
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (File No. 33-
) covering the registration of the Offered Shares under the Securities
- -------
Act of 1933, as amended (the "1933 Act"), including the related preliminary
prospectus or prospectuses, and either (A) has prepared and proposes to file,
prior to the effective date of such registration statement, an amendment to such
registration statement, including final prospectuses, or (B) if the Company has
elected to rely upon Rule 430A ("Rule 430A") of the rules and regulations of the
Commission under the 1933 Act (the "1933 Act Regulations"), will prepare and
file prospectuses, in accordance with the provisions of Rule 430A and Rule
424(b) ("Rule 424(b)") of the 1933 Act Regulations, promptly after execution and
delivery of the U.S. Price Determination Agreement.* The information, if any,
included in such prospectuses that was omitted from any prospectus included in
such registration statement at the time it becomes effective but that is deemed,
pursuant to Rule 430A(b), to be part of such registration statement at the time
it becomes effective is referred to herein as the "Rule 430A Information." Each
form of U.S. Prospectus and form of International Prospectus used before the
time such registration statement becomes effective, and any form of U.S.
Prospectus and form of International Prospectus that omits the Rule 430A
Information that is used after such effectiveness and prior to the execution and
delivery of the U.S. Price Determination Agreement or the International Price
Determination Agreement is herein called a "preliminary prospectus." Any
reference to any preliminary prospectus shall be deemed to refer to and include
the documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the 1933 Act as of the date of such preliminary prospectus. Such
registration statement,
- --------------------
* Two forms of prospectus are to be used in connection with the offering and
sale of the Offered Shares: one relating to the U.S. Shares (the "Form of
U.S. Prospectus") and one relating to the International Shares (the "Form of
International Prospectus"). The Form of International Prospectus is
identical to the Form of U.S. Prospectus, except for the front cover page,
the section captioned "Underwriting," the section captioned "Certain United
States Tax Consequences to Non-U.S. Holders" and the back cover page.
3
<PAGE>
including the exhibits thereto and the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the 1933 Act, as amended at the
time it becomes effective and including, if applicable, the Rule 430A
Information, is herein called the "Registration Statement," and the form of U.S.
Prospectus, including the documents incorporated by reference therein pursuant
to Item 12 of Form S-3 under the 1933 Act and form of International Prospectus,
including the documents incorporated by reference therein pursuant to Item 12 of
Form S-3 under the 1933 Act included in the Registration Statement at the time
it becomes effective are herein called the "U.S. Prospectus" and the
"International Prospectus," respectively, and, collectively, the "Prospectuses"
and, individually, a "Prospectus," except that, if the final U.S. Prospectus or
International Prospectus, as the case may be, first furnished to the U.S.
Underwriters or the Managers after the execution of the U.S. Price Determination
Agreement or the International Price Determination Agreement for use in
connection with the offering of the Offered Shares differs from the prospectuses
included in the Registration Statement at the time it becomes effective (whether
or not such prospectuses are required to be filed pursuant to Rule 424(b)), the
terms "U.S. Prospectus," "International Prospectus," "Prospectuses" and
"Prospectus" shall refer to the final U.S. Prospectus or International
Prospectus, as the case may be, first furnished to the U.S. Underwriters or the
Managers, as the case may be, for such use.
The Company and the Selling Stockholders understand that the U.S.
Underwriters propose to make a public offering of the U.S. Shares as soon as you
deem advisable after the Registration Statement becomes effective and the U.S.
Price Determination Agreement has been executed and delivered.
Section 1. Representations and Warranties. (a) The Company
------------------------------
represents and warrants to and agrees with each of the U.S. Underwriters that:
(i) The Company meets the requirements for use of Form S-3 under
the 1933 Act, and when the Registration Statement shall become
effective, and if the Company has elected to rely upon Rule 430A, on
the date of the U.S. Price Determination Agreement or the
International Price Determination Agreement, and on the effective or
issue date of each amendment or supplement to the Registration
Statement or the Prospectuses, and at the Closing Time referred to
below, (A) the Registration Statement and any amendments and
supplements thereto will comply in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations; (B) neither
the Registration Statement nor any amendment or supplement thereto
will contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; and (C) neither of the Prospectuses
nor any amendment or supplement to either of them include an untrue
statement of a material fact or omit to state a material fact
4
<PAGE>
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
Notwithstanding the foregoing, this representation and warranty does
not apply to statements or omissions from the Registration Statement
or the Prospectuses or any amendments or supplements thereto made in
reliance upon and in conformity with information furnished or
confirmed in writing to the Company by or on behalf of any U.S.
Underwriters through you or the Lead Managers expressly for use in the
Registration Statement or the Prospectuses or any amendments or
supplements thereto.
(ii) The documents incorporated by reference in the Prospectuses
pursuant to Item 12 of Form S-3 under the 1933 Act, at the time they
were filed with the Commission, conformed in all material respects
with the requirements of the Securities Exchange Act of 1934, as
amended (the "1934 Act"), and the rules and regulations of the
Commission thereunder (the "1934 Act Regulations"), and, when read
together with the information in the Prospectuses, at the time the
Registration Statement shall become effective, and if the Company has
elected to rely upon Rule 430A, on the date of the U.S. Price
Determination Agreement or the International Price Determination
Agreement, and on the effective or issue date of each amendment or
supplement to the Registration Statement or the Prospectuses, and at
the Closing Time referred to below, will not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
(iii) Coopers & Lybrand L.L.P., and Price Waterhouse who are
reporting upon the audited consolidated financial statements and
schedules included or incorporated by reference in the Registration
Statement, are independent public accountants as required by the 1933
Act, the 1934 Act, the 1933 Act Regulations and the 1934 Act
Regulations.
(iv) This Agreement and the International Purchase Agreement have
been, and the U.S. Price Determination Agreement and the International
Price Determination Agreement on the date thereof will be, duly
authorized, executed and delivered by the Company.
(v) The consolidated financial statements included or
incorporated by reference in the Registration Statement and the
Prospectuses, together with the related schedules and notes, present
fairly, in all material respects, the consolidated financial position
of the Company and its Subsidiaries (as hereinafter defined) as of the
dates indicated and the consolidated statements of income,
shareholders' equity and cash flows of
5
<PAGE>
the Company and its Subsidiaries for the periods specified. Except as
otherwise stated in the Registration Statement, such financial
statements have been prepared in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis
throughout the periods involved. The financial statement schedules,
if any, included or incorporated by reference in the Registration
Statement present fairly in accordance with GAAP the information
required to be stated therein and have been compiled on a basis
consistent with that of the audited consolidated financial statements
included in the Registration Statement. The selected financial data
and the summary financial information included in the Prospectuses
present fairly in accordance with GAAP the information shown therein
and have been compiled on a basis consistent with that of the audited
consolidated financial statements included in the Registration
Statement. The pro forma financial statements and other pro forma
financial information included in the Prospectuses present fairly in
accordance with GAAP the information shown therein in accordance
with the adjustments and assumptions described therein, have been
prepared in accordance with the Commission's rules and guidelines
with respect to pro forma financial statements, have been properly
compiled on the pro forma basis described therein and in the opinion
of the Company, the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to give
effect to the transactions or circumstances referred to therein.
(vi) The Company is a corporation validly organized and existing
and in good standing under the laws of the Commonwealth of
Massachusetts with power and authority (corporate and other) under
such laws to own, lease and operate its properties and to conduct its
business as described in the Prospectuses and to enter into and
perform its obligations under this Agreement, the U.S. Price
Determination Agreement, the International Purchase Agreement and the
International Price Determination Agreement; and the Company is duly
qualified as a foreign corporation to transact business and is in good
standing under the laws of each other jurisdiction in which the nature
of its business or its ownership or leasing of its properties requires
qualification, except to the extent that the failure to so qualify or
be in good standing would not have a material adverse effect on the
condition (financial or otherwise), earnings, business affairs or
business prospects of the Company and its Subsidiaries (as defined
below), considered as one enterprise.
(vii) The Company's only subsidiaries are listed on Schedule C
hereto (collectively, the "Subsidiaries"). Each Subsidiary is a
corporation validly organized and existing and in good standing under
the laws of the jurisdiction of its incorporation with power and
authority (corporate and other) under such laws to own, lease and
operate its properties and conduct its business as described in the
Prospectuses; and each Subsidiary is duly qualified as a foreign
corporation to transact business and is in good standing under the
laws of each other jurisdiction in which the nature of its business or
its ownership or leasing of its properties requires qualification,
except to the extent that the failure to so qualify or be in good
standing would not have a material adverse effect on the condition
(financial or
6
<PAGE>
otherwise), earnings, business affairs or business prospects of the
Company and its Subsidiaries, considered as one enterprise.
(viii) Except as set forth on Schedule C, all of the outstanding
shares of capital stock of each Subsidiary have been duly authorized
and validly issued and are fully paid and non-assessable, and are
owned by the Company, directly or through one or more Subsidiaries,
free and clear of any pledge, lien, security interest, charge, claim,
mortgage or encumbrance of any kind; none of the outstanding shares of
capital stock of the Subsidiaries was issued in violation of the
preemptive or similar rights of any stockholder of such corporation
arising by operation of law, under the charter or by-laws of any
Subsidiary or under any agreement to which the Company or any
Subsidiary is a party.
(ix) The Company had at the date indicated in the Prospectuses a
duly authorized, issued and outstanding capitalization as set forth in
the Prospectuses under the caption "Capitalization," and the Common
Stock conforms in all material respects to the description thereof
contained under the caption "Description of Capital Stock" in the
Prospectuses.
(x) All of the outstanding shares of capital stock of the
Company, including the Offered Shares to be sold by the Selling
Stockholders pursuant to this Agreement and the International Purchase
Agreement, have been duly authorized and validly issued and are fully
paid and non-assessable; no holder thereof is subject to personal
liability by reason of being such a holder.
(xi) Except as disclosed in the Prospectuses, there are no
outstanding options, warrants or other rights calling for issuance of,
and no commitments, plans or arrangements to issue, any shares of
capital stock of the Company or any of its Subsidiaries or any
security convertible into or exchangeable for capital stock of the
Company or any of its Subsidiaries. Except as set forth in the
Prospectuses, there are no holders of securities (debt or equity) of
the Company or any of the Subsidiaries, or holders of rights
(including, without limitation, preemptive rights), warrants or
options to obtain securities of the Company or its Subsidiaries, who
have the right to request the Company or any of its Subsidiaries to
register securities held by them under the 1933 Act, other than
holders who are participating in the Offerings or who have elected not
to exercise such rights. None of the outstanding shares of Common
Stock of the Company was issued in violation of the preemptive or
other similar rights of any stockholder of the Company arising by
operation of law, under the charter or by-laws of the
7
<PAGE>
Company or under any agreement to which the Company or any of its
Subsidiaries is a party.
(xii) Since the respective dates as of which information is
given in the Registration Statement and the Prospectuses, except as
otherwise stated therein or contemplated thereby, there has not been
(A) any material adverse change in the condition (financial or
otherwise), earnings, business affairs or business prospects of the
Company and its Subsidiaries, considered as one enterprise, whether or
not arising in the ordinary course of business, (B) any transaction
entered into by the Company or any Subsidiary, other than in the
ordinary course of business, that is material to the Company and its
Subsidiaries, considered as one enterprise, or (C) any dividend or
distribution of any kind declared, paid or made by the Company on any
class of its capital stock.
(xiii) Neither the Company nor any Subsidiary is in violation of
its charter or by-laws or in default in the performance or observance
of any obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease or other agreement or instrument to which it is
a party or by which it is bound or to which any of its properties or
assets is subject, and except for such defaults that would not in the
aggregate have a material adverse effect on the condition (financial
or otherwise), earnings, business affairs or business prospects of the
Company and its Subsidiaries, considered as one enterprise.
(xiv) The sale and delivery of the Offered Shares, the
execution, delivery and performance of this Agreement, the U.S. Price
Determination Agreement, the International Purchase Agreement and the
International Price Determination Agreement, the consummation by the
Company of the transactions contemplated thereby and in the
Registration Statement and compliance by the Company with the terms of
the foregoing have been duly authorized by all necessary corporate
action on the part of the Company and do not and will not result in
any violation of the Articles of Organization or by-laws of the
Company or any Subsidiary, and will not, and at the Closing Time will
not, conflict with, or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, or result in
the creation or imposition of any lien or encumbrance upon any
property or assets of the Company or any Subsidiary under (A) any
contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease or other agreement or instrument to which the
Company or any Subsidiary is a party or by which the Company or any
Subsidiary is bound or to which any of their respective properties or
assets are subject, except
8
<PAGE>
for such conflicts, breaches, violations or defaults or liens or
encumbrances that would not in the aggregate have a material adverse
effect on the condition (financial or otherwise), earnings, business
affairs or business prospects of the Company and the Subsidiaries,
considered as one enterprise, or (B) any applicable law, statute,
rule, regulation, judgment, order, writ or decree of any government,
governmental instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any Subsidiary or any of their
respective properties, assets or operations.
(xv) No authorization, approval, consent or license of any
government, governmental instrumentality or court (other than under
the 1933 Act and the 1933 Act Regulations and the securities or blue
sky laws of the various states) is necessary in connection with the
due authorization, execution, delivery and performance by the Company
of this Agreement, the U.S. Price Determination Agreement, the
International Purchase Agreement and the International Price
Determination Agreement and the valid sale and delivery of the Offered
Shares.
(xvi) Except as disclosed in the Prospectuses, there is no
action, suit or proceeding before or by any government, governmental
instrumentality or court, domestic or foreign, now pending or, to the
knowledge of the Company, threatened against or affecting the Company
or any Subsidiary that is required to be disclosed in the Registration
Statement or Prospectuses or that, if determined adversely to the
Company or any of its Subsidiaries, could individually or in the
aggregate reasonably be expected to have a material adverse change in
the condition (financial or otherwise), earnings, business affairs or
business prospects of the Company and its Subsidiaries, considered as
one enterprise, or which might materially and adversely affect the
consummation of the transactions contemplated in this Agreement, the
International Purchase Agreement and in the Registration Statement;
the aggregate of all pending legal or governmental proceedings to
which the Company or any Subsidiary is a party or which affects any of
the Company's or any Subsidiary's properties, including ordinary
routine litigation incidental to the business of the Company or any
Subsidiary, that are not described or referred to in the Prospectuses,
if adversely determined, would not have a material adverse effect on
the condition (financial or otherwise), earnings, business affairs or
business prospects of the Company and its Subsidiaries, considered as
one enterprise.
(xvii) There are no contracts or documents of a character
required to be described in the Registration Statement, the
Prospectuses or the
9
<PAGE>
documents incorporated by reference therein or to be filed as exhibits
thereto that are not described and filed as required.
(xviii) The Company and its Subsidiaries are in compliance
with, and each such entity has not received any notice of any
outstanding violation of, all laws, ordinances, rules and regulations
applicable to it and its operations except, in either case, where any
failure by the Company or any Subsidiary to comply with any such law,
regulation, ordinance or rule would not have, individually or in the
aggregate, a material adverse effect on the condition (financial or
otherwise), earnings, business affairs or business prospects of the
Company and its Subsidiaries, considered as one enterprise.
(xix) Neither the Company nor any of its affiliates has taken
or will take, directly or indirectly, any action designed to, or that
might be reasonably expected to, cause or result in stabilization or
manipulation of the price of the Offered Shares; and neither the
Company nor any of its affiliates has distributed or will distribute
any prospectus (as such term is defined in the 1933 Act and the 1933
Act Regulations) in connection with the offering and sale of the
Offered Shares other than any preliminary prospectus filed with the
Commission or the Prospectuses or other material permitted by the 1933
Act or the 1933 Act Regulations.
(xx) The Company is not an investment company within the
meaning of the Investment Company Act of 1940, as amended.
(xxi) No labor dispute exists with the Company's employees or
with employees of its Subsidiaries or, to the knowledge of the
Company, is imminent that could reasonably be expected to materially
and adversely affect the condition (financial or otherwise), earnings,
business affairs or business prospects of the Company and its
Subsidiaries, considered as one enterprise.
(xxii) Each of the Selling Stockholders has agreed that, for a
period of 90 days from the date hereof, such persons will not, without
the prior written consent of Merrill Lynch, Pierce, Fenner & Smith
Incorporated on behalf of the Underwriters, directly or indirectly,
sell, offer to sell, grant any option for the sale of, or otherwise
dispose of any shares of Common Stock or securities or rights
convertible into or exercisable or exchangeable for Common Stock other
than the sale of the Offered Shares pursuant to this Agreement and the
International Purchase Agreement.
10
<PAGE>
(b) Each of the Selling Stockholders severally represents and
warrants to, and agrees with, each of the U.S. Underwriters as follows:
(i) To the extent that any statements or omissions made in the
Registration Statement, any preliminary prospectus, the Prospectus or
any amendment or supplement thereto are made in reliance upon and in
conformity with written information furnished to the Company by such
Selling Stockholder expressly for use herein, such preliminary
prospectus and the Registration Statement did, and the Prospectus and
any further amendments or supplements to the Registration Statement
and the Prospectus will, when they become effective or are filed with
the Commission, as the case may be, not contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading.
(ii) Each Selling Stockholder has full right, power and
authority to enter into this Agreement, the International Purchase
Agreement, the U.S. Price Determination Agreement, the International
Price Determination Agreement and the Custody Agreement (as defined
below) and to sell, transfer and deliver the U.S. Shares pursuant to
this Agreement; and this Agreement, the International Purchase
Agreement and the Custody Agreement have been, and the U.S. Price
Determination Agreement and the International Price Determination
Agreement on the date thereof will be, duly authorized, executed and
delivered by such Selling Stockholder.
(iii) Except as set forth in the Prospectuses, there is no
action, suit, investigation (of which such Selling Stockholder has
received written notice) or proceeding before or by any government,
governmental instrumentality or court, domestic or foreign, now
pending or, to the knowledge of such Selling Stockholder, threatened,
to which such Selling Stockholder is or would be a party or of which
the property of such Selling Stockholder is or may be subject, that
(i) seeks to restrain, enjoin, prevent the consummation of or
otherwise challenge the sale of the Offered Shares by such Selling
Stockholder or any of the other transactions contemplated hereby or
(ii) questions the legality or validity of any such transactions or
seeks to recover damages or obtain other relief in connection with any
such transactions.
(iv) Such Selling Stockholder has duly executed and delivered, in
the form heretofore furnished to you, an irrevocable power of attorney
and custody agreement (the "Custody Agreement") with
________________________ as custodian (the "Custodian") and
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<PAGE>
________________________ as attorneys-in-fact (the "Attorneys-in-
Fact"); each Attorney-in-Fact is authorized to execute and deliver
this Agreement (including the U.S. Price Determination Agreement) and
the International Purchase Agreement (including the International
Price Determination Agreement) on behalf of such Selling Stockholder,
to determine the purchase price to be paid by the U.S. Underwriters
and Managers to such Selling Stockholder, as provided in Section 2(a)
hereof, and otherwise to act on behalf of such Selling Stockholder in
connection with this Agreement and the International Purchase
Agreement, and the Attorneys-in-Fact and the Custodian are each
authorized to deliver the Offered Shares to be sold by such Selling
Stockholder pursuant to this Agreement and the International Purchase
Agreement and to accept payment therefor.
(v) No authorization, approval, consent or license of any
government, governmental instrumentality or court (other than under
the 1933 Act and the 1933 Act Regulations and the securities or blue
sky laws of the various states and the securities laws of any
jurisdiction outside the United States in which International Shares
are offered or sold by the Managers pursuant to the International
Purchase Agreement) is required for the execution and delivery by such
Selling Stockholder of the Custody Agreement, the execution and
delivery by or on behalf of such Selling Stockholder of this
Agreement, the International Purchase Agreement, the U.S. Price
Determination Agreement and the International Price Determination
Agreement and the valid sale and delivery of the Offered Shares to be
sold by such Selling Stockholder hereunder and thereunder.
(vi) The execution and delivery of this Agreement, the
International Purchase Agreement, the U.S. Price Determination
Agreement, the International Price Determination Agreement and the
Custody Agreement and the consummation of the transactions herein and
therein contemplated will not result in a violation of the charter,
bylaws or other governing document of such Selling Stockholder and
will not conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other material
agreement or instrument to which such Selling Stockholder is a party
or by which such Selling Stockholder is bound or to which the
properties or assets of such Selling Stockholder are subject nor will
such action result in any violation of the provisions of any statute
relating to such Selling Stockholder or its legal or regulatory status
or any order, rule or regulation of any court or governmental agency
or body having jurisdiction over such Selling Stockholder or the
property of such Selling Stockholder.
12
<PAGE>
(vii) Such Selling Stockholder has, and at the Closing Time
will have, good and valid title to the Offered Shares to be sold by
such Selling Stockholder pursuant to this Agreement and the
International Purchase Agreement, free and clear of any pledge, lien,
security interest, charge, claim, equity or encumbrance of any kind;
and, upon delivery of such Offered Shares and payment of the purchase
price therefor as contemplated in this Agreement and the International
Purchase Agreement, each of the Underwriters will receive good and
valid title to the Offered Shares purchased by it from such Selling
Stockholder, free and clear of any pledge, lien, security interest,
charge, claim, equity or encumbrance of any kind. The owner of the
Offered Shares, if other than such Selling Stockholder, is precluded
from asserting against the Underwriters the effectiveness of any
unauthorized endorsement.
(viii) Certificates for all of the Offered Shares to be sold
by such Selling Stockholder pursuant to this Agreement and the
International Purchase Agreement, in suitable form for transfer by
delivery or accompanied by duly executed instruments of transfer or
assignment in blank with signatures guaranteed, have been placed in
custody with the Custodian with irrevocable conditional instructions
to deliver such Offered Shares to the U.S. Underwriters pursuant to
this Agreement and the Managers pursuant to the International Purchase
Agreement.
(ix) For a period of 90 days from the date hereof, such
Selling Stockholder will not, without the prior written consent of
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"),
on behalf of the Underwriters, directly or indirectly, sell, offer to
sell, grant any option for the sale of, or otherwise dispose of any
shares of Common Stock or securities convertible into or exercisable
or exchangeable for Common Stock owned by such Selling Stockholder or
with respect to which such Selling Stockholder has the power of
disposition other than to the Managers pursuant to the International
Purchase Agreement.
(x) Such Selling Stockholder has not taken and will not take,
directly or indirectly, any action designed to, or that might
reasonably be expected to, cause or result in stabilization or
manipulation of the price of the Common Stock; and such Selling
Stockholder has not distributed and will not distribute any prospectus
(as such term is defined in the 1933 Act and the 1933 Act Regulations)
in connection with the offering and sale of the Offered Shares other
than any preliminary prospectus filed with the Commission or the
Prospectuses or other material permitted by the 1933 Act or the 1933
Act Regulations.
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(xi) Except as disclosed in writing to the U.S. Underwriters,
neither such Selling Stockholder nor any of its affiliates directly,
or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, or has any other
association with (within the meaning of Article I, Section 1(m) of the
By-laws of the National Association of Securities Dealers, Inc.), any
member firm of the National Association of Securities Dealers, Inc.
(xii) Such Selling Stockholder has duly executed and
delivered this Agreement and the International Purchase Agreement by
and through its attorney-in-fact.
(xiii) Such Selling Stockholder has not taken, and will not
take, directly or indirectly, any action designed to, or that might
reasonably be expected to, cause or result in stabilization or
manipulation of the price of the Common Stock.
(c) Any certificate signed by any officer of the Company or any
Subsidiary and delivered to you or to Fried, Frank, Harris, Shriver & Jacobson
as counsel for the Underwriters at or prior to the Closing Time pursuant to this
Agreement or the transactions contemplated hereby shall be deemed a
representation and warranty by the Company or such Subsidiary, as the case may
be, to each U.S. Underwriter as to the matters covered thereby; and any
certificate signed by or on behalf of any Selling Stockholder as such and
delivered to you or to counsel for the Underwriters at or prior to the Closing
Time pursuant to the terms of this Agreement or the transactions contemplated
hereby shall be deemed a representation and warranty by such Selling Stockholder
to each U.S. Underwriter, as to the matters covered thereby.
Section 2. Sale and Delivery to the U.S. Underwriters; Closing.
---------------------------------------------------
(a) On the basis of the representations and warranties herein contained, and
subject to the terms and conditions herein set forth, each Selling Stockholder
agrees, severally and not jointly, to sell to each U.S. Underwriter, severally
and not jointly, and each U.S. Underwriter agrees, severally and not jointly, to
purchase from each Selling Stockholder, at the purchase price per share set
forth in the U.S. Price Determination Agreement, that proportion of the number
of U.S. Shares being sold by each such Selling Stockholder set forth on Schedule
B opposite the name of each such Selling Stockholder which the number of U.S.
Shares set forth in Schedule A opposite the name of such U.S. Underwriter (plus
such additional number of U.S. Shares that such U.S. Underwriter may become
obligated to purchase pursuant to Section 10 hereof) bears to the total number
of U.S. Shares, subject, in each case, to such adjustments as the U.S.
Underwriters in their discretion shall make to eliminate any sales or purchases
of fractional shares.
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(b) If the Company has elected not to rely upon Rule 430A, the
initial public offering price per share for the U.S. Shares and the purchase
price per share for the U.S. Shares to be paid by the several U.S. Underwriters
shall be agreed upon and set forth in the U.S. Price Determination Agreement,
dated the date hereof, and an amendment to the Registration Statement containing
such per share price information will be filed before the Registration Statement
becomes effective.
(c) If the Company has elected to rely upon Rule 430A, the initial
public offering price per share for the U.S. Shares and the purchase price per
share for the U.S. Shares to be paid by the several U.S. Underwriters shall be
agreed upon and set forth in the U.S. Price Determination Agreement. In the
event that the U.S. Price Determination Agreement has not been executed by the
close of business on the fourth business day following the date on which the
Registration Statement becomes effective, this Agreement shall terminate
forthwith, without liability of any party to any other party except that
Sections 6 and 7 shall remain in effect.
(d) Payment of the purchase price for, and delivery of certificates
for, the U.S. Shares shall be made at the offices of Fried, Frank, Harris,
Shriver & Jacobson, One New York Plaza, New York, New York 10004, or at such
other place as shall be agreed upon by the Company, the Selling Stockholders and
you, at 10:00 A.M. (New York time) either (i) on the fifth full business day
after the effective date of the Registration Statement, or (ii) if the Company
has elected to rely upon Rule 430A, on the fifth full business day after
execution of the U.S. Price Determination Agreement (unless, in either case,
postponed pursuant to Section 10 or 11), or at such other time not more than ten
full business days thereafter as you, the Company and the Selling Stockholders
shall determine (such date and time of payment and delivery being herein called
the "Closing Time"). Payment shall be made to the Selling Stockholders by
certified or official bank check or checks in New York Clearing House funds
payable to the order of the Custodian pursuant to the Custody Agreement or
directly to the Selling Stockholders if so instructed by the Custodian against
delivery to you for the respective accounts of the several U.S. Underwriters of
certificates for the U.S. Shares to be purchased by them.
(e) Certificates for the U.S. Shares to be purchased by the U.S.
Underwriters shall be in such denominations and registered in such names as you
may request in writing at least two full business days before the Closing Time.
The certificates for the U.S. Shares will be made available in New York City for
examination and packaging by you not later than 10:00 A.M. (New York time) on
the business day prior to the Closing Time.
(g) It is understood that each U.S. Underwriter has authorized you,
for its account, to accept delivery of, receipt for, and make payment of the
purchase price for, the U.S. Shares that it has agreed to purchase. You,
individually and not as U.S. Representatives, may (but shall not be obligated
to) make payment of the purchase price
15
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for the U.S. Shares to be purchased by any U.S. Underwriter whose check or
checks shall not have been received by the Closing Time.
(h) The obligation of the Selling Stockholders to sell to each U.S.
Underwriter the U.S. Shares, and the several and not joint obligations of the
U.S. Underwriters to purchase and pay for the U.S. Shares, upon the terms and
subject to the conditions of this Agreement, are subject to the concurrent
closing of the sale of the International Shares to the Managers pursuant to the
terms of the International Purchase Agreement.
Section 3. Certain Covenants of the Company. The Company covenants
--------------------------------
with each U.S. Underwriter as follows:
(a) The Company will use its best efforts to cause the Registration
Statement to become effective and, if the Company elects to rely upon Rule 430A
and subject to Section 3(b), will comply with the requirements of Rule 430A and
will notify you promptly, (i) when the Registration Statement, or any post-
effective amendment to the Registration Statement, shall have become effective,
or any supplement to the Prospectuses or any amended Prospectuses shall have
been filed, (ii) of the receipt of any comments from the Commission, (iii) of
any request by the Commission to amend the Registration Statement, to amend or
supplement any Prospectus or for additional information and (iv) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of any
preliminary prospectus, or of the suspension of the qualification of the Offered
Shares for offering or sale in any jurisdiction, or of the institution or
threatening of any proceedings for any of such purposes. The Company will make
every reasonable effort to prevent the issuance of any such stop order or of any
order preventing or suspending such use and, if any such order is issued, to
obtain the lifting thereof at the earliest possible moment.
(b) The Company will not at any time file or make any amendment to
the Registration Statement, or any amendment or supplement thereto, or any
document incorporated by reference therein (i) if the Company has not elected to
rely upon Rule 430A, to the Prospectuses or (ii) if the Company has elected to
rely upon Rule 430A, to either the prospectus included in the Registration
Statement at the time it becomes effective or to the Prospectuses, of which you
shall not have previously been advised and furnished a copy or to which you or
Fried, Frank, Harris, Shriver & Jacobson as counsel for the U.S. Underwriters
shall reasonably and timely object in writing.
(c) The Company has furnished or will furnish to you and your
counsel, without charge, one signed copy of the Registration Statement (as
originally filed) and of all amendments thereto (including exhibits filed
therewith and documents incorporated by reference therein), whether filed before
or after the Registration Statement becomes
16
<PAGE>
effective, copies of all exhibits and documents filed therewith, and signed
copies of all consents and certificates of experts, and has furnished or will
furnish to you, for each other U.S. Underwriter, one conformed copy of the
Registration Statement as originally filed and each amendment thereto.
(d) The Company will deliver to each U.S. Underwriter, without
charge, from time to time until the effective date of the Registration Statement
(or, if the Company has elected to rely upon Rule 430A, until the time the U.S.
Price Determination Agreement is executed and delivered), as many copies of each
preliminary prospectus as such U.S. Underwriter may reasonably request, and the
Company hereby consents to the use of such copies for purposes permitted by the
1933 Act. The Company will deliver to each U.S. Underwriter, without charge, as
soon as the Registration Statement shall have become effective (or, if the
Company has elected to rely upon Rule 430A, as soon as practicable after the
U.S. Price Determination Agreement has been executed and delivered) and
thereafter from time to time as requested during the period when the
Prospectuses are required to be delivered under the 1933 Act, such number of
copies of the Prospectuses (as supplemented or amended) as such U.S. Underwriter
may reasonably request.
(e) The Company will comply to the best of its ability with the 1933
Act and the 1933 Act Regulations and the 1934 Act and the 1934 Act Regulations
so as to permit the completion of the distribution of the Offered Shares as
contemplated in this Agreement, the International Purchase Agreement and the
Prospectuses. If at any time when a prospectus is required by the 1933 Act to
be delivered in connection with sales of the Offered Shares any event shall
occur or condition exist as a result of which it is necessary, in the opinion of
counsel for the U.S. Underwriters, to amend the Registration Statement or amend
or supplement any Prospectus in order that the Prospectuses will not include an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary, in the opinion of such counsel, at any such time to amend
the Registration Statement or amend or supplement any Prospectus in order to
comply with the requirements of the 1933 Act, the 1933 Act Regulations, the 1934
Act or the 1934 Act Regulations, the Company will promptly prepare and file with
the Commission, subject to Section 3(b), such amendment or supplement as may be
necessary to correct such untrue statement or omission or to make the
Registration Statement or the Prospectuses comply with such requirements.
(f) The Company will endeavor, in cooperation with the U.S.
Underwriters, to qualify the Offered Shares for offering and sale under the
applicable securities laws of such states and other jurisdictions as you may
designate and to maintain such qualifications in effect for a period of not less
than one year from the effective date of the Registration Statement; provided,
--------
however, that neither the Company nor any Subsidiary shall be obligated to file
- -------
any general consent to service of process or to qualify
17
<PAGE>
as a foreign corporation or as a dealer in securities in any jurisdiction in
which it is not so qualified or to subject itself to taxation in respect of
doing business in any jurisdiction in which it is not otherwise so subject. The
Company will file such statements and reports as may be required by the laws of
each jurisdiction in which the Offered Shares have been qualified as above
provided.
(g) The Company will make generally available to its security holders
as soon as practicable, but not later than 60 days after the close of the period
covered thereby, an earnings statement of the Company (in form complying with
the provisions of Rule 158 of the 1933 Act Regulations), covering a period of 12
months beginning after the effective date of the Registration Statement but not
later than the first day of the Company's fiscal quarter next following such
effective date.
(h) For a period of 90 days from the date hereof, the Company will
not, without the prior written consent of Merrill Lynch on behalf of the
Underwriters, directly or indirectly, sell, offer to sell, grant any option for
the sale of, or otherwise dispose of, any shares of Common Stock or securities
convertible into or exchangeable or exercisable for Common Stock, other than to
(i) the Managers pursuant to the International Purchase Agreement and
(ii) eligible participants in the Company's employee stock plans pursuant to the
terms thereof as in effect on the date hereof.
(i) The Company will use its best efforts to effect the listing of
the Common Stock on the New York Stock Exchange on the date of the U.S. Price
Determination Agreement.
(j) The Company, during the period when the Prospectuses are required
to be delivered under the 1933 Act or the 1934 Act, will file all documents
required to be filed with the Commission pursuant to Sections 13, 14 or 15 of
the 1934 Act subsequent to the time the Registration Statement becomes
effective.
(k) For a period of five years after the Closing Time, the Company
will furnish to you and to each U.S. Underwriter that so requests copies of all
annual reports, quarterly reports and current reports filed with the Commission
on Forms 10-K, 10-Q and 8-K, or such other similar forms as may be designated by
the Commission, and such other documents, reports and information as shall be
furnished by the Company to its stockholders generally.
(l) If the Company has elected to rely upon Rule 430A, it will take
such steps as it deems necessary to ascertain promptly whether the forms of
prospectuses transmitted for filing under Rule 424(b) were received for filing
by the Commission and, in the event that they were not, it will promptly file
such prospectuses.
(m) The Company has complied, and will comply, with all of the
provisions of Florida H.B. 1771, as codified in sec. 517.075 Florida Statutes,
1987, as
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amended, and all regulations promulgated thereunder relating to issuers or their
affiliates doing business with the government of Cuba or with any person or
affiliate located in Cuba.
(n) The Company will use, or will cause Kendall International, Inc.
to use, its best efforts to enforce all of its rights under Section 2.3 of the
Registration Rights Agreement, dated as of July 7, 1992, as amended, among
Kendall International Inc. and the stockholders and other parties thereto
arising in connection with the transactions contemplated by this Agreement,
except with the prior consent of Merrill Lynch, on behalf of the Underwriters.
Section 4. Payment of Expenses. (a) The Company agrees to pay all
-------------------
expenses incident to the performance of its obligations under this Agreement and
the International Purchase Agreement, including (i) the printing and filing of
the Registration Statement (including financial statements and exhibits), as
originally filed and as amended, the preliminary prospectuses and the
Prospectuses and any amendments or supplements thereto, and the cost of
furnishing copies thereof to the Underwriters, (ii) the copying or printing, as
applicable, and distribution of this Agreement (including the U.S. Price
Determination Agreement), the Intersyndicate Agreement among the U.S.
Underwriters and the Managers, the International Purchase Agreement (including
the International Price Determination Agreement), the Agreement among Managers,
the certificates for the Offered Shares and a survey of state securities or blue
sky laws (the "Blue Sky Survey"), (iii) the delivery of the certificates for the
Offered Shares to the Underwriters, including any capital duties, stamp duties
and stock or other transfer taxes payable upon the sale of the Offered Shares to
the Underwriters and the transfer of the Offered Shares between the U.S.
Underwriters and the Managers, (iv) the fees and disbursements of the Company's
counsel, accountants and other advisers and one counsel for the Selling
Stockholders, (v) the qualification of the Offered Shares under the applicable
securities laws in accordance with Section 3(f) and any filing fees for review
of the offering with the National Association of Securities Dealers, Inc.,
including filing fees and reasonable fees and disbursements of Fried, Frank,
Harris, Shriver & Jacobson as counsel for the Underwriters in connection
therewith and in connection with the Blue Sky Survey, (vi) the fees and expenses
of any transfer agent or registrar for the Offered Shares and (vii) the listing
fees and expenses incurred in connection with listing the Offered Shares on the
New York Stock Exchange, if any.
(b) Each of the Selling Stockholders will pay the fees and
disbursements of its counsel and accountants, if any, not paid by the Company
pursuant to Section 4(i)(d) or otherwise.
(c) If this Agreement is terminated by you in accordance with the
provisions of Section 5, 9(a)(i) or 11, the Company and the Selling Stockholders
shall reimburse the U.S. Underwriters through you for all of their reasonable
out-of-pocket
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expenses, including the reasonable fees and disbursements of Fried, Frank,
Harris, Shriver & Jacobson as counsel for the U.S. Underwriters.
Section 5. Conditions of U.S. Underwriters' Obligations. In addition
--------------------------------------------
to the execution and delivery of the U.S. Price Determination Agreement, the
obligations of the several U.S. Underwriters to purchase and pay for the U.S.
Shares that they have respectively agreed to purchase hereunder are subject to
the accuracy of the representations and warranties of the Company and the
Selling Stockholders contained herein (including those contained in the U.S.
Price Determination Agreement) or in certificates of any officer of the Company
or any Subsidiary and the Selling Stockholders delivered pursuant to the
provisions hereof, to the performance by the Company and the Selling
Stockholders of their respective obligations hereunder, and to the following
further conditions:
(a) The Registration Statement shall have become effective not later
than 5:30 P.M. on the date of this Agreement or, with your consent, at a later
time and date not later, however, than 5:30 P.M. on the first business day
following the date hereof, or at such later time or on such later date as you
may agree to in writing with the approval of a majority in interest of the
several U.S. Underwriters; and at the Closing Time no stop order suspending the
effectiveness of the Registration Statement shall have been issued under the
1933 Act and no proceedings for that purpose shall have been instituted or shall
be pending or, to your knowledge or the knowledge of the Company, shall have
been threatened by the Commission, and any request on the part of the Commission
for additional information shall have been complied with to the reasonable
satisfaction of Fried, Frank, Harris, Shriver & Jacobson as counsel for the U.S.
Underwriters. If the Company has elected to rely upon Rule 430A, Prospectuses
containing the Rule 430A Information shall have been filed with the Commission
in accordance with Rule 424(b) (or a post-effective amendment providing such
information shall have been filed and declared effective in accordance with the
requirements of Rule 430A).
(b) At the Closing Time, you shall have received signed opinions of
M. Brian Moroze, Esq., General Counsel for the Company, dated as of the Closing
Time, together with reproduced copies of such opinions for each of the U.S.
Underwriters, in form and substance satisfactory to counsel for the U.S.
Underwriters, to the effect that:
(i) The Company is a corporation validly organized and validly
existing and in good standing under the laws of the Commonwealth of
Massachusetts.
(ii) The Company has the requisite power and authority (corporate
and other) to own, lease and operate its properties and to conduct its
business as described in the Prospectuses, and to enter into and
perform
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its obligations under this Agreement, the U.S. Price Determination
Agreement, the International Purchase Agreement and the International
Price Determination Agreement.
(iii) The Company is duly qualified as a foreign corporation
to transact business and is in good standing under the laws of each
other jurisdiction in which such qualification is required except
where the failure to be so qualified and be in good standing would not
have a material adverse effect on the condition (financial or
otherwise), earnings, business affairs or business prospects of the
Company and its Subsidiaries, considered as one enterprise.
(iv) Each of the Subsidiaries is a corporation validly organized
and existing under the laws of its jurisdiction of incorporation, has
the requisite power and authority (corporate and other) to own, lease
and operate its properties and conduct its business as described in
the Prospectus and is duly qualified as a foreign corporation to
transact business and is in good standing under the laws of each other
jurisdiction in which such qualification is required except where the
failure to be so qualified and be in good standing would not have a
material adverse effect on the condition (financial or otherwise),
earnings, business affairs or business prospects of the Company and
its Subsidiaries taken as a whole; and all of the issued shares of
capital stock of each Subsidiary have been duly authorized and validly
issued, are fully paid and non-assessable, and (except for
non-material liens that have arisen in the ordinary course of
business) are owned directly or indirectly by the Company, free and
clear of all liens, encumbrances, equities or claims.
(v) Other than as disclosed in or contemplated by the
Prospectus, there are no legal or governmental proceedings pending or,
to the best of my knowledge, threatened to which the Company or any of
its Subsidiaries is or may be a party or to which any property of the
Company or its Subsidiaries is or may be the subject which, if
determined adversely to the Company or such Subsidiaries, could
individually or in the aggregate reasonably be expected to have a
material adverse effect on the condition (financial or otherwise),
earnings, business affairs or business prospects of the Company and
its Subsidiaries, considered as one enterprise.
(vi) To the best of my knowledge, no legal or governmental
proceedings are pending or threatened against the Company or any of
its Subsidiaries which are required to be disclosed in the
Registration Statement or the Prospectus, other than those disclosed
therein.
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(vii) To the best of my knowledge, there are no contracts,
indentures, mortgages, loan agreements, notes, leases or other
documents to which the Company or any Subsidiary is a party or by
which any of them may be bound that are required to be filed as an
exhibit to the Registration Statement or required to be described in
the Registration Statement or the Prospectuses, other than those so
filed or described as required.
(viii) Neither the Company nor any of its Subsidiaries is, or,
based upon presently existing circumstances with the giving of notice
or lapse of time or both would be, in violation of or in default
under, their respective restated articles of organization, certificate
of incorporation or other similar charter document or by-laws or any
contract, indenture, mortgage, deed of trust, loan agreement, note,
lease or other agreement or instrument known to me to which the
Company or any of its Subsidiaries is party or by which it or any of
them or any of their respective properties is bound, except for
violations and defaults which individually and in the aggregate are
not material to the Company and the Subsidiaries taken as a whole.
(ix) All descriptions in the Prospectuses of the Agreements set
forth therein are accurate and fairly summarize the information
required to be shown, and the statements in the Prospectuses under
"Legal Proceedings" incorporated by reference from Item 3 of Part 1 of
the Company's Annual Report on Form 10-K for the year ended June 30,
1994, insofar as such statements constitute a summary of the legal
matters, documents or proceedings referred to therein, fairly present
the information called for with respect to such legal matters,
documents or proceedings.
(x) This Agreement, the U.S. Price Determination Agreement,
the International Purchase Agreement and the International Price
Determination Agreement have been duly authorized, executed and
delivered by the Company.
(xi) All of the issued and outstanding shares of capital stock
of the Company, including the Offered Shares, have been duly
authorized and validly issued and are fully paid and non-assessable,
and were not issued in violation of any preemptive or similar rights
of the stockholders of the Company arising under the Corporation Law
of the Commonwealth of Massachusetts, under the charter or by-laws of
the Company, or, to the best of such counsel's knowledge, under any
agreement known to such counsel.
(xii) The authorized, issued and outstanding capital stock of
the Company is as set forth in the Prospectuses under the caption
entitled "Capitalization," as of the date stated therein.
22
<PAGE>
(xiii) Except as disclosed in or specifically contemplated by
the Prospectuses, to the best of such counsel's knowledge there are no
outstanding options, warrants or other rights created by the Company
calling for the issuance of, and no commitments or obligations to
issue, any shares of capital stock of the Company or any security
convertible into or exchangeable for capital stock of the Company.
(xiv) The execution and delivery of this Agreement, the U.S.
Price Determination Agreement, the International Purchase Agreement
and the International Price Determination Agreement by the Company,
the sale and delivery of the Offered Shares, the consummation by the
Company and the Selling Stockholders of the transactions contemplated
in this Agreement and the International Purchase Agreement and
compliance by the Company and the Selling Stockholders with the terms
of the foregoing will not (a) violate the Company's Restated Articles
of Organization or by-laws, (b) breach or result in a default under
any contract, indenture, mortgage, deed of trust, loan or credit
agreement, bond, debenture, note, lease or any other agreement or
instrument known to me to which the Company or any of its Subsidiaries
is a party or by which it or any of them is bound or to which any of
the property or assets of the Company or any of its Subsidiaries is
bound, or (c) violate any applicable law, statute, rule or regulation
(other than state securities or Blue Sky laws or regulations, as to
which counsel need not opine) or any judgment, order, writ,
injunction, or decree of any jurisdiction, governmental
instrumentality or court, domestic or foreign, having jurisdiction
over the Company or any of its properties or operations.
(xv) No consent, approval, authorization or license, order,
registration or qualification of or with any court or of any
government, governmental instrumentality or court is legally required
in connection with the due authorization, execution, sale and delivery
of the Offered Shares or the consummation of the transactions
contemplated by this Agreement, except such as may be required under
the 1933 Act and the 1933 Act Regulations, which have been obtained,
or as may be required under the securities or Blue Sky laws of the
various states, as to which such counsel need express no opinion.
(xvi) To the best of such counsel's knowledge, other than the
Selling Stockholders with respect to the Offered Shares, no holders of
the Company's securities have rights to the registration of shares of
Common Stock or other securities as a result of the filing of the
Registration Statement by the Company or the offering contemplated
hereby, except
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pursuant to the Registration Rights Agreement, dated as of July 7,
1992, as amended, among Kendall International, Inc. and the parties
thereto.
Although such counsel has not undertaken to determine independently
the accuracy and completeness of the statements contained in the Registration
Statement or the Prospectuses, such counsel has obtained information as a result
of discussions and meetings with officers and other representatives of the
Company and its Subsidiaries and discussions with representatives of and
independent public accountants of the Company, in connection with the
preparation of the Registration Statement and the Prospectuses, and the
examination of other information and documents requested by such counsel.
Although such counsel has not undertaken to determine independently, and
therefore, such counsel does not assume responsibility, explicitly or
implicitly, for the accuracy and completeness of the statements contained in the
Registration Statement or the Prospectuses, and such counsel cannot provide
assurance that the procedures described in the preceding sentence would
necessarily reveal matters of significance with respect to the following
comments, during the course of the above-described procedures, nothing has come
to such counsel's attention that has caused such counsel to believe that the
Registration Statement (including the Rule 430A Information, if applicable, and
any amendment thereto) or the Prospectuses (including, in each case, the
documents incorporated by reference therein), on the effective date thereof, or
on the date of the Agreement, contained an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading or that the Prospectuses or any
amendment or supplement thereto, on the date hereof, contains an untrue
statement of a material fact or omitted or omits to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading (it being
understood that such counsel need express no view with respect to financial
statements, the notes thereto and related schedules and other financial or
accounting data included in the Registration Statement or the Prospectuses).
Such opinion shall be to such further effect with respect to other
legal matters relating to this Agreement, the International Purchase Agreement
and the sale of the Offered Shares pursuant to this Agreement and the
International Purchase Agreement as counsel for the Underwriters may reasonably
request. In rendering such opinion, such counsel may rely as to all matters
governed by laws of jurisdictions other than the law of the Commonwealth of
Massachusetts and the federal law of the United States, upon opinions of local
counsel in such jurisdictions, who shall be counsel satisfactory to counsel for
the Underwriters in which case the opinion shall state that they believe you and
they are entitled to so rely. Such counsel may also state that, insofar as such
opinion involves factual matters, such counsel has relied, to the extent such
counsel deems proper, upon certificates of officers of the Company and the
Subsidiaries and certificates of public officials.
24
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(c) At the Closing Time, you shall have received signed opinions of
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel, counsel for the Company, dated
as of the Closing Time, together with reproduced copies of such opinions for
each of the U.S. Underwriters, in form and substance satisfactory to counsel for
the U.S. Underwriters, to the effect that:
(i) The statements made in the Prospectus under "Description
of Capital Stock" insofar as they purport to constitute summaries of
the terms of the Common Stock, constitute accurate and fair summaries
thereof in all material respects, and the form of certificate used to
evidence the Common Stock is in due and proper form and complies with
all applicable statutory requirements and the requirements of the New
York Stock Exchange, Inc.
(ii) The Registration Statement has been declared effective
under the 1933 Act. Any required filing of the Prospectuses or any
supplement thereto has been made with the Commission pursuant to Rule
424(b); such counsel does not know of the issuance of any stop order
suspending the effectiveness of the Registration Statement and no
proceedings for that purpose have been instituted or threatened.
(iii) The Registration Statement (including the Rule 430A
Information, if applicable), the Prospectuses and each amendment or
supplement to the Registration Statement and Prospectuses as of their
respective effective or issue dates, comply as to form in all material
respects to the requirements of the 1933 Act and the applicable 1933
Act Regulations (except that such counsel need not express an opinion
as to financial or accounting data, statements, notes or schedules
included or omitted from any of the documents referred to in this
opinion). Each document incorporated by reference in the Registration
Statement and the Prospectus, when filed with the Commission under the
Exchange Act, complied as to form in all material respects with the
requirements of the Exchange Act (except that such counsel need not
express an opinion as to financial statements, the notes thereto and
related schedules and other financial or accounting data included in
or omitted from any of the documents referred to in this paragraph).
(iv) The statements made in the Prospectuses under "Certain
United States Federal Tax Consequences to Non-U.S. Holders of Common
Stock," to the extent that they are statements of United States
federal laws or legal conclusions thereunder, have been reviewed by
such counsel and fairly present the information disclosed therein in
all material respects.
25
<PAGE>
Although such counsel has not undertaken to determine independently
the accuracy and completeness of the statements contained in the Registration
Statement or the Prospectuses, such counsel has obtained information as a result
of discussions and meetings with officers and other representatives of the
Company and its Subsidiaries and discussions with representatives of and
independent public accountants of the Company, in connection with the
preparation of the Registration Statement and the Prospectuses, and the
examination of other information and documents requested by such counsel.
Although such counsel has not undertaken to determine independently, and
therefore, such counsel does not assume responsibility, explicitly or
implicitly, for the accuracy and completeness of the statements contained in the
Registration Statement or the Prospectuses, and such counsel cannot provide
assurance that the procedures described in the preceding sentence would
necessarily reveal matters of significance with respect to the following
comments, during the course of the above-described procedures, nothing has come
to such counsel's attention that has caused such counsel to believe that the
Registration Statement (including the Rule 430A Information, if applicable, and
any amendment thereto) or the Prospectuses (including, in each case, the
documents incorporated by reference therein), on the date or effective date
thereof, or on the date of the Agreement, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or that the
Prospectuses or any amendment or supplement thereto, on the date hereof,
contain an untrue statement of a material fact or omitted or omits to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading (it being understood that such counsel need express no view with
respect to financial statements, the notes thereto and related schedules and
other financial or accounting data included in the Registration Statement or the
Prospectuses).
Such opinion shall be to such further effect with respect to other
legal matters relating to this Agreement, the International Purchase Agreement
and the sale of the Offered Shares pursuant to this Agreement and the
International Purchase Agreement as counsel for the Underwriters may reasonably
request. In rendering such opinion, such counsel may rely as to all matters
governed by laws of jurisdictions other than the law of the Commonwealth of
Massachusetts and the federal law of the United States, upon opinions of local
counsel in such jurisdictions, who shall be counsel satisfactory to counsel for
the Underwriters in which case the opinion shall state that they believe you and
they are entitled to so rely. Such counsel may also state that, insofar as such
opinion involves factual matters, they have relied, to the extent they deem
proper, upon certificates of officers of the Company and the Subsidiaries and
certificates of public officials.
(d) At the Closing Time, you shall have received signed opinions of
counsel for each of the Selling Stockholders reasonably acceptable to you, dated
as of the Closing Time, together with reproduced copies of such opinions for
each of the U.S.
26
<PAGE>
Underwriters, in form and substance satisfactory to counsel for the U.S.
Underwriters, to the effect that:
(i) The Selling Stockholder has the [corporate/partnership]
power and authority (A) to enter into the Purchase Agreements, Price
Determination Agreements and the Custody Agreement and (B) to sell,
transfer and deliver the Offered Shares to be sold by the Selling
Stockholder under the Purchase Agreements. The Purchase Agreements
and Price Determination Agreements have been duly authorized, executed
and delivered by the Selling Stockholder. The Custody Agreement has
been duly authorized, executed and delivered by the Selling
Stockholder and constitutes the valid and binding obligation of such
Selling Stockholder in accordance with its terms.
(ii) Each Attorney-in-Fact has been duly authorized by the
Selling Stockholder and the Depository is duly authorized to deliver
the Offered Shares to be sold by such Selling Stockholder pursuant to
the Purchase Agreements.
(iii) No authorization, approval, consent or license of any
government, governmental instrumentality or court is required to be
obtained by the Selling Stockholder (other than under the Securities
Act of 1933 or under Blue Sky or state securities laws as to which
such counsel need not opine) in connection with the due authorization,
execution and delivery of the Purchase Agreements, Price Determination
Agreements and Custody Agreement or the sale and delivery of the
Offered Shares to be sold by the Selling Stockholder under the
Purchase Agreements.
(iv) The execution and delivery of the Underwriting Agreements,
the Price Determination Agreements and the Custody Agreement by the
Selling Stockholder, the sale of the Offered Shares by the Selling
Stockholder pursuant to the Purchase Agreements, and the compliance by
the Selling Stockholder with the terms of the foregoing does not
conflict with or result in a violation of (a) the charter, by-laws or
other applicable governing document of the Selling Stockholder, (b)
any law, rule or regulation relating to such Selling Stockholder
(other than under the Securities Act of 1933 or under Blue Sky or
state securities laws as to which such counsel need not opine), (c)
any judgment, order or decree of any government, governmental
instrumentality or court, domestic or foreign, having jurisdiction
over the Selling Stockholder or its properties or (d) any material
contract known to such counsel.
27
<PAGE>
(v) The Selling Stockholder is, and immediately prior to the
Closing Time, will be, the sole registered and beneficial owner of the
Offered Shares to be sold by the Selling Stockholder pursuant to the
Purchase Agreements; upon completion of the sale of the Offered Shares
pursuant to the Purchase Agreements, each of the Underwriters will
receive good and marketable title to the Offered Shares purchased by
it from such Selling Stockholder and, assuming the Underwriters
purchased the Offered Shares in good faith and without notice of any
adverse claim, the Underwriters will have acquired such Offered Shares
free and clear of any pledge, lien, security interest, claim, equity
or encumbrance of any kind.
Such opinion shall be to such further effect with respect to legal
matters relating to this Agreement, the International Purchase Agreement and the
sale of the Offered Shares pursuant to this Agreement and the International
Purchase Agreement as counsel to the Underwriters may reasonably request. Such
counsel may also state that, insofar as such opinions involve factual matters,
they have relied, to the extent they deem proper, upon certificates of officers
of the Company and the Subsidiaries and the Selling Stockholders and
certificates of public officials.
(e) At the Closing Time, you shall have received the favorable
opinion of Fried, Frank, Harris, Shriver & Jacobson as counsel for the U.S.
Underwriters, dated as of the Closing Time, together with reproduced copies of
such opinion for each of the other U.S. Underwriters, to the effect that the
opinions delivered pursuant to Sections 5(b), (c), and (d) appear on their face
to be appropriately responsive to the requirements of this Agreement except,
specifying the same, to the extent waived by you, and with respect to the legal
existence of the Company, the Offered Shares, this Agreement and the
International Purchase Agreement, the Registration Statement, the Prospectuses
and such other related matters as you may require. In giving such opinion such
counsel may rely, as to all matters governed by the laws of jurisdictions other
than the federal law of the United States, the law of the State of New York and
the General Corporation Law of the State of Delaware, upon the opinions of
counsel satisfactory to you. Such counsel may also state that, insofar as such
opinion involves factual matters, they have relied, to the extent they deem
proper, upon certificates of officers or other appropriate representatives of
the Company, the Subsidiaries and the Selling Stockholders and certificates of
public officials.
(f) At the Closing Time, (i) the Registration Statement and the
Prospectuses, as they may then be amended or supplemented, shall conform in all
material respects to the requirements of the 1933 Act, the 1933 Act Regulations,
the 1934 Act and the 1934 Act Regulations, the Company shall have complied in
all material respects with Rule 430A (if it shall have elected to rely thereon),
the Registration Statement, as it may then be amended or supplemented, shall not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or
28
<PAGE>
necessary to make the statements in the Registration Statement not misleading,
and the Prospectuses, as they may be amended or supplemented, shall not contain
an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements in the Prospectuses, in
light of the circumstances under which they were made, not misleading, (ii)
there shall not have been, since the respective dates as of which information is
given in the Prospectuses, any material adverse change in the condition
(financial or otherwise), earnings, business affairs or business prospects of
the Company and its Subsidiaries, considered as one enterprise, whether or not
arising in the ordinary course of business, (iii) no action, suit or proceeding
at law or in equity shall be pending or, to the knowledge of the Company,
threatened against the Company or any Subsidiary that would be required to be
set forth in the Prospectuses other than as set forth therein and no proceedings
shall be pending or, to the knowledge of the Company, threatened against the
Company or any Subsidiary before or by any federal, state or other commission,
board or administrative agency that could reasonably be expected to materially
and adversely affect the condition (financial or otherwise), earnings, business
affairs or business prospects of the Company and its Subsidiaries, considered as
one enterprise, other than as set forth in the Prospectuses, (iv) the Company
shall have complied with all agreements and satisfied all conditions on their
parts to be performed or satisfied at or prior to the Closing Time, and (v) the
other representations and warranties of the Company set forth in Section 1(a)
shall be accurate as though expressly made at and as of the Closing Time. At
the Closing Time, you shall have received a certificate of the President or Vice
President and the chief financial officer or chief accounting officer of the
Company, dated as of the Closing Time, to such effect. As used in Section
5(f)(ii) and (iii), the term "Prospectuses" means the Prospectuses in the form
first used to confirm sales of the Offered Shares.
(g) At the Closing Time, (i) the representations and warranties of
each Selling Stockholder set forth in Section 1(b) and in any certificates by or
on behalf of the Selling Stockholders delivered pursuant to the provisions
hereof shall be accurate as though expressly made at and as of the Closing Time,
(ii) each Selling Stockholder shall have performed its obligations under this
Agreement and the International Purchase Agreement and (iii) you shall have
received a certificate of each Selling Stockholder, dated as of the Closing
Time, to the effect set forth in subsections (i) and (ii) of this Section 5(g).
(h) At the time that this Agreement is executed by the Company, you
shall have received from Coopers & Lybrand L.L.P. a letter, dated such date, in
form and substance satisfactory to you, together with signed or reproduced
copies of such letter for each of the other U.S. Underwriters, confirming that
they are independent public accountants with respect to the Company within the
meaning of the 1933 Act and the applicable published 1933 Act Regulations, and
stating in effect that:
29
<PAGE>
(i) in their opinion, the audited financial statements and the
related financial statement schedules included or incorporated by
reference in the Registration Statement and the Prospectuses comply as
to form in all material respects with the applicable accounting
requirements of the 1933 Act and the 1933 Act Regulations;
(ii) on the basis of procedures (but not an examination in
accordance with generally accepted auditing standards) consisting of a
reading of the minutes of all meetings of the stockholders and
directors of the Company and its Subsidiaries and each committee of
the board of directors of each of the Company and its Subsidiaries,
inquiries of certain officials of the Company and its Subsidiaries
responsible for financial and accounting matters and such other
inquiries and procedures as may be specified in such letter, nothing
came to their attention that caused them to believe that:
(A) at ________, 199_ and at a specified date not more than
five days prior to the date of this Agreement, there was any
(i) change in the shareholders' equity or any decrease in current
assets, working capital or total assets or (ii) increase in long-
term debt of the Company and its Subsidiaries as compared with
the amounts shown in the latest balance sheet included or
incorporated by reference in the Registration Statement, except
in each case for changes, decreases or increases that the
Registration Statement discloses have occurred or may occur; or
(B) for the period from ________, 199_ to ___________, 199_
and to a specified date not more than five days prior to the date
of this Agreement, there was any decrease in sales, or in the
total or per-share amounts of net income before income taxes,
extraordinary item and cumulative effect of accounting changes or
net income, or in other items specified by the U.S.
Representatives, in each case as compared with the comparable
period in the preceding year, except in each case for any
decreases that the Registration Statement discloses have occurred
or may occur;
(iii) in addition to the procedures referred to in clause
(ii) above, they have performed other specified procedures, not
constituting an audit, with respect to certain amounts, percentages,
numerical data and financial information appearing or incorporated by
reference in the Registration Statement, which have previously been
specified by you and which shall be specified in such letter, and have
compared certain of such items
30
<PAGE>
with, and have found such items to be in agreement with, the
accounting and financial records of the Company and its Subsidiaries;
and
(iv) at the Closing Time, you shall have received from Coopers
& Lybrand L.L.P. a letter, in form and substance satisfactory to you
and dated as of the Closing Time, to the effect that they reaffirm the
statements made in the letter furnished pursuant to Section 5(h),
except that the specified date referred to shall be a date not more
than five business days prior to the Closing Time. In the event the
Company relies on Rule 430A and the final Prospectuses furnished to
the Underwriters in connection with the offering of the Offered Shares
differ from the Prospectuses included in the Registration Statement at
the time of effectiveness, such letter shall update the procedures
referred to in clauses 5(h)(ii) and (iii) above.
(j) At the Closing Time, you shall have received a certificate of
the Chief Financial Officer of the Company as to certain agreed upon accounting
matters.
(k) At the Closing Time, counsel for the Underwriters shall have
been furnished with all such documents, certificates and opinions as they may
reasonably request for the purpose of enabling them to pass upon the issuance
and sale of the Offered Shares as contemplated in this Agreement and the
International Purchase Agreement and the matters referred to in Section 5(f) and
in order to evidence the accuracy and completeness of any of the
representations, warranties or statements of the Company and the Selling
Stockholders, the performance of any of the covenants of the Company and the
Selling Stockholders, or the fulfillment of any of the conditions herein
contained; and all proceedings taken by the Company and the Selling Stockholders
at or prior to the Closing Time in connection with the authorization, issuance
and sale of the Offered Shares as contemplated in this Agreement and the
International Purchase Agreement shall be reasonably satisfactory in form and
substance to you and to Fried, Frank, Harris, Shriver & Jacobson as counsel for
the Underwriters.
(l) Each Selling Stockholder shall have delivered to you on or prior
to the Closing Time a properly completed and executed United States Treasury
Department Form W/9 (or other applicable form or statement specified by Treasury
Department regulations).
If any of the conditions specified in this Section 5 shall not have
been fulfilled when and as required by this Agreement to be fulfilled, this
Agreement may be terminated by you on notice to the Company and the Selling
Stockholders at any time at or prior to the Closing Time, and such termination
shall be without liability of any party to any other party, except as provided
in Section 4 herein. Notwithstanding any such termination, the provisions of
Section 6 herein shall remain in effect.
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<PAGE>
Section 6. Indemnification. (a) The Company agrees to indemnify and
---------------
hold harmless each U.S. Underwriter and each person, if any, who controls any
U.S. Underwriter within the meaning of Section 15 of the 1933 Act to the extent
and in the manner set forth in clauses (i), (ii) and (iii) below. In addition,
subject to subsection (d) of this Section, each Selling Stockholder, severally
and not jointly (in the proportion that the number of U.S. Shares being sold by
such Selling Stockholder bears to the total number of U.S. Shares), agrees to
indemnify and hold harmless each U.S. Underwriter and each person, if any, who
controls any U.S. Underwriter within the meaning of Section 15 of the 1933 Act
as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of an untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the Rule
430A Information, if applicable, or the omission or alleged omission
therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising out
of an untrue statement or alleged untrue statement of a material fact
included in any preliminary prospectus or the Prospectuses (or any
amendment or supplement thereto), or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or investigation or proceeding
by any governmental agency or body, commenced or threatened, or of any
claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission, if such settlement is
effected with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including, subject to the last sentence of Section 6(c), fees and
disbursements of counsel chosen by you), reasonably incurred in
investigating, preparing or defending against any litigation, or
investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under
subparagraph (i) or (ii) above;
provided, however, that (i) this indemnity does not apply to any loss,
- -------- -------
liability, claim, damage or expense to the extent arising out of an untrue
statement or omission or alleged untrue statement or omission made in the
Registration Statement (or any amendment
32
<PAGE>
thereto), including the Rule 430A Information, if applicable, or any preliminary
prospectus or the Prospectuses (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the
Company by any U.S. Underwriter expressly for use in the Registration Statement
(or any amendment thereto) (ii) such indemnity with respect to any preliminary
prospectus shall not inure to the benefit of any U.S. Underwriter (or any
persons controlling such U.S. Underwriter) from whom the person asserting such
loss, claim, damage or liability purchased the Offered Shares which are the
subject thereof if such person did not receive a copy of the U.S. Prospectus (or
the U.S. Prospectus as amended or supplemented) at or prior to the confirmation
of the sale of such Offered Shares to such person in any case where such
delivery is required by the 1933 Act and the untrue statement or omission or
alleged untrue statement or omission of a material fact contained in such
preliminary prospectus was corrected in the U.S. Prospectus (or the U.S.
Prospectus as amended or supplemented) and (iii) with respect to the indemnity
by each Selling Stockholder, the indemnity shall, in each case, apply only to
the extent that any untrue statement or alleged untrue statement or omission or
alleged omission was made in the Registration Statement (or any amendment
thereto), including the Rule 430A Information, if applicable, or any preliminary
prospectus or the Prospectuses (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished by such
Selling Stockholder to the Company or the Underwriters expressly for use in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information, if applicable, or such preliminary prospectus or the Prospectuses
(or any amendment or supplement thereto).
(b) Each U.S. Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, each of its officers who
signed the Registration Statement and, each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act and each Selling
Stockholder against any and all loss, liability, claim, damage and expense
described in the indemnity contained in Section 6(a), as incurred, but only with
respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or any amendment thereto),
including the Rule 430A Information, if applicable, or any preliminary
prospectus or the Prospectuses (or any amendment or supplement thereto) in
reliance upon and in conformity with information furnished to the Company by
such U.S. Underwriter expressly for use in the Registration Statement (or any
amendment thereto), including the Rule 430A Information, if applicable, or such
preliminary prospectus or the Prospectuses (or any amendment or supplement
thereto).
(c) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve it from any liability which it may have otherwise than
on account of this indemnity agreement. Any indemnifying party may participate
at its own expense in the defense of
33
<PAGE>
such action. If it so elects within a reasonable time after receipt of such
notice, an indemnifying party, jointly with any other indemnifying parties
receiving such notice, may assume the defense of such action with counsel chosen
by it and approved by the indemnified parties defendant in such action, unless
such indemnified parties reasonably object to such assumption on the ground that
there may be legal defenses available to them which are different from or in
addition to those available to such indemnifying party. If an indemnifying
party assumes the defense of such action, the indemnifying parties shall not be
liable for any fees and expenses of counsel for the indemnified parties incurred
thereafter in connection with such action. In no event shall the indemnifying
party or parties be liable for the fees and expenses of more than one counsel
for all indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdictions arising out of the same
general allegations or circumstances.
(e) No Selling Stockholder shall be responsible for the payment of an
amount, pursuant to this Section, which exceeds the net proceeds received by the
Selling Stockholder from the sale of the Offered Shares by such Selling
Stockholder hereunder and under the International Purchase Agreement.
Section 7. Contribution. In order to provide for just and equitable
------------
contribution in circumstances under which the indemnity provided for in
Section 6 is for any reason held to be unenforceable by the indemnified parties
although applicable in accordance with its terms, the Company, the Selling
Stockholders and the U.S. Underwriters shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by such
indemnity incurred by the Company, the Selling Stockholders and one or more of
the U.S. Underwriters, as incurred, in such proportion that the U.S.
Underwriters are responsible for that portion represented by the percentage that
the underwriting discount appearing on the cover page of the Prospectuses bears
to the initial public offering price appearing thereon and the Company and the
Selling Stockholders shall be liable for the balance; provided, however, that no
-------- -------
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of this
Section 7, each person, if any, who controls a U.S. Underwriter within the
meaning of Section 15 of the 1933 Act shall have the same rights to contribution
as the U.S. Underwriter, and each director of the Company, each officer of the
Company who signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act shall have
the same rights to contribution as the Company and the Selling Stockholders.
Notwithstanding the provisions of this Section 7, no Selling Stockholder shall
be required to contribute any amount under this Section 7 in excess of the
amount by which the net proceeds received by such Selling Stockholder in
connection herewith exceed the aggregate amount such Selling Stockholder has
otherwise paid pursuant hereto and to Section 1(b) and Section 6(a).
34
<PAGE>
Section 8. Representations, Warranties and Agreements to Survive
-----------------------------------------------------
Delivery. The representations, warranties, indemnities, agreements and other
- --------
statements of the Company, its officers and the Selling Stockholders set forth
in or made pursuant to this Agreement will remain operative and in full force
and effect regardless of any investigation made by or on behalf of the Company,
the Selling Stockholders or any U.S. Underwriter or controlling person and will
survive delivery of and payment for the Offered Shares.
Section 9. Termination of Agreement. (a) You may terminate this
------------------------
Agreement, by notice to the Company and the Selling Stockholders, at any time at
or prior to the Closing Time (i) if there has been, since the date as of which
information is given in the Prospectuses, any material adverse change, in the
condition (financial or otherwise), earnings, business affairs or business
prospects of the Company and its Subsidiaries, considered as one enterprise,
whether or not arising in the ordinary course of business, (ii) if there has
occurred any material adverse change in the financial markets in the United
States or any outbreak or escalation of hostilities or other calamity or
crisis the effect of which in each case is such as to make it, in your judgment,
impracticable to market the U.S. Offered Shares or enforce contracts for the
sale of the U.S. Offered Shares, (iii) if trading in any securities of the
Company has been suspended by the Commission or if trading generally on the New
York Stock Exchange or in the over-the-counter market has been suspended, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices for securities have been required, by either of such exchanges or by
order of the Commission, the National Association of Securities Dealers, Inc. or
any other governmental authority, or (iv) if a banking moratorium has been
declared by either federal or New York authorities. As used in this
Section 9(a), the term "Prospectuses" means the Prospectuses in the form first
used to confirm sales of the Offered Shares.
(b) If this Agreement is terminated pursuant to this Section 9, such
termination shall be without liability of any party to any other party, except
to the extent provided in Section 4 hereof. Notwithstanding any such
termination, the provisions of Sections 6 and 7 shall remain in effect.
(c) This Agreement may also terminate pursuant to the provisions of
Section 2 and Section 5, with the effect stated in such Section.
Section 10. Default by One or More of the U.S. Underwriters. If one
-----------------------------------------------
or more of the U.S. Underwriters shall fail at the Closing Time to purchase the
U.S. Shares that it or they are obligated to purchase pursuant to this Agreement
(the "Defaulted U.S. Shares"), you shall have the right, within 24 hours
thereafter, to make arrangements for one or more of the non-defaulting U.S.
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted U.S. Shares in such amounts as may
35
<PAGE>
be agreed upon and upon the terms set forth in this Agreement; if, however, you
have not completed such arrangements within such 24-hour period, then:
(a) if the aggregate principal amount of Defaulted U.S. Shares does
not exceed 10% of the total number of U.S. Shares to be purchased pursuant to
this Agreement, the non-defaulting U.S. Underwriters shall be obligated to
purchase the full amount thereof in the proportions that their respective U.S.
Shares underwriting obligation proportions bear to the underwriting obligation
proportions of all non-defaulting U.S. Underwriters, or
(b) if the aggregate principal amount of Defaulted U.S. Shares
exceeds 10% of the of U.S. Shares, this Agreement shall terminate without
liability on the part of any non-defaulting U.S. Underwriter.
No action taken pursuant to this Section 10 shall relieve any
defaulting U.S. Underwriter from liability in respect of its default.
In the event of any such default that does not result in a termination
of this Agreement, either you or the Company or the Selling Stockholders shall
have the right to postpone the Closing Time for a period not exceeding seven
days in order to effect any required changes in the Registration Statement or
Prospectuses or in any other documents or arrangements. As used herein, the
term "U.S. Underwriter" includes any person substituted for a U.S. Underwriter
under this Section 10.
Section 11. Default by One or More of the Selling Stockholders. If
--------------------------------------------------
one or more of the Selling Stockholders shall fail at the Closing Time to sell
and deliver the number of Offered Shares that it is obligated to sell, then the
U.S. Representatives may, at their option, by notice to the Company and the non-
defaulting Selling Stockholders, either (a) terminate this Agreement without any
liability on the part of any non-defaulting party except to the extent provided
in Section 4 and except that the provisions of Sections 6 and 7 shall remain in
effect or (b) elect to purchase the Offered Shares which the non-defaulting
party has agreed to sell hereunder. No action taken pursuant to this Section
shall relieve such Selling Stockholder from liability, if any, in respect of
such default.
Section 12. Notices. All notices and other communications under this
-------
Agreement shall be in writing and shall be deemed to have been duly given if
delivered, mailed or transmitted by any standard form of telecommunication.
Notices to you shall be directed to you, c/o Merrill Lynch, Pierce, Fenner &
Smith Incorporated at Merrill Lynch World Headquarters, North Tower, World
Financial Center, New York, New York 10261, attention of Wood Steinberg, Esq.
with a copy to Fried, Frank, Harris, Shriver & Jacobson, One New York Plaza,
New York, NY 10004-1980, attention of Valerie Ford Jacob, Esq.; and notices to
the Company shall be directed to the Company at One Tyco
36
<PAGE>
Park, Exeter, New Hampshire 03833, attention of M. Brian Moroze, Esq. with a
copy to Kramer, Levin, Naftalis, Nessen, Kamin & Frankel, 919 Third Avenue, New
York, NY 10022, attention of Howard A. Sobel, Esq. and notices to the Selling
Stockholders shall be directed to ____________________ at ____________________
________________, attention of _________________.
Section 13. Parties. This Agreement is made solely for the benefit
-------
of the several U.S. Underwriters, the Selling Stockholders, the Company, and, to
the extent expressed, any person controlling the Company, or any of the U.S.
Underwriters, and the directors of the Company, the officers of the Company who
have signed the Registration Statement, and the executors, administrators,
successors and assigns of such persons and, no other person shall acquire or
have any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include any purchaser, as such purchaser, from any of the
several U.S. Underwriters of the U.S. Shares. All of the obligations of the
U.S. Underwriters hereunder are several and not joint.
SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED
----------------------
BY THE LAWS OF THE STATE OF NEW YORK. SPECIFIED TIMES OF THE DAY REFER TO NEW
YORK CITY TIME.
37
<PAGE>
Section 16. Counterparts. This Agreement may be executed in one or
------------
more counterparts and, when a counterpart has been executed by each party, all
such counterparts taken together shall constitute one and the same agreement.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return a counterpart hereof, whereupon this
instrument will become a binding agreement among the Company, each of the
Selling Stockholders and the several U.S. Underwriters in accordance with its
terms.
Very truly yours,
TYCO INTERNATIONAL LTD.
By
-------------------------
Name:
Title:
THE SELLING STOCKHOLDERS LISTED IN SCHEDULE A
HERETO
By
-------------------------
Name:
Title:
[Attorney-in-Fact acting on behalf of the
Selling Stockholders]
38
<PAGE>
Confirmed and accepted as of
the date first above written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
GOLDMAN, SACHS & CO.
DONALDSON LUFKIN & JENRETTE
SECURITIES CORPORATION
LEHMAN BROTHERS INC.
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By
------------------------
Name:
Title:
For themselves and as U.S. Representatives of the
- -------------------------------------------------
other U.S. Underwriters named in Schedule B.
- -------------------------------------------
39
<PAGE>
Exhibit A
TYCO INTERNATIONAL LTD.
(a Massachusetts corporation)
__________ Shares of Common Stock
U.S. PRICE DETERMINATION AGREEMENT
----------------------------------
____________________, 199_
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
GOLDMAN, SACHS & CO.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
LEHMAN BROTHERS INC.
As Representatives of the several U.S. Underwriters
c/o Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10261-1201
Ladies and Gentlemen:
Reference is made to the U.S. Purchase Agreement dated as of
_________, 1995 (the "U.S. Purchase Agreement") among Tyco International Ltd., a
Massachusetts corporation (the "Company"), the Selling Stockholders listed in
Schedule A thereto and hereto (the "Selling Stockholders") and the several U.S.
Underwriters named in Schedule __________ thereto and hereto (the "U.S.
Underwriters"), for whom Merrill Lynch, Pierce, Fenner & Smith Incorporated,
Goldman, Sachs & Co., Donaldson, Lufkin & Jenrette Securities Corporation and
Lehman Brothers Inc. are acting as representatives (the "U.S.
Representatives"). The U.S. Purchase Agreement provides for the purchase by
the U.S. Underwriters from the Selling Stockholders, subject to the terms and
conditions set forth therein, of an aggregate of _______________ shares (the
"U.S. Shares") of the Company's common stock, par value $___ per share. This
Agreement is the U.S. Price Determination Agreement referred to in the U.S.
Purchase Agreement.
<PAGE>
Pursuant to Section 2 of the U.S. Purchase Agreement, the undersigned
agree with the U.S. Underwriters as follows:
1. The initial public offering price per share for the U.S.
Shares shall be $_____.
2. The purchase price per share for the U.S. Shares to be paid
by the several U.S. Underwriters shall be $_____, representing an
amount equal to the initial public offering price set forth above,
less $_____ per share.
The Company represents and warrants to each of the U.S. Underwriters
that the representations and warranties of the Company set forth in Section 1(a)
of the U.S. Purchase Agreement are accurate as though expressly made at and as
of the date hereof.
Each of the Selling Stockholders represents and warrants to each of
the U.S. Underwriters that the representations and warranties of such Selling
Stockholder set forth in Section 1(b) of the U.S. Purchase Agreement is accurate
as though expressly made at and as of the date hereof.
As contemplated by Section 2 of the U.S. Purchase Agreement, attached
as Schedule A is a list of each of the Selling Stockholders and attached as
Schedule B is a complete list of the several U.S. Underwriters, which shall be a
part of this Agreement and the U.S. Purchase Agreement.
THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company and the Selling Stockholders a
counterpart hereof, whereupon this instrument along with all counterparts and
together with the U.S.
A-2
<PAGE>
Purchase Agreement shall be a binding agreement among the U.S. Underwriters, the
Company and the Selling Stockholders in accordance with its terms and the terms
of the U.S. Purchase Agreement.
Very truly yours,
TYCO INTERNATIONAL LTD.
By ______________________________
Name:
Title:
THE SELLING STOCKHOLDERS LISTED IN
SCHEDULE A HERETO
By ______________________________
Name:
Title: As Attorney-in-Fact
acting on behalf of the Selling
Stockholders
A-3
<PAGE>
Confirmed and accepted as of
the date first above written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
GOLDMAN, SACHS & CO.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
LEHMAN BROTHERS INC.
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By
--------------------------
Name:
Title:
For themselves and as U.S. Representatives of the other
- --------------------------------------------------------
U.S. Underwriters named in Schedule attached hereto.
- ------------------------------------------------------------------------
A-4
<PAGE>
SCHEDULE A
Number of U.S.
Selling Stockholder Shares to be Sold
------------------- -----------------
TOTAL
=======================
<PAGE>
SCHEDULE B
Number of U.S.
Shares to
U.S. Underwriters be Purchased
----------------- -------------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Goldman, Sachs & Co.
Donaldson, Lufkin & Jenrette Securities
Corporation
Lehman Brothers Inc.
TOTAL
==============
<PAGE>
SCHEDULE C
Subsidiaries
- ------------
Exhibit 1(b)
DRAFT 1/27/95
TYCO INTERNATIONAL LTD.
(a Massachusetts corporation)
Shares of Common Stock
----------
INTERNATIONAL PURCHASE AGREEMENT
--------------------------------
Dated: , 1995
-----------------
<PAGE>
TYCO INTERNATIONAL LTD.
(a Massachusetts corporation)
Shares of Common Stock
------------------
INTERNATIONAL PURCHASE AGREEMENT
--------------------------------
, 1995
--------------------------
Merrill Lynch International Limited
Goldman Sachs International
Donaldson, Lufkin & Jenrette Securities Corporation
Lehman Brothers International (Europe)
As Representatives of the several U.S. Underwriters
c/o Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
Tyco International Ltd., a Massachusetts corporation (the "Company"),
and each of the stockholders of the Company listed in Schedule A hereto (the
"Selling Stockholders"), confirm their respective agreements with Merrill Lynch
International Limited, Goldman Sachs International, Donaldson, Lufkin & Jenrette
Securities Corporation, Lehman Brothers International (Europe), and each of the
other Underwriters named in Schedule B hereto (collectively, the "Managers,"
which term shall also include any underwriter substituted as hereinafter
provided in Section 10), for whom Merrill Lynch International Limited,
Goldman, Sachs International, Donaldson, Lufkin & Jenrette Securities
Corporation and Lehman Brothers International (Europe) are acting as
representatives (in such capacity, the "Lead Managers"), with respect
to the sale by the Selling Stockholders, acting severally and not jointly, of
the respective number of shares of Common Stock set forth opposite such
Selling Stockholder's name in Schedule A hereto and the purchase by the
Managers, acting severally and not jointly, of the respective number of
shares
<PAGE>
opposite such Manager's name in Schedule B hereto. The ________ shares of
Common Stock to be purchased by the Managers are collectively hereinafter
called the International Shares.
It is understood that the Company and the Selling Stockholders are
entering into an agreement, dated the date hereof (the "U.S. Purchase
Agreement"), providing for the sale by the Selling Stockholders of an aggregate
of shares of Common Stock (the "U.S. Shares"), through arrangements
---------
with certain underwriters outside the United States and Canada (the "U.S.
Underwriters" and, together with the Managers, the "Underwriters"), for whom
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Goldman, Sachs & Co.,
Donaldson, Lufkin & Jenrette Securities Corporation, and Lehman Brothers Inc.
are acting as representatives (the "U.S. Representatives"). It is understood
that the Selling Stockholders are not obligated to sell, and the Managers are
not obligated to purchase, any International Shares unless all of the U.S.
Shares are contemporaneously purchased by the U.S. Underwriters. The
International Shares and the U.S. Shares are hereinafter collectively referred
to as the "Offered Shares."
The Company and the Selling Stockholders understand that the Managers
will simultaneously enter into an agreement with the U.S. Underwriters dated the
date hereof (the "Intersyndicate Agreement") providing for the coordination of
certain transactions among the Managers and the U.S. Underwriters.
You have advised us that you and the other Managers, acting severally
and not jointly, desire to purchase the International Shares and that you have
been authorized by the other Managers to execute this Agreement and the
International Price Determination Agreement referred to below on their behalf.
Prior to the purchase and public offering of the International Offered
Shares by the several Managers, the Company, the Selling Stockholders and the
Lead Managers, acting on behalf of the Managers shall enter into a separate
written instrument substantially in the form of Exhibit A hereto (the
"International Price Determination Agreement"). The International Price
Determination Agreement may take the form of an exchange of any standard form of
written telecommunication between the Company, the Selling Stockholders and the
Lead Managers and shall specify such applicable information as included in
Exhibit A hereto. The offering of the International Shares will be governed by
this Agreement, as supplemented by the International Price Determination
Agreement. From and after the date of the execution and delivery of the
International Price Determination Agreement, this Agreement shall be deemed
to incorporate, and all references herein to "this Agreement" or "herein"
shall be deemed to include, the International Price Determination Agreement.
The initial public offering price per share and the purchase price per
share for the U.S. Shares to be paid by the U.S. Underwriters pursuant to the
U.S. Purchase
2
<PAGE>
Agreement shall be set forth in a separate agreement (the "U.S. Price
Determination Agreement"), the form of which is attached to the U.S.
Purchase Agreement. The purchase price per share for the U.S. Shares to be paid
by the several U.S. Underwriters shall be identical to the purchase price per
share for the International Shares to be paid by the several Managers hereunder.
This Agreement (including the related International Price Determination
Agreement) and the U.S. Purchase Agreement (including the related U.S. Price
Determination Agreement) are collectively referred to herein as the "Purchase
Agreements."
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (File No. 33-
) covering the registration of the Offered Shares under the Securities
- -------
Act of 1933, as amended (the "1933 Act"), including the related preliminary
prospectus or prospectuses, and either (A) has prepared and proposes to file,
prior to the effective date of such registration statement, an amendment to such
registration statement, including final prospectuses, or (B) if the Company has
elected to rely upon Rule 430A ("Rule 430A") of the rules and regulations of the
Commission under the 1933 Act (the "1933 Act Regulations"), will prepare and
file prospectuses, in accordance with the provisions of Rule 430A and Rule
424(b) ("Rule 424(b)") of the 1933 Act Regulations, promptly after execution and
delivery of the International Price Determination Agreement.* The
information, if any, included in such prospectuses that was omitted from any
prospectus included in such registration statement at the time it becomes
effective but that is deemed, pursuant to Rule 430A(b), to be part of such
registration statement at the time it becomes effective is referred to herein as
the "Rule 430A Information." Each form of International Prospectus and form of
U.S. Prospectus used before the time such registration statement becomes
effective, and any form of International Prospectus and form of U.S. Prospectus
that omits the Rule 430A Information that is used after such effectiveness and
prior to the execution and delivery of the International Price Determination
Agreement or the U.S. Price Determination Agreement is herein called a
"preliminary prospectus." Any reference to any preliminary prospectus shall be
deemed to refer to and include the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the 1933 Act as of the date of such
preliminary prospectus. Such registration statement, including the exhibits
thereto and the documents incorporated by reference therein pursuant to Item 12
of Form S-3 under the 1933 Act, as amended at the time it becomes
--------------------
* Two forms of prospectus are to be used in connection with
the offering and sale of the Offered Shares: one relating to the
U.S. Shares (the "Form of U.S. Prospectus") and one relating to
the International Shares (the "Form of International
Prospectus"). The Form of International Prospectus is identical
to the Form of U.S. Prospectus, except for the front cover page,
the section captioned "Underwriting," the section captioned
"Certain United States Tax Consequences to Non-U.S. Holders" and
the back cover page.
3
<PAGE>
effective and including, if applicable, the Rule 430A Information, is herein
called the "Registration Statement," and the form of International Prospectus,
including the documents incorporated by reference therein pursuant to Item 12 of
Form S-3 under the 1933 Act and form of U.S. Prospectus, including the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 under the 1933
Act included in the Registration Statement at the time it becomes effective are
herein called the "International Prospectus" and the "U.S. Prospectus,"
respectively, and, collectively, the "Prospectuses" and, individually, a
"Prospectus," except that, if the final International Prospectus or U.S.
Prospectus, as the case may be, first furnished to the Managers or the U.S.
Underwriters after the execution of the International Price Determination
Agreement or the U.S. Price Determination Agreement for use in connection with
the offering of the Offered Shares differs from the prospectuses included in the
Registration Statement at the time it becomes effective (whether or not such
prospectuses are required to be filed pursuant to Rule 424(b)), the terms
"International Prospectus," "U.S. Prospectus," "Prospectuses" and "Prospectus"
shall refer to the final International Prospectus or U.S. Prospectus, as the
case may be, first furnished to the Managers or the U.S. Underwriters, as the
case may be, for such use.
The Company and the Selling Stockholders understand that the Managers
propose to make a public offering of the International Shares as soon as you
deem advisable after the Registration Statement becomes effective and the
International Price Determination Agreement has been executed and delivered.
Section 1. Representations and Warranties. (a) The Company
------------------------------
represents and warrants to and agrees with each of the Managers that:
(i) The Company meets the requirements for use of Form S-3 under
the 1933 Act, and when the Registration Statement shall become
effective, and if the Company has elected to rely upon Rule 430A, on
the date of the International Price Determination Agreement or the
U.S. Price Determination Agreement, and on the effective or issue date
of each amendment or supplement to the Registration Statement or the
Prospectuses, and at the Closing Time referred to below, (A) the
Registration Statement and any amendments and supplements thereto will
comply in all material respects with the requirements of the 1933 Act
and the 1933 Act Regulations; (B) neither the Registration Statement
nor any amendment or supplement thereto will contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; and (C) neither of the Prospectuses nor any amendment or
supplement to either of them include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
4
<PAGE>
Notwithstanding the foregoing, this representation and warranty does
not apply to statements or omissions from the Registration Statement
or the Prospectuses or any amendments or supplements thereto made in
reliance upon and in conformity with information furnished or
confirmed in writing to the Company by or on behalf of any Managers
through you or the U.S. Representatives expressly for use in the
Registration Statement or the Prospectuses or any amendments or
supplements thereto.
(ii) The documents incorporated by reference in the Prospectuses
pursuant to Item 12 of Form S-3 under the 1933 Act, at the time they
were filed with the Commission, conformed in all material respects
with the requirements of the Securities Exchange Act of 1934, as
amended (the "1934 Act"), and the rules and regulations of the
Commission thereunder (the "1934 Act Regulations"), and, when read
together with the information in the Prospectuses, at the time the
Registration Statement shall become effective, and if the Company has
elected to rely upon Rule 430A, on the date of the International Price
Determination Agreement or the U.S. Price Determination Agreement, and
on the effective or issue date of each amendment or supplement to the
Registration Statement or the Prospectuses, and at the Closing Time
referred to below, will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(iii) Coopers & Lybrand L.L.P. and Price Waterhouse, who are
reporting upon the audited consolidated financial statements and
schedules included or incorporated by reference in the Registration
Statement, are independent public accountants as required by the 1933
Act, the 1934 Act, the 1933 Act Regulations and the 1934 Act
Regulations.
(iv) This Agreement and the U.S. Purchase Agreement have been,
and the International Price Determination Agreement and the U.S. Price
Determination Agreement on the date thereof will be, duly authorized,
executed and delivered by the Company.
(v) The consolidated financial statements included or
incorporated by reference in the Registration Statement and the
Prospectuses, together with the related schedules and notes, present
fairly, in all material respects, the consolidated financial position
of the Company and its Subsidiaries (as hereinafter defined) as of the
dates indicated and the consolidated statements of income,
shareholders' equity and cash flows of the Company and its
Subsidiaries for the periods specified. Except as otherwise stated in
the Registration Statement, such financial statements
5
<PAGE> have been prepared in conformity with generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the
periods involved. The financial statement schedules, if any, included
or incorporated by reference in the Registration Statement present
fairly in accordance with GAAP the information required to be stated
therein and have been compiled on a basis consistent with that of the
audited consolidated financial statements included in the Registration
Statement. The selected financial data and the summary financial
information included in the Prospectuses present fairly in accordance
with GAAP the information shown therein and have been compiled on a
basis consistent with that of the audited consolidated financial
statements included in the Registration Statement. The pro forma
financial statements and other pro forma financial information
included in the Prospectuses present fairly in accordance with GAAP
the information shown therein in accordance with the adjustments and
assumptions described therein, have been prepared in accordance with
the Commission's rules and guidelines with respect to pro forma
financial statements, have been properly compiled on the pro forma
basis described therein and in the opinion of the Company, the
assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the
transactions or circumstances referred to therein.
(vi) The Company is a corporation validly organized and existing
and in good standing under the laws of the Commonwealth of
Massachusetts with power and authority (corporate and other) under
such laws to own, lease and operate its properties and to conduct its
business as described in the Prospectuses and to enter into and
perform its obligations under this Agreement, the International Price
Determination Agreement, the U.S. Purchase Agreement and the U.S.
Price Determination Agreement; and the Company is duly qualified as a
foreign corporation to transact business and is in good standing under
the laws of each other jurisdiction in which the nature of its
business or its ownership or leasing of its properties requires
qualification, except to the extent that the failure to so qualify or
be in good standing would not have a material adverse effect on the
condition (financial or otherwise), earnings, business affairs or
business prospects of the Company and its Subsidiaries (as defined
below), considered as one enterprise.
(vii) The Company's only subsidiaries are listed on
Schedule C hereto (collectively, the "Subsidiaries"). Each Subsidiary
is a corporation validly organized and existing and in good standing
under the laws of the jurisdiction of its incorporation with power and
authority (corporate and
6
<PAGE>
other) under such laws to own, lease and operate its properties and
conduct its business as described in the Prospectuses; and each
Subsidiary is duly qualified as a foreign corporation to transact
business and is in good standing under the laws of each other
jurisdiction in which the nature of its business or its ownership or
leasing of its properties requires qualification, except to the extent
that the failure to so qualify or be in good standing would not have a
material adverse effect on the condition (financial or otherwise),
earnings, business affairs or business prospects of the Company and
its Subsidiaries, considered as one enterprise.
(viii) Except as set forth on Schedule C, all of the
outstanding shares of capital stock of each Subsidiary have been duly
authorized and validly issued and are fully paid and non-assessable,
and are owned by the Company, directly or through one or more
Subsidiaries, free and clear of any pledge, lien, security interest,
charge, claim, mortgage or encumbrance of any kind; none of the
outstanding shares of capital stock of the Subsidiaries was issued in
violation of the preemptive or similar rights of any stockholder of
such corporation arising by operation of law, under the charter or by-
laws of any Subsidiary or under any agreement to which the Company or
any Subsidiary is a party.
(ix) The Company had at the date indicated in the Prospectuses a
duly authorized, issued and outstanding capitalization as set forth in
the Prospectuses under the caption "Capitalization," and the Common
Stock conforms in all material respects to the description thereof
contained under the caption "Description of Capital Stock" in the
Prospectuses.
(x) All of the outstanding shares of capital stock of the
Company, including the Offered Shares to be sold by the Selling
Stockholders pursuant to this Agreement and the International Purchase
Agreement, have been duly authorized and validly issued and are fully
paid and non-assessable; no holder thereof is subject to personal
liability by reason of being such a holder.
(xi) Except as disclosed in the Prospectuses, there are no
outstanding options, warrants or other rights calling for issuance of,
and no commitments, plans or arrangements to issue, any shares of
capital stock of the Company or any of its Subsidiaries or any
security convertible into or exchangeable for capital stock of the
Company or any of its Subsidiaries. Except as set forth in the
Prospectuses, there are no holders of securities (debt or equity) of
the Company or any of the Subsidiaries, or holders of rights
(including, without limitation, preemptive rights), warrants or
options to obtain securities of the Company or its Subsidiaries, who
have the right
7
<PAGE>
to request the Company or any of its Subsidiaries to register
securities held by them under the 1933 Act, other than holders who are
participating in the Offerings or who have elected not to exercise
such rights. None of the outstanding shares of Common Stock of the
Company was issued in violation of the preemptive or other similar
rights of any stockholder of the Company arising by operation of law,
under the charter or by-laws of the Company or under any agreement to
which the Company or any of its Subsidiaries is a party.
(xii) Since the respective dates as of which information is
given in the Registration Statement and the Prospectuses, except as
otherwise stated therein or contemplated thereby, there has not been
(A) any material adverse change in the condition (financial or
otherwise), earnings, business affairs or business prospects of the
Company and its Subsidiaries, considered as one enterprise, whether or
not arising in the ordinary course of business, (B) any transaction
entered into by the Company or any Subsidiary, other than in the
ordinary course of business, that is material to the Company and its
Subsidiaries, considered as one enterprise, or (C) any dividend or
distribution of any kind declared, paid or made by the Company on any
class of its capital stock.
(xiii) Neither the Company nor any Subsidiary is in violation
of its charter or by-laws or in default in the performance or
observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease or other agreement or instrument to
which it is a party or by which it is bound or to which any of its
properties or assets is subject, and except for such defaults that
would not in the aggregate have a material adverse effect on the
condition (financial or otherwise), earnings, business affairs or
business prospects of the Company and its Subsidiaries, considered as
one enterprise.
(xiv) The sale and delivery of the Offered Shares, the
execution, delivery and performance of this Agreement, the
International Price Determination Agreement, the U.S. Purchase
Agreement and the U.S. Price Determination Agreement, the consummation
by the Company of the transactions contemplated thereby and in the
Registration Statement and compliance by the Company with the terms of
the foregoing have been duly authorized by all necessary corporate
action on the part of the Company and do not and will not result in
any violation of the Articles of Organization or by-laws of the
Company or any Subsidiary, and will not, and at the Closing Time will
not, conflict with, or result in a breach or violation of any of the
terms or provisions of, or constitute a default under,
8
<PAGE>
or result in the creation or imposition of any lien or encumbrance
upon any property or assets of the Company or any Subsidiary under (A)
any contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease or other agreement or instrument to which the
Company or any Subsidiary is a party or by which the Company or any
Subsidiary is bound or to which any of their respective properties or
assets are subject, except for such conflicts, breaches, violations or
defaults or liens or encumbrances that would not in the aggregate have
a material adverse effect on the condition (financial or otherwise),
earnings, business affairs or business prospects of the Company and
the Subsidiaries, considered as one enterprise, or (B) any applicable
law, statute, rule, regulation, judgment, order, writ or decree of any
government, governmental instrumentality or court, domestic or
foreign, having jurisdiction over the Company or any Subsidiary or any
of their respective properties, assets or operations.
(xv) No authorization, approval, consent or license of any
government, governmental instrumentality or court (other than under
the 1933 Act and the 1933 Act Regulations and the securities or blue
sky laws of the various states) is necessary in connection with the
due authorization, execution, delivery and performance by the Company
of this Agreement, the International Price Determination Agreement,
the U.S. Purchase Agreement and the U.S. Price Determination Agreement
and the valid sale and delivery of the Offered Shares.
(xvi) Except as disclosed in the Prospectuses, there is no
action, suit or proceeding before or by any government, governmental
instrumentality or court, domestic or foreign, now pending or, to the
knowledge of the Company, threatened against or affecting the Company
or any Subsidiary that is required to be disclosed in the Registration
Statement or Prospectuses or that, if determined adversely to the
Company or any of its Subsidiaries, could individually or in the
aggregate reasonably be expected to have a material adverse change in
the condition (financial or otherwise), earnings, business affairs or
business prospects of the Company and its Subsidiaries, considered as
one enterprise, or which might materially and adversely affect the
consummation of the transactions contemplated in this Agreement, the
U.S. Purchase Agreement and in the Registration Statement; the
aggregate of all pending legal or governmental proceedings to which
the Company or any Subsidiary is a party or which affects any of the
Company's or any Subsidiary's properties, including ordinary routine
litigation incidental to the business of the Company or any
Subsidiary, that are not described or referred to in the Prospectuses,
if adversely determined, would not have a material adverse effect on
the condition (financial or
9
<PAGE>
otherwise), earnings, business affairs or business prospects of the
Company and its Subsidiaries, considered as one enterprise.
(xvii) There are no contracts or documents of a character
required to be described in the Registration Statement, the
Prospectuses or the documents incorporated by reference therein or to
be filed as exhibits thereto that are not described and filed as
required.
(xviii) The Company and its Subsidiaries are in compliance
with, and each such entity has not received any notice of any
outstanding violation of, all laws, ordinances, rules and regulations
applicable to it and its operations except, in either case, where any
failure by the Company or any Subsidiary to comply with any such law,
regulation, ordinance or rule would not have, individually or in the
aggregate, a material adverse effect on the condition (financial or
otherwise), earnings, business affairs or business prospects of the
Company and its Subsidiaries, considered as one enterprise.
(xix) Neither the Company nor any of its affiliates has taken
or will take, directly or indirectly, any action designed to, or that
might be reasonably expected to, cause or result in stabilization or
manipulation of the price of the Offered Shares; and neither the
Company nor any of its affiliates has distributed or will distribute
any prospectus (as such term is defined in the 1933 Act and the 1933
Act Regulations) in connection with the offering and sale of the
Offered Shares other than any preliminary prospectus filed with the
Commission or the Prospectuses or other material permitted by the 1933
Act or the 1933 Act Regulations.
(xx) The Company is not an investment company within the meaning
of the Investment Company Act of 1940, as amended.
(xxi) No labor dispute exists with the Company's employees or
with employees of its Subsidiaries or, to the knowledge of the
Company, is imminent that could reasonably be expected to materially
and adversely affect the condition (financial or otherwise), earnings,
business affairs or business prospects of the Company and its
Subsidiaries, considered as one enterprise.
(xxii) Each of the Selling Stockholders has agreed that, for a
period of 90 days from the date hereof, such persons will not, without
the prior written consent of Merrill Lynch, Pierce, Fenner & Smith
Incorporated on behalf of the Underwriters, directly or indirectly,
sell, offer to sell, grant any option for the sale of, or otherwise
dispose of any shares of Common
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Stock or securities or rights convertible into or exercisable
or exchangeable for Common Stock other than the sale of the Offered
Shares pursuant to this Agreement and the U.S. Purchase Agreement.
(b) Each of the Selling Stockholders severally represents and
warrants to, and agrees with, each of the Managers as follows:
(i) To the extent that any statements or omissions made in the
Registration Statement, any preliminary prospectus, the Prospectus or
any amendment or supplement thereto are made in reliance upon and in
conformity with written information furnished to the Company by such
Selling Stockholder expressly for use herein, such preliminary
prospectus and the Registration Statement did, and the Prospectus and
any further amendments or supplements to the Registration Statement
and the Prospectus will, when they become effective or are filed with
the Commission, as the case may be, not contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading.
(ii) Each Selling Stockholder has full right, power and authority
to enter into this Agreement, the U.S. Purchase Agreement, the
International Price Determination Agreement, the U.S. Price
Determination Agreement and the Custody Agreement (as defined below)
and to sell, transfer and deliver the International Shares pursuant to
this Agreement; and this Agreement, the U.S. Purchase Agreement and
the Custody Agreement have been, and the International Price
Determination Agreement and the U.S. Price Determination Agreement on
the date thereof will be, duly authorized, executed and delivered by
such Selling Stockholder.
(iii) Except as set forth in the Prospectuses, there is no
action, suit, investigation (of which such Selling Stockholder has
received written notice) or proceeding before or by any government,
governmental instrumentality or court, domestic or foreign, now
pending or, to the knowledge of such Selling Stockholder, threatened,
to which such Selling Stockholder is or would be a party or of which
the property of such Selling Stockholder is or may be subject, that
(i) seeks to restrain, enjoin, prevent the consummation of or
otherwise challenge the sale of the Offered Shares by such Selling
Stockholder or any of the other transactions contemplated hereby or
(ii) questions the legality or validity of any such transactions or
seeks to recover damages or obtain other relief in connection with any
such transactions.
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<PAGE>
(iv) Such Selling Stockholder has duly executed and delivered, in
the form heretofore furnished to you, an irrevocable power of attorney
and custody agreement (the "Custody Agreement") with
________________________ as custodian (the "Custodian") and
________________________ as attorneys-in-fact (the "Attorneys-in-
Fact"); each Attorney-in-Fact is authorized to execute and deliver
this Agreement (including the International Price Determination
Agreement) and the U.S. Purchase Agreement (including the U.S. Price
Determination Agreement) on behalf of such Selling Stockholder, to
determine the purchase price to be paid by the Managers and U.S.
Underwriters to such Selling Stockholder, as provided in Section 2(a)
hereof, and otherwise to act on behalf of such Selling Stockholder in
connection with this Agreement and the U.S. Purchase Agreement, and
the Attorneys-in-Fact and the Custodian are each authorized to deliver
the Offered Shares to be sold by such Selling Stockholder pursuant to
this Agreement and the U.S. Purchase Agreement and to accept payment
therefor.
(v) No authorization, approval, consent or license of any
government, governmental instrumentality or court (other than under
the 1933 Act and the 1933 Act Regulations and the securities or blue
sky laws of the various states and the securities laws of any
jurisdiction outside the United States in which International Shares
are offered or sold by the Managers pursuant to this Agreement) is
required for the execution and delivery by such Selling Stockholder of
the Custody Agreement, the execution and delivery by or on behalf of
such Selling Stockholder of this Agreement, the U.S. Purchase
Agreement, the International Price Determination Agreement and the
U.S. Price Determination Agreement and the valid sale and delivery of
the Offered Shares to be sold by such Selling Stockholder hereunder
and thereunder.
(vi) The execution and delivery of this Agreement, the U.S.
Purchase Agreement, the International Price Determination Agreement,
the U.S. Price Determination Agreement and the Custody Agreement and
the consummation of the transactions herein and therein contemplated
will not result in a violation of the charter, bylaws or other
governing document of such Selling Stockholder and will not conflict
with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other material agreement or
instrument to which such Selling Stockholder is a party or by which
such Selling Stockholder is bound or to which the properties or assets
of such Selling Stockholder are subject nor will such action result in
any violation of the provisions of any statute relating to such
Selling
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<PAGE>
Stockholder or its legal or regulatory status or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over such Selling Stockholder or the property of such
Selling Stockholder.
(vii) Such Selling Stockholder has, and at the Closing Time
will have, good and valid title to the Offered Shares to be sold by
such Selling Stockholder pursuant to this Agreement and the U.S.
Purchase Agreement, free and clear of any pledge, lien, security
interest, charge, claim, equity or encumbrance of any kind; and, upon
delivery of such Offered Shares and payment of the purchase price
therefor as contemplated in this Agreement and the U.S. Purchase
Agreement, each of the Underwriters will receive good and valid title
to the Offered Shares purchased by it from such Selling Stockholder,
free and clear of any pledge, lien, security interest, charge, claim,
equity or encumbrance of any kind. The owner of the Offered Shares,
if other than such Stockholder, is precluded from asserting against
the Underwriters the effectiveness of any unauthorized endorsement.
(viii) Certificates for all of the Offered Shares to be sold
by such Selling Stockholder pursuant to this Agreement and the U.S.
Purchase Agreement, in suitable form for transfer by delivery or
accompanied by duly executed instruments of transfer or assignment in
blank with signatures guaranteed, have been placed in custody with the
Custodian with irrevocable conditional instructions to deliver such
Offered Shares to the Managers pursuant to this Agreement and the U.S.
Underwriters pursuant to the U.S. Purchase Agreement.
(ix) For a period of 90 days from the date hereof, such Selling
Stockholder will not, without the prior written consent of Merrill
Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), on
behalf of the Underwriters, directly or indirectly, sell, offer to
sell, grant any option for the sale of, or otherwise dispose of any
shares of Common Stock or securities convertible into or exercisable
or exchangeable for Common Stock owned by such Selling Stockholder or
with respect to which such Selling Stockholder has the power of
disposition other than to the U.S. Underwriters pursuant to the U.S.
Purchase Agreement.
(x) Such Selling Stockholder has not taken and will not take,
directly or indirectly, any action designed to, or that might
reasonably be expected to, cause or result in stabilization or
manipulation of the price of the Common Stock; and such Selling
Stockholder has not distributed and will not distribute any prospectus
(as such term is defined in the 1933 Act and the 1933 Act Regulations)
in connection with the offering and sale of the Offered Shares other
than any preliminary prospectus filed with the Commission or the
Prospectuses or other material permitted by the 1933 Act or the 1933
Act Regulations.
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<PAGE>
(xi) Except as disclosed in writing to the Managers, neither such
Selling Stockholder nor any of its affiliates directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or
is under common control with, or has any other association with
(within the meaning of Article I, Section 1(m) of the By-laws of the
National Association of Securities Dealers, Inc.), any member firm of
the National Association of Securities Dealers, Inc.
(xii) Such Selling Stockholder has duly executed and
delivered this Agreement and the U.S. Purchase Agreement by and
through its attorney-in-fact.
(xiii) Such Selling Stockholder has not taken, and will not
take, directly or indirectly, any action designed to, or that might
reasonably be expected to, cause or result in stabilization or
manipulation of the price of the Common Stock.
(c) Any certificate signed by any officer of the Company or any
Subsidiary and delivered to you or to Fried, Frank, Harris, Shriver & Jacobson
as counsel for the Underwriters at or prior to the Closing Time pursuant to this
Agreement or the transactions contemplated hereby shall be deemed a
representation and warranty by the Company or such Subsidiary, as the case may
be, to each Manager as to the matters covered thereby; and any certificate
signed by or on behalf of any Selling Stockholder as such and delivered to you
or to counsel for the Underwriters at or prior to the Closing Time pursuant to
the terms of this Agreement or the transactions contemplated hereby shall be
deemed a representation and warranty by such Selling Stockholder to each
Manager, as to the matters covered thereby.
Section 2. Sale and Delivery to the U.S. Underwriters; Closing.
---------------------------------------------------
(a) On the basis of the representations and warranties herein contained, and
subject to the terms and conditions herein set forth, each Selling Stockholder
agrees, severally and not jointly, to sell to each Manager, severally and not
jointly, and each Manager agrees, severally and not jointly, to purchase from
each Selling Stockholder, at the purchase price per share set forth in the
International Price Determination Agreement, that proportion of the number of
International Shares being sold by each such Selling Stockholder set forth on
Schedule B opposite the name of each such Selling Stockholder which the number
of International Shares set forth in Schedule A opposite the name of such
Manager (plus such additional number of International Shares that such Manager
may become obligated to purchase pursuant to Section 10 hereof) bears to the
total number of International Shares, subject, in each case, to such adjustments
as the Managers in their discretion shall make to eliminate any sales or
purchases of fractional shares.
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<PAGE>
(b) If the Company has elected not to rely upon Rule 430A, the
initial public offering price per share for the International Shares and the
purchase price per share for the International Shares to be paid by the several
Managers shall be agreed upon and set forth in the International Price
Determination Agreement, dated the date hereof, and an amendment to the
Registration Statement containing such per share price information will be filed
before the Registration Statement becomes effective.
(c) If the Company has elected to rely upon Rule 430A, the initial
public offering price per share for the International Shares and the purchase
price per share for the International Shares to be paid by the several Managers
shall be agreed upon and set forth in the International Price Determination
Agreement. In the event that the International Price Determination Agreement
has not been executed by the close of business on the fourth business day
following the date on which the Registration Statement becomes effective, this
Agreement shall terminate forthwith, without liability of any party to any other
party except that Sections 6 and 7 shall remain in effect.
(d) Payment of the purchase price for, and delivery of certificates
for, the International Shares shall be made at the offices of Fried, Frank,
Harris, Shriver & Jacobson, One New York Plaza, New York, New York 10004, or at
such other place as shall be agreed upon by the Company, the Selling
Stockholders and you, at 10:00 A.M. (New York time) either (i) on the fifth full
business day after the effective date of the Registration Statement, or (ii) if
the Company has elected to rely upon Rule 430A, on the fifth full business day
after execution of the U.S. Price Determination Agreement (unless, in either
case, postponed pursuant to Section 10 or 11), or at such other time not more
than ten full business days thereafter as you, the Company and the Selling
Stockholders shall determine (such date and time of payment and delivery being
herein called the "Closing Time"). Payment shall be made to the Selling
Stockholders by certified or official bank check or checks in New York Clearing
House funds payable to the order of the Custodian pursuant to the Custody
Agreement or directly to the Selling Stockholders if so instructed by the
Custodian against delivery to you for the respective accounts of the several
Managers of certificates for the International Shares to be purchased by them.
(e) Certificates for the International Shares to be purchased by the
Managers shall be in such denominations and registered in such names as you may
request in writing at least two full business days before the Closing Time. The
certificates for the International Shares will be made available in New York
City for examination and packaging by you not later than 10:00 A.M. (New York
time) on the business day prior to the Closing Time.
(f) It is understood that each Manager has authorized you, for its
account, to accept delivery of, receipt for, and make payment of the purchase
price for, the International Shares that it has agreed to purchase. You,
individually and not as Lead Managers, may (but shall not be obligated to) make
payment of the purchase price for the International Shares to be purchased by
any Manager whose check or checks shall not have been received by the Closing
Time.
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<PAGE>
(g) The obligation of the Selling Stockholders to sell to each
Manager the International Shares, and the several and not joint obligations of
the Managers to purchase and pay for the International Shares, upon the terms
and subject to the conditions of this Agreement, are subject to the concurrent
closing of the sale of the U.S. Shares to the U.S. Underwriters pursuant to the
terms of the U.S. Purchase Agreement.
Section 3. Certain Covenants of the Company. The Company covenants
--------------------------------
with each Manager as follows:
(a) The Company will use its best efforts to cause the Registration
Statement to become effective and, if the Company elects to rely upon Rule 430A
and subject to Section 3(b), will comply with the requirements of Rule 430A and
will notify you promptly, (i) when the Registration Statement, or any post-
effective amendment to the Registration Statement, shall have become effective,
or any supplement to the Prospectuses or any amended Prospectuses shall have
been filed, (ii) of the receipt of any comments from the Commission, (iii) of
any request by the Commission to amend the Registration Statement, to amend or
supplement any Prospectus or for additional information and (iv) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of any
preliminary prospectus, or of the suspension of the qualification of the Offered
Shares for offering or sale in any jurisdiction, or of the institution or
threatening of any proceedings for any of such purposes. The Company will make
every reasonable effort to prevent the issuance of any such stop order or of any
order preventing or suspending such use and, if any such order is issued, to
obtain the lifting thereof at the earliest possible moment.
(b) The Company will not at any time file or make any amendment to
the Registration Statement, or any amendment or supplement thereto, or any
document incorporated by reference therein (i) if the Company has not elected to
rely upon Rule 430A, to the Prospectuses or (ii) if the Company has elected to
rely upon Rule 430A, to either the prospectus included in the Registration
Statement at the time it becomes effective or to the Prospectuses, of which you
shall not have previously been advised and furnished a copy or to which you or
Fried, Frank, Harris, Shriver & Jacobson as counsel for the Managers shall
reasonably and timely object in writing.
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<PAGE>
(c) The Company has furnished or will furnish to you and your
counsel, without charge, one signed copy of the Registration Statement (as
originally filed) and of all amendments thereto (including exhibits filed
therewith and documents incorporated by reference therein), whether filed before
or after the Registration Statement becomes effective, copies of all exhibits
and documents filed therewith, and signed copies of all consents and
certificates of experts, and has furnished or will furnish to you, for each
other Manager, one conformed copy of the Registration Statement as originally
filed and each amendment thereto.
(d) The Company will deliver to each Manager, without charge, from
time to time until the effective date of the Registration Statement (or, if the
Company has elected to rely upon Rule 430A, until the time the International
Price Determination Agreement is executed and delivered), as many copies of each
preliminary prospectus as such Manager may reasonably request, and the Company
hereby consents to the use of such copies for purposes permitted by the 1933
Act. The Company will deliver to each Manager, without charge, as soon as the
Registration Statement shall have become effective (or, if the Company has
elected to rely upon Rule 430A, as soon as practicable after the International
Price Determination Agreement has been executed and delivered) and thereafter
from time to time as requested during the period when the Prospectuses are
required to be delivered under the 1933 Act, such number of copies of the
Prospectuses (as supplemented or amended) as such Manager may reasonably
request.
(e) The Company will comply to the best of its ability with the 1933
Act and the 1933 Act Regulations and the 1934 Act and the 1934 Act Regulations
so as to permit the completion of the distribution of the Offered Shares as
contemplated in this Agreement, the U.S. Purchase Agreement and the
Prospectuses. If at any time when a prospectus is required by the 1933 Act to
be delivered in connection with sales of the Offered Shares any event shall
occur or condition exist as a result of which it is necessary, in the opinion of
counsel for the Managers, to amend the Registration Statement or amend or
supplement any Prospectus in order that the Prospectuses will not include an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, or if it
shall be necessary, in the opinion of such counsel, at any such time to amend
the Registration Statement or amend or supplement any Prospectus in order to
comply with the requirements of the 1933 Act, the 1933 Act Regulations, the 1934
Act or the 1934 Act Regulations, the Company will promptly prepare and file with
the Commission, subject to Section 3(b), such amendment or supplement as may be
necessary to correct such untrue statement or omission or to make the
Registration Statement or the Prospectuses comply with such requirements.
(f) The Company will endeavor, in cooperation with the Managers, to
qualify the Offered Shares for offering and sale under the applicable securities
laws of such states and other jurisdictions as you may designate and to maintain
such
17
<PAGE>
qualifications in effect for a period of not less than one year from the
effective date of the Registration Statement; provided, however, that neither
-------- -------
the Company nor any Subsidiary shall be obligated to file any general consent to
service of process or to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified or to subject
itself to taxation in respect of doing business in any jurisdiction in which it
is not otherwise so subject. The Company will file such statements and reports
as may be required by the laws of each jurisdiction in which the Offered Shares
have been qualified as above provided.
(g) The Company will make generally available to its security holders
as soon as practicable, but not later than 60 days after the close of the period
covered thereby, an earnings statement of the Company (in form complying with
the provisions of Rule 158 of the 1933 Act Regulations), covering a period of 12
months beginning after the effective date of the Registration Statement but not
later than the first day of the Company's fiscal quarter next following such
effective date.
(h) For a period of 90 days from the date hereof, the Company will
not, without the prior written consent of Merrill Lynch on behalf of the
Underwriters, directly or indirectly, sell, offer to sell, grant any option for
the sale of, or otherwise dispose of, any shares of Common Stock or securities
convertible into or exchangeable or exercisable for Common Stock, other than to
(i) the U.S. Underwriters pursuant to the U.S. Purchase Agreement and
(ii) eligible participants in the Company's employee stock plans pursuant to the
terms thereof as in effect on the date hereof.
(i) The Company will use its best efforts to effect the listing of
the Common Stock on the New York Stock Exchange on the date of the International
Price Determination Agreement.
(j) The Company, during the period when the Prospectuses are required
to be delivered under the 1933 Act or the 1934 Act, will file all documents
required to be filed with the Commission pursuant to Sections 13, 14 or 15 of
the 1934 Act subsequent to the time the Registration Statement becomes
effective.
(k) For a period of five years after the Closing Time, the Company
will furnish to you and to each Manager that so requests copies of all annual
reports, quarterly reports and current reports filed with the Commission on
Forms 10-K, 10-Q and 8-K, or such other similar forms as may be designated by
the Commission, and such other documents, reports and information as shall be
furnished by the Company to its stockholders generally.
(l) If the Company has elected to rely upon Rule 430A, it will take
such steps as it deems necessary to ascertain promptly whether the forms of
prospectuses
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<PAGE>
transmitted for filing under Rule 424(b) were received for filing by the
Commission and, in the event that they were not, it will promptly file such
prospectuses.
(m) The Company has complied, and will comply, with all of the
provisions of Florida H.B. 1771, as codified in sec. 517.075 Florida Statutes,
1987, as amended, and all regulations promulgated thereunder relating to issuers
or their affiliates doing business with the government of Cuba or with any
person or affiliate located in Cuba.
(n) The Company will use, or will cause Kendall International, Inc.
to use, its best efforts to enforce all of its rights under Section 2.3 of the
Registration Rights Agreement, dated as of July 7, 1992, as amended, among
Kendall International, Inc. and the stockholders and other parties thereto
arising in connection with the transactions contemplated by this Agreement,
except with the prior consent of Merrill Lynch, on behalf of the Underwriters.
Section 4. Payment of Expenses. (a) The Company agrees to pay all
-------------------
expenses incident to the performance of its obligations under this Agreement and
the U.S. Purchase Agreement, including (i) the printing and filing of the
Registration Statement (including financial statements and exhibits), as
originally filed and as amended, the preliminary prospectuses and the
Prospectuses and any amendments or supplements thereto, and the cost of
furnishing copies thereof to the Underwriters, (ii) the copying or printing, as
applicable, and distribution of this Agreement (including the International
Price Determination Agreement), the Intersyndicate Agreement among the Managers
and the U.S. Underwriters, the U.S. Purchase Agreement (including the U.S. Price
Determination Agreement), the Agreement among Managers, the certificates for the
Offered Shares and a survey of state securities or blue sky laws (the "Blue Sky
Survey"), (iii) the delivery of the certificates for the Offered Shares to the
Underwriters, including any capital duties, stamp duties and stock or other
transfer taxes payable upon the sale of the Offered Shares to the Underwriters
and the transfer of the Offered Shares between the Managers and the U.S.
Underwriters, (iv) the fees and disbursements of the Company's counsel,
accountants and other advisers and one counsel for the Selling Stockholders, (v)
the qualification of the Offered Shares under the applicable securities laws in
accordance with Section 3(f) and any filing fees for review of the offering with
the National Association of Securities Dealers, Inc., including filing fees and
reasonable fees and disbursements of Fried, Frank, Harris, Shriver & Jacobson as
counsel for the Underwriters in connection therewith and in connection with the
Blue Sky Survey, (vi) the fees and expenses of any transfer agent or registrar
for the Offered Shares and (vii) the listing fees and expenses incurred in
connection with listing the Offered Shares on the New York Stock Exchange, if
any.
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(b) Each of the Selling Stockholders will pay the fees and
disbursements of its counsel and accountants, if any, not paid by the Company
pursuant to Section 4(i)(d) or otherwise.
(c) If this Agreement is terminated by you in accordance with the
provisions of Section 5, 9(a)(i) or 11, the Company and the Selling Stockholders
shall reimburse the U.S. Underwriters through you for all of their reasonable
out-of-pocket expenses, including the reasonable fees and disbursements of
Fried, Frank, Harris, Shriver & Jacobson as counsel for the U.S. Underwriters.
Section 5. Conditions of Managers' Obligations. In addition to the
-----------------------------------
execution and delivery of the International Price Determination Agreement, the
obligations of the several Managers to purchase and pay for the International
Shares that they have respectively agreed to purchase hereunder are subject to
the accuracy of the representations and warranties of the Company and the
Selling Stockholders contained herein (including those contained in the
International Price Determination Agreement) or in certificates of any officer
of the Company or any Subsidiary and the Selling Stockholders delivered pursuant
to the provisions hereof, to the performance by the Company and the Selling
Stockholders of their respective obligations hereunder, and to the following
further conditions:
(a) The Registration Statement shall have become effective not later
than 5:30 P.M. on the date of this Agreement or, with your consent, at a later
time and date not later, however, than 5:30 P.M. on the first business day
following the date hereof, or at such later time or on such later date as you
may agree to in writing with the approval of a majority in interest of the
several Managers; and at the Closing Time no stop order suspending the
effectiveness of the Registration Statement shall have been issued under the
1933 Act and no proceedings for that purpose shall have been instituted or shall
be pending or, to your knowledge or the knowledge of the Company, shall have
been threatened by the Commission, and any request on the part of the Commission
for additional information shall have been complied with to the reasonable
satisfaction of Fried, Frank, Harris, Shriver & Jacobson as counsel for the
Managers. If the Company has elected to rely upon Rule 430A, Prospectuses
containing the Rule 430A Information shall have been filed with the Commission
in accordance with Rule 424(b) (or a post-effective amendment providing such
information shall have been filed and declared effective in accordance with the
requirements of Rule 430A).
(b) At the Closing Time, you shall have received signed opinions of
M. Brian Moroze, Esq., General Counsel for the Company, dated as of the Closing
Time, together with reproduced copies of such opinions for each of the Managers,
in form and substance satisfactory to counsel for the Managers, to the effect
that:
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(i) The Company is a corporation validly organized and validly
existing and in good standing under the laws of the Commonwealth of
Massachusetts.
(ii) The Company has the requisite power and authority (corporate
and other) to own, lease and operate its properties and to conduct its
business as described in the Prospectuses, and to enter into and
perform its obligations under this Agreement, the International Price
Determination Agreement, the U.S. Purchase Agreement
and the U.S. Price Determination Agreement.
(iii) The Company is duly qualified as a foreign corporation
to transact business and is in good standing under the laws of each
other jurisdiction in which such qualification is required except
where the failure to be so qualified and be in good standing would not
have a material adverse effect on the condition (financial or
otherwise), earnings, business affairs or business prospects of the
Company and its Subsidiaries, considered as one enterprise.
(iv) Each of the Subsidiaries is a corporation validly organized
and existing under the laws of its jurisdiction of incorporation, has
the requisite power and authority (corporate and other) to own, lease
and operate its properties and conduct its business as described in
the Prospectus and is duly qualified as a foreign corporation to
transact business and is in good standing under the laws of each other
jurisdiction in which such qualification is required except where the
failure to be so qualified and be in good standing would not have a
material adverse effect on the condition (financial or otherwise),
earnings, business affairs or business prospects of the Company and
its Subsidiaries taken as a whole; and all of the issued shares of
capital stock of each Subsidiary have been duly authorized and validly
issued, are fully paid and non-assessable, and (except for
non-material liens that have arisen in the ordinary course of
business) are owned directly or indirectly by the Company, free and
clear of all liens, encumbrances, equities or claims.
(v) Other than as disclosed in or contemplated by the
Prospectus, there are no legal or governmental proceedings pending or,
to the best of my knowledge, threatened to which the Company or any of
its Subsidiaries is or may be a party or to which any property of the
Company or its Subsidiaries is or may be the subject which, if
determined adversely to the Company or such Subsidiaries, could
individually or in the aggregate reasonably be expected to have a
material adverse effect on the condition
21
<PAGE>
(financial or otherwise), earnings, business affairs or business
prospects of the Company and its Subsidiaries, considered as one
enterprise.
(vi) To the best of my knowledge, no legal or governmental
proceedings are pending or threatened against the Company or any of
its Subsidiaries which are required to be disclosed in the
Registration Statement or the Prospectus, other than those disclosed
therein.
(vii) To the best of my knowledge, there are no contracts,
indentures, mortgages, loan agreements, notes, leases or other
documents to which the Company or any Subsidiary is a party or by
which any of them may be bound that are required to be filed as an
exhibit to the Registration Statement or required to be described in
the Registration Statement or the Prospectuses, other than those so
filed or described as required.
(viii) Neither the Company nor any of its Subsidiaries is, or,
based upon presently existing circumstances with the giving of notice
or lapse of time or both would be, in violation of or in default
under, their respective restated articles of organization, certificate
of incorporation or other similar charter document or by-laws or any
contract, indenture, mortgage, deed of trust, loan agreement, note,
lease or other agreement or instrument known to me to which the
Company or any of its Subsidiaries is party or by which it or any of
them or any of their respective properties is bound, except for
violations and defaults which individually and in the aggregate are
not material to the Company and the Subsidiaries taken as a whole.
(ix) All description in the Prospectuses of the Agreements set
forth therein are accurate and fairly summarize the information
required to be shown, and the statements in the Prospectuses under
"Legal Proceedings" incorporated by reference from Item 3 of Part 1 of
the Company's annual Report on Form 10-K for the year ended June 30,
1994, insofar as such statements constitute a summary of the legal
matters, documents or proceedings referred to therein, fairly present
the information called for with respect to such legal matters,
documents or proceedings.
(x) This Agreement, the International Price Determination
Agreement, the U.S. Purchase Agreement and the U.S. Price
Determination Agreement have been duly authorized, executed and
delivered by the Company.
(xi) All of the issued and outstanding shares of capital stock of
the Company, including the Offered Shares, have been duly authorized
and validly issued and are fully paid and non-assessable, and were not
issued in
22
<PAGE> violation of any preemptive or similar rights of the stockholders of
the Company arising under the Corporation Law of the Commonwealth of
Massachusetts, under the charter or by-laws of the Company, or, to the
best of such counsel's knowledge, under any agreement known to such
counsel.
(xii) The authorized, issued and outstanding capital stock of
the Company is as set forth in the Prospectuses under the caption
entitled "Capitalization," as of the date stated therein.
(xiii) Except as disclosed in or specifically contemplated by
the Prospectuses, to the best of such counsel's knowledge there are no
outstanding options, warrants or other rights created by the Company
calling for the issuance of, and no commitments or obligations to
issue, any shares of capital stock of the Company or any security
convertible into or exchangeable for capital stock of the Company.
(xiv) The execution and delivery of this Agreement, the
International Price Determination Agreement, the U.S. Purchase
Agreement and the U.S. Price Determination Agreement by the Company,
the sale and delivery of the Offered Shares, the consummation by the
Company and the Selling Stockholders of the transactions contemplated
in this Agreement and the U.S. Purchase Agreement and compliance by
the Company and the Selling Stockholders with the terms of the
foregoing will not (a) violate the Company's Restated Articles of
Organization or by-laws, (b) breach or result in a default under any
contract, indenture, mortgage, deed of trust, loan or credit
agreement, bond, debenture, note, lease or any other agreement or
instrument known to me to which the Company or any of its Subsidiaries
is a party or by which it or any of them is bound or to which any of
the property or assets of the Company or any of its Subsidiaries is
bound, or (c) violate any applicable law, statute, rule or regulation
(other than state securities or Blue Sky laws or regulations, as to
which counsel need not opine) or any judgment, order, writ,
injunction, or decree of any jurisdiction, governmental
instrumentality or court, domestic or foreign, having jurisdiction
over the Company or any of its properties or operations.
(xv) No consent, approval, authorization or license, order,
registration or qualification of or with any court or of any
government, governmental instrumentality or court is legally required
in connection with the due authorization, execution, sale and delivery
of the Offered Shares or the consummation of the transactions
contemplated by this Agreement, except such as may be required under
the 1933 Act and the 1933 Act Regulations, which have been obtained,
or as may be required under the
23
<PAGE>
securities or Blue Sky laws of the various states, as to which such
counsel need express no opinion.
(xvi) To the best of such counsel's knowledge, other than the
Selling Stockholders with respect to the Offered Shares, no holders of
the Company's securities have rights to the registration of shares of
Common Stock or other securities as a result of the filing of the
Registration Statement by the Company or the offering contemplated
hereby, except pursuant to the Registration Rights Agreement, dated as
of July 7, 1992, as amended, among Kendall International, Inc. and the
parties thereto.
Although such counsel has not undertaken to determine independently
the accuracy and completeness of the statements contained in the Registration
Statement or the Prospectuses, such counsel has obtained information as a result
of discussions and meetings with officers and other representatives of the
Company and its Subsidiaries and discussions with representatives of and
independent public accountants of the Company, in connection with the
preparation of the Registration Statement and the Prospectuses, and the
examination of other information and documents requested by such counsel.
Although such counsel has not undertaken to determine independently, and
therefore, such counsel does not assume responsibility, explicitly or
implicitly, for the accuracy and completeness of the statements contained in the
Registration Statement or the Prospectuses, and such counsel cannot provide
assurance that the procedures described in the preceding sentence would
necessarily reveal matters of significance with respect to the following
comments, during the course of the above-described procedures, nothing has come
to such counsel's attention that has caused such counsel to believe that the
Registration Statement (including the Rule 430A Information, if applicable, and
any amendment thereto) or the Prospectuses (including, in each case, the
documents incorporated by reference therein), on the effective date thereof, or
on the date of the Agreement, contained an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading or that the Prospectuses or any
amendment or supplement thereto, on the date hereof, contains an untrue
statement of a material fact or omitted or omits to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading (it being
understood that such counsel need express no view with respect to financial
statements, the notes thereto and related schedules and other financial or
accounting data included in the Registration Statement or the Prospectuses).
Such opinion shall be to such further effect with respect to other
legal matters relating to this Agreement, the U.S. Purchase Agreement and the
sale of the Offered Shares pursuant to this Agreement and the U.S. Purchase
Agreement as counsel for the Underwriters may reasonably request. In rendering
such opinion, such counsel may rely as to all matters governed by laws of
jurisdictions other than the law of the
24
<PAGE>
Commonwealth of Massachusetts and the federal law of the United States, upon
opinions of local counsel in such jurisdictions, who shall be counsel
satisfactory to counsel for the Underwriters in which case the opinion shall
state that they believe you and they are entitled to so rely. Such counsel may
also state that, insofar as such opinion involves factual matters, such counsel
has relied, to the extent such counsel deems proper, upon certificates of
officers of the Company and the Subsidiaries and certificates of public
officials.
(c) At the Closing Time, you shall have received signed opinions of
Kramer, Levin, Naftalis, Nessen, Kamin & Frankel, counsel for the Company, dated
as of the Closing Time, together with reproduced copies of such opinions for
each of the Managers, in form and substance satisfactory to counsel for the
Managers, to the effect that:
(i) The statements made in the Prospectus under "Description of
Capital Stock" insofar as they purport to constitute summaries of the
terms of the Common Stock, constitute accurate and fair summaries
thereof in all material respects, and the form of certificate used to
evidence the Common Stock is in due and proper form and complies with
all applicable statutory requirements and the requirements of the New
York Stock Exchange, Inc.
(ii) The Registration Statement has been declared effective under
the 1933 Act. Any required filing of the Prospectuses or any
supplement thereto has been made with the Commission pursuant to Rule
424(b); such counsel does not know of the issuance of any stop order
suspending the effectiveness of the Registration Statement and no
proceedings for that purpose have been instituted or threatened.
(iii) The Registration Statement (including the Rule 430A
Information, if applicable), the Prospectuses and each amendment or
supplement to the Registration Statement and Prospectuses as of their
respective effective or issue dates, comply as to form in all material
respects to the requirements of the 1933 Act and the applicable 1933
Act Regulations (except that such counsel need not express an opinion
as to financial or accounting data, statements, notes or schedules
included or omitted from any of the documents referred to in this
opinion). Each document incorporated by reference in the Registration
Statement and the Prospectus, when filed with the Commission under the
Exchange Act, complied as to form in all material respects with the
requirements of the Exchange Act (except that such counsel need not
express an opinion as to financial statements, the notes thereto and
related schedules and other financial or accounting data included in
or omitted from any of the documents referred to in this paragraph).
25
<PAGE>
(iv) The statements made in the Prospectuses under "Certain
United States Federal Tax Consequences to Non-U.S. Holders of Common
Stock," to the extent that they are statements of United States
federal laws or legal conclusions thereunder, have been reviewed by
such counsel and fairly present the information disclosed therein in
all material respects.
Although such counsel has not undertaken to determine independently
the accuracy and completeness of the statements contained in the Registration
Statement or the Prospectuses, such counsel has obtained information as a result
of discussions and meetings with officers and other representatives of the
Company and its Subsidiaries and discussions with representatives of and
independent public accountants of the Company, in connection with the
preparation of the Registration Statement and the Prospectuses, and the
examination of other information and documents requested by such counsel.
Although such counsel has not undertaken to determine independently, and
therefore, such counsel does not assume responsibility, explicitly or
implicitly, for the accuracy and completeness of the statements contained in the
Registration Statement or the Prospectuses, and such counsel cannot provide
assurance that the procedures described in the preceding sentence would
necessarily reveal matters of significance with respect to the following
comments, during the course of the above-described procedures, nothing has come
to such counsel's attention that has caused such counsel to believe that the
Registration Statement (including the Rule 430A Information, if applicable, and
any amendment thereto) or the Prospectuses (including, in each case, the
documents incorporated by reference therein), on the date or effective date
thereof, or on the date of the Agreement, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or that the
Prospectuses or any amendment or supplement thereto, on the date hereof,
contains an untrue statement of a material fact or omitted or omits to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading (it being understood that such counsel need express no view with
respect to financial statements, the notes thereto and related schedules and
other financial or accounting data included in the Registration Statement or the
Prospectuses).
Such opinion shall be to such further effect with respect to other
legal matters relating to this Agreement, the U.S. Purchase Agreement and the
sale of the Offered Shares pursuant to this Agreement and the U.S. Purchase
Agreement as counsel for the Underwriters may reasonably request. In rendering
such opinion, such counsel may rely as to all matters governed by laws of
jurisdictions other than the law of the Commonwealth of Massachusetts and the
federal law of the United States, upon opinions of local counsel in such
jurisdictions, who shall be counsel satisfactory to counsel for the Underwriters
in which case the opinion shall state that they believe you and they are
entitled to so rely. Such counsel may also state that, insofar as such opinion
involves
26
<PAGE>
factual matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Company and the Subsidiaries and certificates of
public officials.
(d) At the Closing Time, you shall have received signed opinions of
counsel for each of the Selling Stockholders reasonably acceptable to you, dated
as of the Closing Time, together with reproduced copies of such opinions for
each of the Managers, in form and substance satisfactory to counsel for the
Managers, to the effect that:
(i) The Selling Stockholder has the [corporate/partnership]
power and authority (A) to enter into the Purchase Agreements, Price
Determination Agreements and the
Custody Agreement and (B) to sell, transfer and deliver the Offered
Shares to be sold by the Selling Stockholder under the Purchase
Agreements. The Purchase Agreements and Price Determination
Agreements have been duly authorized, executed and delivered by the
Selling Stockholder. The Custody Agreement has been duly authorized,
executed and delivered by the Selling Stockholder and constitutes the
valid and binding obligation of such Selling Stockholder in accordance
with its terms.
(ii) Each Attorney-in-Fact has been duly authorized by the
Selling Stockholder and the Depository is duly authorized to deliver
the Offered Shares to be sold by such Selling Stockholder pursuant to
the Purchase Agreements.
(iii) No authorization, approval, consent or license of any
government, governmental instrumentality or court is required to be
obtained by the Selling Stockholder (other than under the Securities
Act of 1933 or under Blue Sky or state securities laws as to which
such counsel need not opine) in connection with the due authorization,
execution and delivery of the Purchase Agreements, Price Determination
Agreements and Custody Agreement or the sale and delivery of the
Offered Shares to be sold by the Selling Stockholder under the
Purchase Agreements.
(iv) The execution and delivery of the Underwriting Agreements,
the Price Determination Agreements and the Custody Agreement by the
Selling Stockholder, the sale of the Offered Shares by the Selling
Stockholder pursuant to the Purchase Agreements, and the compliance by
the Selling Stockholder with the terms of the foregoing does not
conflict with or result in a violation of (a) the charter, by-laws or
other applicable governing document of the Selling Stockholder, (b)
any law, rule or regulation relating to such Selling Stockholder
(other than under the Securities Act of 1933 or under Blue Sky or
state securities laws as to
27
<PAGE> which such counsel need not opine), (c) any judgment, order or decree
of any government, governmental instrumentality or court, domestic or
foreign, having jurisdiction over the Selling Stockholder or its
properties or (d) any material contract known to such counsel.
(v) The Selling Stockholder is, and immediately prior to the
Closing Time, will be, the sole registered and beneficial owner of the
Offered Shares to be sold by the Selling Stockholder pursuant to the
Purchase Agreements; upon completion of the sale of the Offered Shares
pursuant to the Purchase Agreements, each of the Underwriters will
receive good and marketable title to the Offered Shares purchased by
it from such Selling Stockholder and, assuming the Underwriters
purchased the Offered Shares in good faith and without notice of any
adverse claim, the Underwriters will have acquired such Offered Shares
free and clear of any pledge, lien, security interest, claim, equity
or encumbrance of any kind.
Such opinion shall be to such further effect with respect to legal
matters relating to this Agreement, the U.S. Purchase Agreement and the sale of
the Offered Shares pursuant to this Agreement and the U.S. Purchase Agreement as
counsel to the Underwriters may reasonably request. Such counsel may also state
that, insofar as such opinions involve factual matters, they have relied, to the
extent they deem proper, upon certificates of officers of the Company and the
Subsidiaries and the Selling Stockholders and certificates of public officials.
(e) At the Closing Time, you shall have received the favorable
opinion of Fried, Frank, Harris, Shriver & Jacobson as counsel for the Managers,
dated as of the Closing Time, together with reproduced copies of such opinion
for each of the other Managers, to the effect that the opinions delivered
pursuant to Sections 5(b), (c), and (d) appear on their face to be appropriately
responsive to the requirements of this Agreement except, specifying the same, to
the extent waived by you, and with respect to the legal existence of the
Company, the Offered Shares, this Agreement and the U.S. Purchase Agreement, the
Registration Statement, the Prospectuses and such other related matters as you
may require. In giving such opinion such counsel may rely, as to all matters
governed by the laws of jurisdictions other than the federal law of the United
States, the law of the State of New York and the General Corporation Law of the
State of Delaware, upon the opinions of counsel satisfactory to you. Such
counsel may also state that, insofar as such opinion involves factual matters,
they have relied, to the extent they deem proper, upon certificates of officers
or other appropriate representatives of the Company, the Subsidiaries and the
Selling Stockholders and certificates of public officials.
(f) At the Closing Time, (i) the Registration Statement and the
Prospectuses, as they may then be amended or supplemented, shall conform in all
material respects to the requirements of the 1933 Act, the 1933 Act Regulations,
the 1934
28
<PAGE>
Act and the 1934 Act Regulations, the Company shall have complied in all
material respects with Rule 430A (if it shall have elected to rely thereon), the
Registration Statement, as it may then be amended or supplemented, shall not
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements in the
Registration Statement not misleading, and the Prospectuses, as they may be
amended or supplemented, shall not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements in the Prospectuses, in light of the circumstances under
which they were made, not misleading, (ii) there shall not have been, since the
respective dates as of which information is given in the Prospectuses, any
material adverse change in the condition (financial or otherwise), earnings,
business affairs or business prospects of the Company and its Subsidiaries,
considered as one enterprise, whether or not arising in the ordinary course of
business, (iii) no action, suit or proceeding at law or in equity shall be
pending or, to the knowledge of the Company, threatened against the Company or
any Subsidiary that would be required to be set forth in the Prospectuses other
than as set forth therein and no proceedings shall be pending or, to the
knowledge of the Company, threatened against the Company or any Subsidiary
before or by any federal, state or other commission, board or administrative
agency that could reasonably be expected to materially and adversely affect the
condition (financial or otherwise), earnings, business affairs or business
prospects of the Company and its Subsidiaries, considered as one enterprise,
other than as set forth in the Prospectuses, (iv) the Company shall have
complied with all agreements and satisfied all conditions on their parts to be
performed or satisfied at or prior to the Closing Time, and (v) the other
representations and warranties of the Company set forth in Section 1(a) shall be
accurate as though expressly made at and as of the Closing Time. At the Closing
Time, you shall have received a certificate of the President or Vice President
and the chief financial officer or chief accounting officer of the Company,
dated as of the Closing Time, to such effect. As used in Section 5(f)(ii) and
(iii), the term "Prospectuses" means the Prospectuses in the form first used to
confirm sales of the Offered Shares.
(g) At the Closing Time, (i) the representations and warranties of
each Selling Stockholder set forth in Section 1(b) and in any certificates by or
on behalf of the Selling Stockholders delivered pursuant to the provisions
hereof shall be accurate as though expressly made at and as of the Closing Time,
(ii) each Selling Stockholder shall have performed its obligations under this
Agreement and the International Purchase Agreement and (iii) you shall have
received a certificate of each Selling Stockholder, dated as of the Closing
Time, to the effect set forth in subsections (i) and (ii) of this Section 5(g).
(h) At the time that this Agreement is executed by the Company, you
shall have received from Coopers & Lybrand L.L.P. a letter, dated such date, in
form and substance satisfactory to you, together with signed or reproduced
copies of such letter for
29
<PAGE>
each of the other Managers, confirming that they are independent public
accountants with respect to the Company within the meaning of the 1933 Act and
the applicable published 1933 Act Regulations, and stating in effect that:
(i) in their opinion, the audited financial statements and the
related financial statement schedules included or incorporated by
reference in the Registration Statement and the Prospectuses comply as
to form in all material respects with the applicable accounting
requirements of the 1933 Act and the 1933 Act Regulations;
(ii) on the basis of procedures (but not an examination in
accordance with generally accepted auditing standards) consisting of a
reading of the minutes of all meetings of the stockholders and
directors of the Company and its Subsidiaries and each committee of
the board of directors of each of the Company and its Subsidiaries,
inquiries of certain officials of the Company and its Subsidiaries
responsible for financial and accounting matters and such other
inquiries and procedures as may be specified in such letter, nothing
came to their attention that caused them to believe that:
(A) at ________, 199_ and at a specified date not more than
five days prior to the date of this Agreement, there was any
(i) change in the shareholders' equity or any decrease in current
assets, working capital or total assets or (ii) increase in long-
term debt of the Company and its Subsidiaries as compared with
the amounts shown in the latest balance sheet included or
incorporated by reference in the Registration Statement, except
in each case for changes, decreases or increases that the
Registration Statement discloses have occurred or may occur; or
(B) for the period from ________, 199_ to ___________, 199_
and to a specified date not more than five days prior to the date
of this Agreement, there was any decrease in sales, or in the
total or per-share amounts of net income before income taxes,
extraordinary item and cumulative effect of accounting changes or
net income, or in other items specified by the Lead Managers, in
each case as compared with the comparable period in the preceding
year, except in each case for any decreases that the Registration
Statement discloses have occurred or may occur; and
(iii) in addition to the procedures referred to in clause
(ii) above, they have performed other specified procedures, not
constituting an audit, with respect to certain amounts, percentages,
numerical data and financial
30
<PAGE>
information appearing or incorporated by reference in the Registration
Statement, which have previously been specified by you and which shall
be specified in such letter, and have compared certain of such items
with, and have found such items to be in agreement with, the
accounting and financial records of the Company and its Subsidiaries.
(iv) At the Closing Time, you shall have received from Coopers &
Lybrand L.L.P. a letter, in form and substance satisfactory to you and
dated as of the Closing Time, to the effect that they reaffirm the
statements made in the letter furnished pursuant to Section 5(h),
except that the specified date referred to shall be a date not more
than five business days prior to the Closing Time. In the event the
Company relies on Rule 430A and the final Prospectuses furnished to
the Underwriters in connection with the offering of the Offered Shares
differ from the Prospectuses included in the Registration Statement at
the time of effectiveness, such letter shall update the procedures
referred to in clauses 5(h)(ii) and (iii) above.
(j) At the Closing Time, you shall have received a certificate of the
Chief Financial Officer of the Company as to certain agreed upon accounting
matters.
(k) At the Closing Time, counsel for the Underwriters shall have been
furnished with all such documents, certificates and opinions as they may
reasonably request for the purpose of enabling them to pass upon the issuance
and sale of the Offered Shares as contemplated in this Agreement and the U.S.
Purchase Agreement and the matters referred to in Section 5(f) and in order to
evidence the accuracy and completeness of any of the representations, warranties
or statements of the Company and the Selling Stockholders, the performance of
any of the covenants of the Company and the Selling Stockholders, or the
fulfillment of any of the conditions herein contained; and all proceedings taken
by the Company and the Selling Stockholders at or prior to the Closing Time in
connection with the authorization, issuance and sale of the Offered Shares as
contemplated in this Agreement and the U.S. Purchase Agreement shall be
reasonably satisfactory in form and substance to you and to Fried, Frank,
Harris, Shriver & Jacobson as counsel for the Underwriters.
(l) Each Selling Stockholder shall have delivered to you on or prior
to the Closing Time a properly completed and executed United States Treasury
Department Form W/9 (or other applicable form or statement specified by Treasury
Department regulations).
If any of the conditions specified in this Section 5 shall not have
been fulfilled when and as required by this Agreement to be fulfilled, this
Agreement may be terminated by you on notice to the Company and the Selling
Stockholders at any time at or prior to the Closing Time, and such termination
shall be without liability of any party
31
<PAGE>
to any other party, except as provided in Section 4 herein. Notwithstanding any
such termination, the provisions of Section 6 herein shall remain in effect.
Section 6. Indemnification. (a) The Company agrees to indemnify and
---------------
hold harmless each Manager and each person, if any, who controls any Manager
within the meaning of Section 15 of the 1933 Act to the extent and in the manner
set forth in clauses (i), (ii) and (iii) below. In addition, subject to
subsection (d) of this Section, each Selling Stockholder, severally and not
jointly (in the proportion that the number of International Shares being sold by
such Selling Stockholder bears to the total number of U.S. Shares), agrees to
indemnify and hold harmless each Manager and each person, if any, who controls
any Manager within the meaning of Section 15 of the 1933 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of an untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the Rule
430A Information, if applicable, or the omission or alleged omission
therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising out
of an untrue statement or alleged untrue statement of a material fact
included in any preliminary prospectus or the Prospectuses (or any
amendment or supplement thereto), or the omission or alleged omission
therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or investigation or proceeding
by any governmental agency or body, commenced or threatened, or of any
claim whatsoever based upon any such untrue statement or omission, or
any such alleged untrue statement or omission, if such settlement is
effected with the written consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including, subject to the last sentence of Section 6(c), fees and
disbursements of counsel chosen by you), reasonably incurred in
investigating, preparing or defending against any litigation, or
investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under
subparagraph (i) or (ii) above;
32
<PAGE>
provided, however, that (i) this indemnity does not apply to any loss,
- -------- -------
liability, claim, damage or expense to the extent arising out of an untrue
statement or omission or alleged untrue statement or omission made in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information, if applicable, or any preliminary prospectus or the Prospectuses
(or any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by any Manager expressly for use in
the Registration Statement (or any amendment thereto) (ii) such indemnity with
respect to any preliminary prospectus shall not inure to the benefit of any
Manager (or any persons controlling such Manager) from whom the person asserting
such loss, claim, damage or liability purchased the Offered Shares which are the
subject thereof if such person did not receive a copy of the International
Prospectus (or the International Prospectus as amended or supplemented) at or
prior to the confirmation of the sale of such Offered Shares to such person in
any case where such delivery is required by the 1933 Act and the untrue
statement or omission or alleged untrue statement or omission of a material fact
contained in such preliminary prospectus was corrected in the International
Prospectus (or the International Prospectus as amended or supplemented) and
(iii) with respect to the indemnity by each Selling Stockholder, the indemnity
shall, in each case, apply only to the extent that any untrue statement or
alleged untrue statement or omission or alleged omission was made in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information, if applicable, or any preliminary prospectus or the Prospectuses
(or any amendment or supplement thereto) in reliance upon and in conformity with
written information furnished by such Selling Stockholder to the Company or the
Underwriters expressly for use in the Registration Statement (or any amendment
thereto), including the Rule 430A Information, if applicable, or such
preliminary prospectus or the Prospectuses (or any amendment or supplement
thereto).
(b) Each Manager agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, each of its officers who signed the
Registration Statement and, each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act and each Selling Stockholder against
any and all loss, liability, claim, damage and expense described in the
indemnity contained in Section 6(a), as incurred, but only with respect to
untrue statements or omissions, or alleged untrue statements or omissions, made
in the Registration Statement (or any amendment thereto), including the Rule
430A Information, if applicable, or any preliminary prospectus or the
Prospectuses (or any amendment or supplement thereto) in reliance upon and in
conformity with information furnished to the Company by such Manager expressly
for use in the Registration Statement (or any amendment thereto), including the
Rule 430A Information, if applicable, or such preliminary prospectus or the
Prospectuses (or any amendment or supplement thereto).
33
<PAGE>
(c) Each indemnified party shall give prompt notice to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve it from any liability which it may have otherwise than
on account of this indemnity agreement. Any indemnifying party may participate
at its own expense in the defense of such action. If it so elects within a
reasonable time after receipt of such notice, an indemnifying party, jointly
with any other indemnifying parties receiving such notice, may assume the
defense of such action with counsel chosen by it and approved by the indemnified
parties defendant in such action, unless such indemnified parties reasonably
object to such assumption on the ground that there may be legal defenses
available to them which are different from or in addition to those available to
such indemnifying party. If an indemnifying party assumes the defense of such
action, the indemnifying parties shall not be liable for any fees and expenses
of counsel for the indemnified parties incurred thereafter in connection with
such action. In no event shall the indemnifying party or parties be liable for
the fees and expenses of more than one counsel for all indemnified parties in
connection with any one action or separate but similar or related actions in the
same jurisdictions arising out of the same general allegations or circumstances.
(e) No Selling Stockholder shall be responsible for the payment of an
amount, pursuant to this Section, which exceeds the net proceeds received by the
Selling Stockholder from the sale of the Offered Shares by such Selling
Stockholder hereunder and under the U.S. Purchase Agreement.
Section 7. Contribution. In order to provide for just and equitable
------------
contribution in circumstances under which the indemnity provided for in
Section 6 is for any reason held to be unenforceable by the indemnified parties
although applicable in accordance with its terms, the Company, the Selling
Stockholders and the Managers shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by such
indemnity incurred by the Company, the Selling Stockholders and one or more of
the Managers, as incurred, in such proportion that the Managers are responsible
for that portion represented by the percentage that the underwriting discount
appearing on the cover page of the Prospectuses bears to the initial public
offering price appearing thereon and the Company and the Selling Stockholders
shall be liable for the balance; provided, however, that no person guilty of
-------- -------
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this Section 7, each person,
if any, who controls a Manager within the meaning of Section 15 of the 1933 Act
shall have the same rights to contribution as the Manager, and each director of
the Company, each officer of the Company who signed the Registration Statement,
and each person, if any, who controls the Company within the meaning of
Section 15 of the 1933 Act shall have the same rights to contribution as the
Company and
34
<PAGE>
the Selling Stockholders. Notwithstanding the provisions of this Section 7,
no Selling Stockholder shall be required to contribute any amount under this
Section 7 in excess of the amount by which the net proceeds received by such
Selling Stockholder in connection herewith exceed the aggregate amount such
Selling Stockholder has otherwise paid pursuant hereto and to Section 1(b) and
Section 6(a).
Section 8. Representations, Warranties and Agreements to Survive
-----------------------------------------------------
Delivery. The representations, warranties, indemnities, agreements
- ------------------
and other statements of the Company, its officers and the Selling Stockholders
set forth in or made pursuant to this Agreement will remain operative and in
full force and effect regardless of any investigation made by or on behalf of
the Company, the Selling Stockholders or any Manager or controlling person and
will survive delivery of and payment for the Offered Shares.
Section 9. Termination of Agreement. (a) You may terminate this
------------------------
Agreement, by notice to the Company and the Selling Stockholders, at any time at
or prior to the Closing Time (i) if there has been, since the date as of which
information is given in the Prospectuses, any material adverse change, in the
condition (financial or otherwise), earnings, business affairs or business
prospects of the Company and its Subsidiaries, considered as one enterprise,
whether or not arising in the ordinary course of business, (ii) if there has
occurred any material adverse change in the financial markets in the United
States or any outbreak of hostilities or escalation of or other calamity or
crisis the effect of which in each case is such as to make it, in your judgment,
impracticable to market the International Offered Shares or enforce contracts
for the sale of the International Offered Shares, (iii) if trading in any
securities of the Company has been suspended by the Commission or if trading
generally on the New York Stock Exchange or in the over-the-counter market has
been suspended, or minimum or maximum prices for trading have been fixed, or
maximum ranges for prices for securities have been required, by either of such
exchanges or by order of the Commission, the National Association of Securities
Dealers, Inc. or any other governmental authority, or (iv) if a banking
moratorium has been declared by either federal or New York authorities. As used
in this Section 9(a), the term "Prospectuses " means the Prospectuses in the
form first used to confirm sales of the Offered Shares.
(b) If this Agreement is terminated pursuant to this Section 9, such
termination shall be without liability of any party to any other party, except
to the extent provided in Section 4 hereof. Notwithstanding any such
termination, the provisions of Sections 6 and 7 shall remain in effect.
(c) This Agreement may also terminate pursuant to the provisions of
Section 2 and Section 5, with the effect stated in such Section.
35
<PAGE>
Section 10. Default by One or More of the Managers. If one or more
--------------------------------------
of the Managers shall fail at the Closing Time to purchase the International
Shares that it or they are obligated to purchase pursuant to this Agreement (the
"Defaulted International Shares"), you shall have the right, within 24 hours
thereafter, to make arrangements for one or more of the non-defaulting Managers,
or any other underwriters, to purchase all, but not less than all, of the
Defaulted International Shares in such amounts as may be agreed upon and upon
the terms set forth in this Agreement; if, however, you have not completed such
arrangements within such 24-hour period, then:
(a) if the aggregate principal amount of Defaulted International
Shares does not exceed 10% of the total number of International Shares to be
purchased pursuant to this Agreement, the non-defaulting Managers shall be
obligated to purchase the full amount thereof in the proportions that their
respective International Shares underwriting obligation proportions bear to the
underwriting obligation proportions of all non-defaulting Managers, or
(b) if the aggregate principal amount of Defaulted International
Shares exceeds 10% of the of International Shares, this Agreement shall
terminate without liability on the part of any non-defaulting Manager.
No action taken pursuant to this Section 10 shall relieve any
defaulting Manager from liability in respect of its default.
In the event of any such default that does not result in a termination
of this Agreement, either you or the Company or the Selling Stockholders shall
have the right to postpone the Closing Time for a period not exceeding seven
days in order to effect any required changes in the Registration Statement or
Prospectuses or in any other documents or arrangements. As used herein, the
term "Manager" includes any person substituted for a Manager under this
Section 10.
Section 11. Default by One or More of the Selling Stockholders. If
--------------------------------------------------
one or more of the Selling Stockholders shall fail at the Closing Time to sell
and deliver the number of Offered Shares that it is obligated to sell, then the
Lead Managers may, at their option, by notice to the Company and the non-
defaulting Selling Stockholders, either (a) terminate this Agreement without any
liability on the part of any non-defaulting party except to the extent provided
in Section 4 and except that the provisions of Sections 6 and 7 shall remain in
effect or (b) elect to purchase the Offered Shares which the non-defaulting
party has agreed to sell hereunder. No action taken pursuant to this Section
shall relieve such Selling Stockholder from liability, if any, in respect of
such default.
Section 12. Notices. All notices and other communications under this
-------
Agreement shall be in writing and shall be deemed to have been duly given if
delivered, mailed or transmitted by any standard form of telecommunication.
Notices to you shall
36
<PAGE>
be directed to you, c/o Merrill Lynch International Limited at Ropemaker Place,
25 Ropemaker Street, London ECZY, 9LY England, attention of Michael Rowan with a
copy to Fried, Frank, Harris, Shriver and Jacobson, One New York Plaza, New
York, NY 10004-1980, attention of Valerie Ford Jacob, Esq.; and notices to the
Company shall be directed to the Company at One Tyco Park, Exeter, New Hampshire
03833, attention of M. Brian Moroze, Esq. with a copy to Kramer, Levin,
Naftalis, Nessen, Kamin & Frankel, 919 Third Avenue, New York, NY 10022,
attention of Howard A. Sobel, Esq. and notices to the Selling Stockholders shall
be directed to ____________________ at ____________________ ________________,
attention of _________________.
Section 13. Parties. This Agreement is made solely for the benefit
-------
of the several Managers, the Selling Stockholders, the Company, and, to the
extent expressed, any person controlling the Company, or any of the Managers,
and the directors of the Company, the officers of the Company who have signed
the Registration Statement, and the executors, administrators, successors and
assigns of such persons and, no other person shall acquire or have any right
under or by virtue of this Agreement. The term "successors and assigns" shall
not include any purchaser, as such purchaser, from any of the several Managers
of the International Shares. All of the obligations of the Managers hereunder
are several and not joint.
SECTION 14. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED
----------------------
BY THE LAWS OF THE STATE OF NEW YORK. SPECIFIED TIMES OF THE DAY REFER TO NEW
YORK CITY TIME.
37
<PAGE>
Section 16. Counterparts. This Agreement may be executed in one or more
------------
counterparts and, when a counterpart has been executed by each party, all such
counterparts taken together shall constitute one and the same agreement.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to a counterpart hereof, whereupon this
instrument will become a binding agreement among the Company, each of the
Selling Stockholders and the several Managers in accordance with its terms.
Very truly yours,
TYCO INTERNATIONAL LTD.
By
------------------------
Name:
Title:
THE SELLING STOCKHOLDERS LISTED IN SCHEDULE A
HERETO
By
------------------------
Name:
Title:
[Attorney-in-Fact acting on behalf of
the Selling Stockholders]
38
<PAGE>
Confirmed and accepted as of
the date first above written:
MERRILL LYNCH INTERNATIONAL LIMITED
GOLDMAN SACHS INTERNATIONAL
DONALDSON LUFKIN & JENRETTE
SECURITIES CORPORATION
LEHMAN BROTHERS INTERNATIONAL (EUROPE)
By: MERRILL LYNCH INTERNATIONAL LIMITED
By
-------------------------
Name:
Title:
For themselves and as Lead Managers of the
- ------------------------------------------
other Managers named in Schedule B.
- ----------------------------------
39
<PAGE>
Exhibit A
TYCO INTERNATIONAL LTD.
(a Massachusetts corporation)
__________ Shares of Common Stock
INTERNATIONAL PRICE DETERMINATION AGREEMENT
-------------------------------------------
____________________, 199_
MERRILL LYNCH INTERNATIONAL LIMITED
GOLDMAN SACHS INTERNATIONAL
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
LEHMAN BROTHERS INTERNATIONAL (EUROPE)
As Representatives of the several Managers
c/o Merrill Lynch International Limited
Ropemaker Place
25 Ropemaker Street
London ECZY
9LY ENGLAND
Ladies and Gentlemen:
Reference is made to the International Purchase Agreement dated as of
_________, 1995 (the "International Purchase Agreement") among Tyco
International Ltd., a Massachusetts corporation (the "Company"), the Selling
Stockholders listed in Schedule A thereto and hereto (the "Selling
Stockholders") and the several Managers named in Schedule __________ thereto
and hereto (the "Managers"), for whom Merrill Lynch International Limited,
Goldman Sachs International, Donaldson, Lufkin & Jenrette Securities Corporation
and Lehman Brothers International (Europe) are acting as representatives (the
"Lead Managers "). The International Purchase Agreement provides for the
purchase by the Managers from the Selling Stockholders, subject to the terms
and conditions set forth therein, of an aggregate of _______________ shares
(the "International Shares") of the Company's common stock, par value $___ per
share. This Agreement is the International Price Determination Agreement
referred to in the International Purchase Agreement.
Pursuant to Section 2 of the International Purchase Agreement, the
undersigned agree with the Managers as follows:
<PAGE>
1. The initial public offering price per share for the
International Shares shall be $_____.
2. The purchase price per share for the International Shares to
be paid by the several Managers shall be $_____, representing an
amount equal to the initial public offering price set forth above,
less $_____ per share.
The Company represents and warrants to each of the Managers that the
representations and warranties of the Company set forth in Section 1(a) of the
International Purchase Agreement are accurate as though expressly made at and as
of the date hereof.
Each of the Selling Stockholders represent and warrant to each of the
Managers that the representations and warranties of such Selling Stockholder set
forth in Section 1(b) of the International Purchase Agreement is accurate as
though expressly made at and as of the date hereof.
As contemplated by Section 2 of the International Purchase Agreement,
attached as Schedule A is a list of each of the Selling Stockholders and
attached as Schedule B is a complete list of the several Managers, which shall
be a part of this Agreement and the International Purchase Agreement.
THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company and the Selling Stockholders a
counterpart hereof, whereupon this instrument along with all counterparts and
together with the International.
A-2
<PAGE>
Purchase Agreement shall be a binding agreement among the Managers, the Company
and the Selling Stockholders in accordance with its terms and the terms of the
International Purchase Agreement.
Very truly yours,
TYCO INTERNATIONAL LTD.
By --------------------------
Name:
Title:
THE SELLING STOCKHOLDERS LISTED IN SCHEDULE A
HERETO
By --------------------------
Name:
Title: As Attorney-in-Fact acting on
behalf of the Selling Stockholders
A-3
<PAGE>
Confirmed and accepted as of
the date first above written:
MERRILL LYNCH INTERNATIONAL LIMITED
GOLDMAN SACHS INTERNATIONAL
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
LEHMAN BROTHERS INTERNATIONAL (EUROPE)
By: MERRILL LYNCH INTERNATIONAL LIMITED
By
--------------------------------------
Name:
Title:
For themselves and as Lead Managers of the other
- -------------------------------------------------
Managers named in Schedule attached hereto.
- ---------------------------------------------------------------
A-4
<PAGE>
SCHEDULE A
Number of International
Selling Stockholder Shares to be Sold
------------------- -----------------
TOTAL
=======================
<PAGE>
SCHEDULE B
Number of
International Shares
Managers to be Purchased
-------- ---------------
Merrill Lynch International Limited
Goldman Sachs International
Donaldson, Lufkin & Jenrette Securities
Corporation
Lehman Brothers International (Europe)
TOTAL
=======================
<PAGE>
SCHEDULE C
Subsidiaries
- ------------
Exhibit 10(b)
AMENDMENT NO. 1 TO REGISTRATION RIGHTS AGREEMENT
------------------------------------------------
AMENDMENT NO. 1, dated as of July 11, 1994 (this
"Amendment"), to the Registration Rights Agreement, dated as
of July 7, 1992 (as amended by this Amendment, the "Regis-
tration Rights Agreement"), among Kendall International,
Inc., a Delaware corporation formerly named CDK Holding
Corporation (the "Company"), and The Clayton & Dubilier
Private Equity Fund IV Limited Partnership, a partnership
organized under the laws of Connecticut, Joseph Littlejohn &
Levy Fund, L.P., a partnership organized under the laws of
Delaware, Mutual Series Fund Inc., FIMA Finance Management
Inc., Leeway & Co., Richard A. Gilleland and Carrie
Gilleland, and The Clayton & Dubilier Private Equity Fund
III Limited Partnership, a partnership organized under the
laws of Connecticut.
WHEREAS, one or more of the parties to or bene-
ficiaries of the Registration Rights Agreement that are
partnerships may distribute Warrants and/or Reallocation
Certificates (as each such term is defined in the Registra-
tion Rights Agreement) held by them to their respective
partners; and
WHEREAS, the parties to the Registration Rights
Agreement desire to extend the rights and obligations under
the Registration Rights Agreement to such partners with
respect to the Warrants, Common Stock issuable upon exercise
of Warrants and Common Stock issuable upon exercise of
Reallocation Certificates that may be held by such partners;
NOW, THEREFORE, in consideration of the premises
and the mutual agreements contained herein, the parties
hereto hereby agree as follows:
SECTION 1. Defined Terms. Unless otherwise
-------------
defined in this Amendment, terms used herein that are
defined in the Registration Rights Agreement are so used as
so defined.
SECTION 2. Amendments to the Registration Rights
-------------------------------------
Agreement. The Registration Rights Agreement is hereby
---------
amended as follows:
The definition of "Permitted Transferee" in Sec-
tion 1.1 of the Registration Rights Agreement is hereby
<PAGE>
amended by deleting the word "or" preceding clause (vi) of
such definition, inserting the words "or (vii) with respect
to Warrants, Reallocation Certificates or shares of Common
Stock issuable upon exercise of Warrants or Reallocation
Certificates, the partners of a partnership that is such
Person;" after the semi-colon following clause (vi) thereof
and deleting the words "clauses (i) through (vi)" in the
final proviso to such definition and inserting in lieu
thereof the words "clauses (i) through (vii)".
SECTION 3. Effectiveness of Amendment. This
--------------------------
Amendment shall become effective as of the date hereof upon
the execution of a counterpart of this Amendment by the
Holders of not less than 95% of the Common Stock constitut-
ing Registrable Securities and the Holders of a majority of
Warrants.
SECTION 4. Continuing Effect of the Registration
-------------------------------------
Rights Agreement. This Amendment shall not constitute an
----------------
amendment or waiver of any provision of the Registration
Rights Agreement except solely to the extent expressly
stated herein. Except as expressly amended hereby, the
provisions of the Registration Rights Agreement are and
shall remain in full force and effect.
SECTION 5. Miscellaneous. This Amendment may be
-------------
executed in any number of counterparts by the parties
hereto, each of which counterparts when so executed shall be
an original, but all counterparts taken together shall
constitute one and the same instrument. The descriptive
headings of the several Sections of this Amendment are
inserted for convenience only and do not constitute a part
of this Amendment. The Registration Rights Agreement as
amended hereby contains the entire understanding of the
parties thereto and hereto in respect of the subject matter
contained therein and herein and the transactions contem-
plated thereby and hereby. There are no restrictions,
agreements, promises, representations, warranties, covenants
or undertakings with respect to the subject matter thereof
or hereof, other than those expressly set forth or referred
to therein or herein. The Registration Rights Agreement as
amended hereby supersedes all prior agreements and under-
standings between the parties thereto and hereto with
respect to the subject matter thereof and hereof. THIS
AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
2
<PAGE>
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
APPLICABLE PRINCIPLES OF CONFLICT OF LAWS.
IN WITNESS WHEREOF, the parties hereto have caused
this Amendment to be executed and delivered by their respec-
tive duly authorized officers or representatives as of the
date first above written.
JOSEPH LITTLEJOHN & LEVY
FUND, L.P.
By: JLL ASSOCIATES LP.,
General Partner
By:
-------------------------
Name:
Title: General Partner
THE CLAYTON & DUBILIER PRIVATE
EQUITY FUND IV LIMITED
PARTNERSHIP
By: CLAYTON & DUBILIER ASSOCIATES
IV LIMITED PARTNERSHIP,
General Partner
By:
-------------------------
Name:
Title: General Partner
FIMA FINANCE MANAGEMENT INC.
By:
-------------------------
Name:
Title:
3
<PAGE>
LEEWAY & CO.
By: STATE STREET BANK AND TRUST
COMPANY
By:
-------------------------
Name:
Title:
MUTUAL SERIES FUND INC.
By:
-------------------------
Name:
Title:
RICHARD A. GILLELAND
------------------------------
CARRIE GILLELAND
------------------------------
THE CLAYTON & DUBILIER PRIVATE
EQUITY FUND III LIMITED
PARTNERSHIP
By: CLAYTON & DUBILIER ASSOCIATES
III, LIMITED PARTNERSHIP,
General Partner
By:
-------------------------
Name:
Title: General Partner
4
<PAGE>
ACKNOWLEDGMENT BY THE COMPANY
The undersigned hereby acknowledges the foregoing
Amendment No. 1 to the Registration Rights Agreement and
agrees that it shall be bound by the Registration Rights
Agreement as so amended.
KENDALL INTERNATIONAL, INC.
By:
-------------------------
Name:
Title:
5
Exhibit 10(c)
ASSUMPTION AGREEMENT
--------------------
This ASSUMPTION AGREEMENT, dated October 19, 1994,
by Tyco International Ltd., a Massachusetts corporation
("Tyco"), in favor of the parties and beneficiaries to and
under the Registration Rights Agreement referred to below.
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, Kendall International, Inc. (formerly
named CDK Holding Corporation), a Delaware corporation (the
"Company"), is party to a Registration Rights Agreement,
dated as of July 7, 1992, as amended by Amendment No. 1
thereto dated as of July 11, 1994 (as so amended, the
"Registration Rights Agreement"; capitalized terms used
herein but not defined herein are used as defined in the
Registration Rights Agreement), among the Company, The
Clayton & Dubilier Private Equity Fund IV Limited
Partnership ("Fund IV"), Joseph Littlejohn & Levy Fund, L.P.
("JLL Fund"), Mutual Series Fund Inc., FIMA Finance
Management Inc., Leeway & Co., Richard A. Gilleland, Carrie
Gilleland, and The Clayton & Dubilier Private Equity Fund
III Limited Partnership ("Fund III");
WHEREAS, Tyco is party to separate Stockholder
Agreements, each dated as of July 13, 1994, as amended by
separate Stockholder Agreement Modifications each dated as
of October 3, 1994 (as so amended, collectively, the
"Stockholder Agreements"), between the Company and each of
Fund IV, JLL Fund and Fund III;
WHEREAS, concurrently with the execution and
delivery of this Assumption Agreement, T Acquisition Corp.,
a Delaware corporation and wholly owned subsidiary of Tyco,
is merging with and into the Company (such merger, the
"Merger"), and the Effective Time (as defined in the
Stockholder Agreements) of the Merger has occurred; and
WHEREAS, pursuant to the Stockholder Agreements,
Tyco has agreed to assume and agree to perform the
obligations of the Company under the Registration Rights
Agreement;
NOW, THEREFORE, Tyco hereby agrees as follows:
<PAGE>
1. In accordance with Section 5 of each of the
Stockholder Agreements, for the benefit of each Holder and
each other party to or beneficiary under the Registration
Rights Agreement, Tyco hereby expressly and irrevocably as-
sumes, confirms, and agrees to be bound by and to perform
and observe, the terms and provisions of the Registration
Rights Agreement, and all of the covenants, rights, prom-
ises, agreements, obligations and duties of the Company
under the Registration Rights Agreement, provided that
--------
Section 2.3(c) of the Registration Rights Agreement is
hereby assumed as modified to read as follows:
"(c) If any registration of Registrable Securities
shall be in connection with an Underwritten Offering,
the Company agrees, and will use its reasonable efforts
to cause other Persons (other than any institutional
investment manager subject to Section 13(f) of the
Exchange Act) holding 5% or more of the Common Stock
and who are not otherwise subject to "holdback"
agreements that are at least as favorable to the
Holders as the provisions contained in this Section 2.3
to agree, not to effect any sale or distribution of any
of its equity securities or of any security convertible
into or exchangeable or exercisable for any equity
security of the Company during the period beginning
seven days prior to the effective date of such
registration statement and ending on the earlier of (x)
180 days after such effective date, and (y) 90 days
after such effective date, if the managing underwriter
in such Underwritten Offering shall permit such earlier
sale or distribution as not materially adversely
affecting the offering, and the Holders participating
in any such offering shall use their reasonable efforts
to obtain such permission from the managing
underwriter."
2. Tyco hereby confirms and agrees that (a) the
-
Parent Shares (as defined in the Stockholder Agreements) to
be received by any Holder, in the Merger or pursuant to any
exercise of Warrants or Reallocation Certificates, shall
constitute Common Stock and Registrable Securities entitled
to the benefits of the Registration Rights Agreement, (b)
-
the term "Requisite Percentage of Common Stock" shall be
construed to mean an amount of Parent Shares (or other
securities at any time constituting Common Stock) equivalent
to 12% of the amount of shares of common stock of the
Company outstanding upon consummation of the Plan, and (c)
-
clause (iii) of Section 2.1(d) of the Registration Rights
2
<PAGE>
Agreement shall be construed to refer to Warrants
constituting Registrable Securities that represent the right
to acquire upon exercise an amount of Parent Shares (or
other securities) equivalent to less than 3% of the amount
of shares of common stock of the Company outstanding upon
consummation of the Plan. For purposes of the preceding
sentence, (i) as of the Effective Time, the amount of Parent
-
Shares that is equivalent to a given amount of shares of
common stock of the Company shall be deemed to be the amount
of Parent Shares that a holder of such shares of common
stock of the Company would be entitled to receive pursuant
to the Merger and (ii) after the Effective Time, the
--
equivalency of an amount of Parent Shares (or other
securities at any time constituting Common Stock) shall be
determined after also taking into account, in a manner
analogous to the provisions of clause (i) hereof, any
relevant transactions that may have occurred since the
Effective Time in respect of Common Stock (including,
without limitation, any stock split or combination, merger,
consolidation, reclassification, recapitalization or
reorganization), subject to the provisions of Section 2.6 of
the Registration Rights Agreement.
3. Tyco hereby confirms and agrees that, with
respect to Section 2.1(g) of the Registration Rights
Agreement, if a requested registration pursuant to Section
2.1 of the Registration Rights Agreement involves an
Underwritten Offering in which Fund IV and/or JLL Fund is
participating, Fund IV and JLL Fund together (or, if only
one of them is participating in such offering, the fund so
participating) shall have the right to select a nationally
recognized investment banker (or investment bankers)
reasonably acceptable to Tyco that shall manage such
offering.
4. For purposes of this Assumption Agreement,
all references to the "Company" in the Registration Rights
Agreement shall also be deemed to be references to Tyco.
5. This Assumption Agreement shall be binding
upon Tyco, its successors and assigns, and shall inure to
the benefit of the parties to and other beneficiaries under
the Registration Rights Agreement and their respective
successors and assigns. This Assumption Agreement shall be
effective immediately upon its execution and delivery by
Tyco. This Assumption Agreement cannot be amended,
modified, waived or supplemented except by a written
instrument signed by each of Fund IV, JLL Fund and Fund III,
3
<PAGE>
and (except in the case of a waiver) by Tyco. Tyco hereby
acknowledges and agrees that irreparable harm would occur in
the event that any of the terms or provisions of this
Assumption Agreement were not performed in accordance with
its specific terms or were otherwise breached, and that
accordingly each of Fund IV, JLL Fund, Fund III and each
other Holder shall be entitled to an injunction or
injunctions to prevent breaches of this Assumption Agreement
and to enforce specifically the terms and provisions of this
Assumption Agreement in any court of the United States or
any state thereof having jurisdiction, this being in
addition to any other remedy to which they are entitled at
law or in equity.
6. THIS ASSUMPTION AGREEMENT SHALL IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
APPLICABLE PRINCIPLES OF CONFLICT OF LAWS THEREOF. Tyco
hereby irrevocably submits to the jurisdiction of any New
York State or Federal court sitting in the City of New York
in any action or proceeding arising out of or related to
this Assumption Agreement or the Registration Rights
Agreement, and hereby irrevocably agrees that all claims in
respect of such action or proceeding may be heard and
determined in such State or Federal court. Tyco hereby
irrevocably consents to the service of process, which may be
served in any such action or proceeding by certified mail,
return receipt requested, by delivering a copy of such
process to Tyco at its address specified in Section 9 of the
Stockholder Agreements, or by any other method permitted by
law.
4
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused
this Assumption Agreement to be duly executed by its duly
authorized officer on the date hereof.
TYCO INTERNATIONAL LTD.
By_______________________
Name:
Title:
[Seal]
5
EXHIBIT 23(A)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-3 of
(a) our report dated December 22, 1994 on our audit of the consolidated
financial statements of Tyco International Ltd. which report is included on page
F-2.
(b) our report dated August 1, 1994 on our audit of the consolidated
financial statements of Tyco International Ltd. which report is included in Form
10-K for the year ended June 30, 1994 incorporated by reference in this Form
S-3.
(c) our report dated August 1, 1994 on our audit of the consolidated
financial statements of Tyco International Ltd. for the year ended June 30, 1994
which report is included in Form 8-K dated August 17, 1994 and Form 8-K/A dated
September 19, 1994 incorporated by reference in this Form S-3.
(d) our report dated January 28, 1993 on our audit of the consolidated
financial statements of Kendall International, Inc. for the year ended December
31, 1993, the six month periods ended December 31, 1992 and June 30, 1992 and
the year ended December 31, 1991 which report is included in Form 8-K dated
October 28, 1994 and Forms 8-K/A dated November 1, 1994 and November 2, 1994
incorporated herein by reference.
We also consent to the reference to our firm under the caption "Experts."
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
January 30, 1995
EXHIBIT 23(B)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our reports
dated August 3, 1993 appearing on pages 7 and 32 of the Current Report on Form
8-K of Tyco International Ltd. dated January 10, 1995. We also consent to the
reference to us under the heading "Experts" in such Prospectus.
PRICE WATERHOUSE LLP
Boston, Massachusetts
January 30, 1995
