AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 5, 1996
REGISTRATION NO.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------
TYCO INTERNATIONAL LTD.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
MASSACHUSETTS 3842 04-2297459
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Number) Identification No.)
organization)
</TABLE>
-------------------
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)
-------------------
MARK H. SWARTZ
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>
JOSHUA M. BERMAN, ESQ. STEPHEN E. JACOBS, ESQ.
KRAMER, LEVIN, NAFTALIS & FRANKEL WEIL, GOTSHAL & MANGES LLP
919 THIRD AVENUE 767 FIFTH AVENUE
NEW YORK, NEW YORK 10022 NEW YORK, NEW YORK 10153
</TABLE>
-------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
-------------------
CALCULATION OF REGISTRATION FEE
[CAPTION]
<TABLE>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER SECURITY OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, par value $0.50
per share....................... 3,230,000(1) $39.928(1) $128,967,440 $44,472(2)
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457 ("Rule 457") promulgated under the Securities Act of 1933, as
amended.
(2) As provided in Rule 457(b), includes $26,269 paid previously in connection
with the Preliminary Proxy Statement of Carlisle Plastics, Inc. filed with
the Commission on June 12, 1996.
-------------------
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, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TYCO INTERNATIONAL LTD.
SHARES OF COMMON STOCK
TO BE ISSUED IN CONNECTION WITH THE MERGER
OF A WHOLLY-OWNED SUBSIDIARY OF
TYCO INTERNATIONAL LTD.
AND
CARLISLE PLASTICS, INC.
-------------------
CROSS REFERENCE SHEET PURSUANT TO ITEM 501(B)
OF REGULATION S-K SHOWING THE LOCATION IN THE PROSPECTUS
OF THE INFORMATION REQUIRED BY PART I OF FORM S-4
<TABLE>
<CAPTION>
LOCATION OR
CAPTION IN PROXY
ITEM OF FORM S-4 STATEMENT/PROSPECTUS
- ----------------------------------------------------- ----------------------------------------
<S> <C> <C> <C>
A. INFORMATION ABOUT THE TRANSACTION
1. Forepart of Registration Statement and
Outside Front Cover Page of
Prospectus.............................. Facing Page of the Registration
Statement; Outside Front Cover Page of
Proxy Statement/Prospectus
2. Inside Front and Outside Back Cover
Pages of Prospectus..................... Available Information; Incorporation of
Documents by Reference; Table of
Contents
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information........... Summary; The Merger; Comparative Per
Share Prices and Dividends; Unaudited
Pro Forma Combined Financial Statements;
Business of Tyco; Business of Carlisle
4. Terms of the Transaction................ The Merger; The Merger Agreement and
Related Agreements; Description of
Capital Stock of Tyco; Comparison of
Stockholder Rights
5. Pro Forma Financial Information......... Unaudited Pro Forma Combined Financial
Statements
6. Material Contacts with the Company being
Acquired................................ The Merger
7. Additional Information Required for the
Offering by Persons and Parties deemed
to be Underwriters...................... Not Applicable
8. Interests of Named Experts and
Counsel................................. The Merger; Legal Matters; Experts
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities............................. Not Applicable
B. INFORMATION ABOUT THE REGISTRANT
10. Information with Respect to S-3
Registrants............................. Available Information; Incorporation of
Documents by Reference
11. Incorporation of Certain Information by
Reference............................... Available Information; Incorporation of
Documents by Reference
12. Information with Respect to S-2 or S-3
Registrants............................. Not Applicable
13. Incorporation of Certain Information by
Reference............................... Not Applicable
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LOCATION OR
CAPTION IN PROXY
ITEM OF FORM S-4 STATEMENT/PROSPECTUS
- ----------------------------------------------------- ----------------------------------------
<S> <C> <C> <C>
14. Information with Respect to Registrants
Other Than S-3 or S-2 Registrants....... Not Applicable
C. INFORMATION ABOUT THE COMPANY BEING ACQUIRED
15. Information with Respect to S-3
Companies............................... Not Applicable
16 Information with Respect to S-2 or S-3
Companies............................... Not Applicable
17. Information with Respect to Companies
Other Than S-2 or S-3 Companies......... Outside Front Cover Page of Proxy
Statement/Prospectus; Summary; Business
of Carlisle; Selected Financial Data of
Carlisle; Comparative Per Share Prices
and Dividends; Managements Discussion
and Analysis of Financial Conditions of
Results of Operation; Index to the
Financial Statements of Carlisle;
Section 16(a) Compliance.
D. VOTING AND MANAGEMENT INFORMATION
18. Information if Proxies, Consents or
Authorizations are to be Solicited...... Outside Front Cover Page of Proxy
Statement/Prospectus; Available
Information; Incorporation of Documents
by Reference; Summary; Special Meeting;
The Merger; Directors and Executive
Officers of Carlisle; Carlisle Executive
Compensation; Certain Relationships and
Related Transactions of Carlisle;
Security Ownership of Certain Beneficial
Owners and Management of Carlisle
19. Information if Proxies, Consents or
Authorizations Are Not to be Solicited
or in an Exchange Offer................. Not Applicable
</TABLE>
<PAGE>
[LETTERHEAD OF CARLISLE]
August __, 1996
Dear Stockholder:
You are cordially invited to attend the special meeting (the "Special
Meeting") of stockholders of Carlisle Plastics, Inc. ("Carlisle") to be held at
10:00 a.m., Mountain Standard Time, on September , 1996 at Carlisle's
corporate headquarters at 1314 North Third Street, Phoenix, Arizona 85004.
At the Special Meeting, holders of Carlisle Common Stock will be asked to
approve an Agreement and Plan of Merger, dated as of May 14, 1996 (the "Merger
Agreement"), by and among Tyco International Ltd. ("Tyco"), T2 Acquisition
Corp., a wholly-owned subsidiary of Tyco ("Merger Sub"), and Carlisle, pursuant
to which Merger Sub will be merged with and into Carlisle (the "Merger").
Following consummation of the Merger, Carlisle will be a wholly owned subsidiary
of Tyco. In the Merger, each outstanding share of Carlisle common stock, par
value $0.01 per share ("Carlisle Common Stock") (other than shares owned by
Carlisle as treasury stock, or by its subsidiaries, or by Tyco or its
subsidiaries, all of which shall be canceled) will be converted into the right
to receive 0.172185 shares of Tyco common stock, par value $0.50 per share
("Tyco Common Stock") (the "Exchange Ratio") and a cash payment in lieu of any
fractional shares. Approval of the Merger Agreement requires the affirmative
vote of a majority of the voting power of the outstanding shares of Carlisle
Common Stock. Each outstanding share of Class A Carlisle Common Stock is
entitled to one vote and each outstanding share of Class B Carlisle Common Stock
is entitled to 20 votes. Holders of approximately 92% of the voting power of the
outstanding shares of Carlisle Common Stock as of the date of the Merger
Agreement entered into certain Stockholder Agreements with Tyco pursuant to
which such holders agreed, subject to certain terms and conditions, to vote in
favor of the Merger Agreement. The vote of such holders at the Special Meeting
in favor of the Merger Agreement will be sufficient to approve and adopt the
Merger Agreement, irrespective of the votes cast by any other holders of
Carlisle Common Stock.
YOUR BOARD OF DIRECTORS BELIEVES THAT THE MERGER IS FAIR TO, AND IN THE BEST
INTERESTS OF, CARLISLE AND ITS STOCKHOLDERS. THE BOARD HAS UNANIMOUSLY APPROVED
THE TERMS OF THE MERGER AND RECOMMENDS THAT YOU VOTE TO APPROVE AND ADOPT THE
MERGER AGREEMENT.
The accompanying Proxy Statement/Prospectus provides detailed information
concerning the proposed Merger and additional information, which you are urged
to read carefully. It is important that your shares of Carlisle Common Stock be
represented at the Special Meeting, regardless of the number of shares you hold.
Therefore, please sign, date and return your proxy card as soon as possible,
whether or not you plan to attend the Special Meeting. You may revoke your proxy
at any time prior to its exercise at the Special Meeting by giving written
notice of the revocation to the Secretary of Carlisle, by signing and returning
a later dated proxy or by voting in person at the Special Meeting. Accordingly,
even if you have returned your proxy card, you may change your vote prior to or
at the Special Meeting.
Sincerely,
[SIGNATURE OF WILLIAM H. BINNIE]
Chairman of the Board
<PAGE>
CARLISLE PLASTICS, INC.
1314 NORTH THIRD STREET
PHOENIX, AZ 85004
-------------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD SEPTEMBER , 1996
-------------------
To the Stockholders of Carlisle Plastics, Inc.:
Notice is hereby given that a Special Meeting of Stockholders of Carlisle
Plastics, Inc., a Delaware corporation ("Carlisle"), will be held at 10:00 a.m.,
Mountain Standard Time, on September , 1996, at Carlisle's corporate
headquarters at 1314 North Third Street, Phoenix, Arizona 85004 for the
following purposes:
1. To approve and adopt an Agreement and Plan of Merger, dated as of May 14,
1996 (the "Merger Agreement"), among Carlisle, Tyco International Ltd. ("Tyco")
and T2 Acquisition Corp. ("Merger Sub"), a wholly-owned subsidiary of Tyco,
pursuant to which (i) Merger Sub will be merged with and into Carlisle (the
"Merger") and Carlisle will become a wholly-owned subsidiary of Tyco, and (ii)
each outstanding share of Carlisle common stock, $0.01 par value per share
("Carlisle Common Stock") (other than shares owned by Carlisle as treasury stock
or by its subsidiaries or by Tyco or its subsidiaries, all of which shall be
canceled), will be converted into the right to receive 0.172185 shares (the
"Exchange Ratio") of Tyco common stock, $0.50 par value per share ("Tyco Common
Stock") and a cash payment in lieu of any fractional share. A copy of the Merger
Agreement is attached as Annex A to the Proxy Statement/Prospectus accompanying
this Notice.
2. To transact such other business as may properly be brought before the
Special Meeting or any adjournments or postponements thereof.
The affirmative vote of a majority of the voting power of the outstanding
shares of Carlisle Common Stock is necessary for approval and adoption of the
Merger Agreement. Holders of approximately 92% of the voting power of the
outstanding shares of Carlisle Common Stock as of the date of the Merger
Agreement entered into certain Stockholder Agreements with Tyco pursuant to
which such holders agreed, subject to certain terms and conditions, to vote in
favor of the Merger Agreement. The vote of such holders at the Special Meeting
in favor of the Merger Agreement will be sufficient to approve and adopt the
Merger Agreement, irrespective of the votes cast by any other holders of
Carlisle Common Stock. The Merger and other related matters are more fully
described in the accompanying Proxy Statement/Prospectus, and the annexes
thereto, which form a part of this Notice.
The Board of Directors has fixed the close of business on August 7, 1996 as
the record date for the determination of the holders of Carlisle Common Stock
entitled to notice of, and to vote at, the Special Meeting.
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING. TO ENSURE YOUR
REPRESENTATION AT THE MEETING, HOWEVER, YOU ARE URGED TO COMPLETE, DATE, SIGN
AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE. A POSTAGE-PREPAID
ENVELOPE IS ENCLOSED FOR THAT PURPOSE. ANY STOCKHOLDER ATTENDING THE MEETING MAY
VOTE IN PERSON EVEN IF THAT STOCKHOLDER HAS RETURNED A PROXY.
By Order of the Board of Directors,
PATRICK J. O'LEARY
Secretary
August __, 1996
PLEASE DO NOT SEND IN ANY CERTIFICATES FOR YOUR SHARES AT THIS TIME.
<PAGE>
CARLISLE PLASTICS, INC.
PROXY STATEMENT
---------------------
TYCO INTERNATIONAL LTD.
PROSPECTUS
This Proxy Statement and Prospectus ("Proxy Statement/Prospectus") is being
furnished to the holders of common stock, par value $0.01 per share ("Carlisle
Common Stock"), of Carlisle Plastics, Inc., a Delaware corporation ("Carlisle"),
in connection with the solicitation of proxies by the Board of Directors of
Carlisle for use at a special meeting of stockholders of Carlisle to be held at
1314 North Third Street, Phoenix, Arizona 85004, on September , 1996, at 10:00
a.m. Mountain Standard Time, and at any and all adjournments or postponements
thereof (the "Special Meeting"). This Proxy Statement/Prospectus also
constitutes the Prospectus of Tyco International Ltd., a Massachusetts
corporation ("Tyco"), with respect to the issuance of up to 3,230,000 shares of
Tyco common stock, par value $0.50 per share ("Tyco Common Stock"), to be issued
to stockholders of Carlisle, in connection with the Merger (as defined)
described below. Tyco Common Stock is traded on the New York Stock Exchange,
Inc. (the "NYSE") under the symbol "TYC". On August __, 1996, the closing sale
price for Tyco Common Stock as reported in the NYSE Composite Transactions was
$____ per share.
This Proxy Statement/Prospectus relates to the proposed merger (the
"Merger") of T2 Acquisition Corp., a wholly-owned subsidiary of Tyco ("Merger
Sub"), with and into Carlisle, pursuant to an Agreement and Plan of Merger,
dated as of May 14, 1996 (the "Merger Agreement"), by and among Tyco, Merger Sub
and Carlisle. Upon consummation of the Merger, Carlisle will be a wholly-owned
subsidiary of Tyco. In the Merger, each outstanding share of Carlisle Common
Stock (other than shares owned by Carlisle as treasury stock, or by its
subsidiaries, or by Tyco or its subsidiaries, all of which shall be canceled)
will be converted into the right to receive 0.172185 shares of Tyco Common Stock
(the "Exchange Ratio") and a cash payment in lieu of any fractional shares.
Assuming that there will be approximately 18,748,335 shares of Carlisle Common
Stock issued and outstanding on the effective date of the Merger, the aggregate
merger consideration will consist of approximately 3,230,000 shares of Tyco
Common Stock having an aggregate value, based upon the closing sale price of
Tyco Common Stock of $ on August __, 1996, of approximately $ .
Consummation of the Merger is subject to various conditions, including the
approval and adoption of the Merger Agreement by the holders of a majority of
the voting power of the outstanding shares of Carlisle Common Stock at the
Special Meeting. Each outstanding share of Class A Carlisle Common Stock (the
"Carlisle A Stock") is entitled to one vote and each outstanding share of Class
B Carlisle Common Stock (the "Carlisle B Stock") is entitled to 20 votes. Only
holders of Carlisle Common Stock of record at the close of business on August 7,
1996 (the "Record Date") will be entitled to notice of and to vote at the
Special Meeting or any adjournment thereof. On that date, [8,468,788] shares of
Carlisle A Stock and [9,385,497] shares of Carlisle B Stock were issued and
outstanding. Thus, on the basis of the shares of each class of Carlisle Common
Stock outstanding as of the Record Date, holders of Carlisle B Stock represented
95.4% of the voting power of the outstanding shares of Carlisle Common Stock on
the Record Date. Holders of approximately 92% of the voting power of the
outstanding shares of Carlisle Common Stock as of the date of the Merger
Agreement entered into certain Stockholder Agreements with Tyco pursuant to
which such holders agreed, subject to certain terms and conditions, to vote in
favor of the Merger Agreement. The vote of such holders at the Special Meeting
in favor of the Merger Agreement will be sufficient to approve and adopt the
Merger Agreement, irrespective of the votes cast by any other holders of
Carlisle Common Stock.
All information contained in this Proxy Statement/Prospectus with respect to
Tyco and Merger Sub has been provided by Tyco. All information contained in this
Proxy Statement/Prospectus with respect to Carlisle has been provided by
Carlisle.
This Proxy Statement/Prospectus and the accompanying forms of Proxy are
being mailed to stockholders of Carlisle on or about August __, 1996. A
stockholder who has given a proxy may revoke it any time prior to its exercise.
See "The Special Meeting--Record Date; Voting Rights; Proxies."
---------------------
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 PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROXY STATEMENT/PROSPECTUS IS AUGUST __, 1996.
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN OR INCORPORATED BY REFERENCE IN THIS PROXY
STATEMENT/PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
NOT CONTAINED HEREIN MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS
PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR THE
SOLICITATION OF AN OFFER TO PURCHASE, ANY OF THE SECURITIES OFFERED BY THIS
PROXY STATEMENT/PROSPECTUS, OR THE SOLICITATION OF A PROXY, IN ANY JURISDICTION
TO OR FROM ANY PERSON TO OR FROM WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION OF AN OFFER, OR PROXY SOLICITATION, IN SUCH JURISDICTION. NEITHER
THE DELIVERY OF THIS PROXY STATEMENT/PROSPECTUS NOR THE ISSUANCE OR SALE OF ANY
SECURITIES HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE INFORMATION SET FORTH HEREIN OR INCORPORATED BY
REFERENCE SINCE THE DATE HEREOF.
AVAILABLE INFORMATION
Tyco and Carlisle are subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith file reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549 and may be available at the
following Regional Offices of the Commission: Chicago Regional Office,
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511; and New York Regional Office, 7 World Trade Center, Suite
130, New York, New York 10048. Copies of such materials can be obtained at
prescribed rates from the Public Reference Section of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. In addition,
material filed by Tyco and Carlisle can be inspected at the offices of the NYSE,
20 Broad Street, New York, New York 10005, on which the shares of Tyco Common
Stock and Carlisle A Stock are listed.
This Proxy Statement/Prospectus does not contain all the information set
forth in the Registration Statement on Form S-4 and exhibits relating thereto,
including any amendments (the "Registration Statement"), of which this Proxy
Statement/Prospectus is a part, and which Tyco has filed with the Commission
under the Securities Act of 1933, as amended (the "Securities Act"). Reference
is made to such Registration Statement for further information with respect to
Tyco and the securities of Tyco offered hereby. Statements contained herein
concerning the provisions of documents are necessarily summaries of such
documents, and each statement is qualified in its entirety by reference to the
copy of the applicable document filed with the Commission or attached as an
annex hereto.
INCORPORATION OF DOCUMENTS BY REFERENCE
Tyco (File No. 1-5482) hereby incorporates by reference into this Proxy
Statement/Prospectus the following documents previously filed with the
Commission pursuant to the Exchange Act:
1. Tyco's Annual Report on Form 10-K for the fiscal year ended June 30,
1995;
2. The financial statements of The Earth Technology Corporation (USA)
("Earth Tech", File No. 33-16098), acquired by Tyco in January, 1996, set forth
on pages 22-36 of Earth Tech's 1995 Annual Report, filed as Exhibit Item 13.1 to
Earth Tech's Annual Report on Form 10-K for the fiscal year ended August 25,
1995, are incorporated by reference herein; and
3. Tyco's Quarterly Reports on Form 10-Q for the quarters ended September
30, 1995, December 31, 1995 and March 31, 1996.
<PAGE>
In addition, all reports and other documents filed by Tyco pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date
hereof and prior to the Special Meeting shall be deemed to be incorporated by
reference herein and to be a part hereof from the date of filing of such reports
and 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 Proxy Statement/Prospectus to the extent that a statement
contained herein, or in any other subsequently filed document that also is
incorporated or deemed to be incorporated by reference herein, modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Proxy Statement/Prospectus.
This proxy statement/prospectus incorporates by reference documents relating
to Tyco which are not presented herein or delivered herewith. These documents
(other than exhibits to such documents, unless such exhibits are specifically
incorporated by reference herein) are available, without charge, upon written or
oral request from any person to whom this Proxy Statement/Prospectus is
delivered, including any beneficial owner, to One Tyco Park, Exeter, New
Hampshire 03833, Attention: David Brownell, Vice President (telephone no. (603)
778-9700).
In addition, copies of the following documents relating to Carlisle are
available, without charge, upon written or oral request from any person to whom
this Proxy Statement/Prospectus is delivered, including any beneficial owner, to
1314 North Third Street, Phoenix, Arizona 85004, Attention: Patrick J. O'Leary,
Secretary (telephone no. (602) 407-2100):
1. Carlisle's Annual Report on Form 10-K for the year ended December 31,
1995;
2. Carlisle's Quarterly Report on Form 10-Q for the quarter ended March 31,
1996;
3. Carlisle's Current Report on Form 8-K dated May 14, 1996;
4. Carlisle's Current Report on Form 8-K/A dated August 5, 1996;
5. Carlisle's Annual Report on Form 10-K/A for the year ended December 31,
1995, filed July 18, 1996; and
6. The description of the Carlisle A Stock contained in Carlisle's
Registration Statement on Form S-1 (File No. 33-39515) filed with the Commission
pursuant to Section 12(g) of the Exchange Act on March 27, 1991.
In order to ensure timely delivery of the documents, any request should be made
by August __, 1996.
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
PAGE
----
<S> <C>
SUMMARY............................................................................... 1
The Companies....................................................................... 1
Special Meeting..................................................................... 1
Reasons for the Merger.............................................................. 2
Recommendation of the Board of Directors of Carlisle................................ 2
The Merger.......................................................................... 3
Opinion of Financial Advisor........................................................ 5
Certain Considerations.............................................................. 5
Interests of Certain Persons in the Merger.......................................... 6
Material Federal Income Tax Consequences............................................ 6
Comparative Rights of Stockholders.................................................. 6
Comparative Per Share Prices........................................................ 6
Summary Historical and Unaudited Pro Forma Combined Financial Data.................. 7
Comparative Per Share Data.......................................................... 10
Tyco Operating Results, Year Ended June 30, 1996.................................... 12
THE SPECIAL MEETING................................................................... 13
Purpose of the Special Meeting...................................................... 13
Record Date; Voting Rights; Proxies................................................. 13
Solicitation of Proxies............................................................. 13
Quorum.............................................................................. 14
Required Vote....................................................................... 14
THE MERGER............................................................................ 14
General............................................................................. 14
Effective Time...................................................................... 15
Conversion of Shares; Procedures for Exchange of Certificates....................... 15
Background of the Merger............................................................ 15
Reasons for the Merger.............................................................. 17
Recommendation of the Board of Directors of Carlisle................................ 17
Opinion of Carlisle's Financial Advisor............................................. 18
Certain Considerations.............................................................. 22
Interests of Certain Persons in the Merger.......................................... 22
Material Federal Income Tax Consequences............................................ 23
Accounting Treatment................................................................ 24
Effect on Employee Benefits Plans................................................... 25
Certain Legal Matters............................................................... 25
Federal Securities Law Consequences................................................. 26
Stock Exchange Listing.............................................................. 26
Dividends........................................................................... 26
Appraisal Rights.................................................................... 26
Fees and Expenses................................................................... 27
THE MERGER AGREEMENT AND RELATED AGREEMENTS........................................... 27
Terms of the Merger................................................................. 27
Exchange of Certificates............................................................ 29
Representations and Warranties...................................................... 30
Conduct of Business Pending the Merger.............................................. 30
Additional Agreements............................................................... 33
Conditions to the Merger............................................................ 34
</TABLE>
i
<PAGE>
<TABLE>
PAGE
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<S> <C>
Termination......................................................................... 36
Amendment and Waiver................................................................ 38
Stockholder Agreements.............................................................. 38
COMPARATIVE PER SHARE PRICES AND DIVIDENDS............................................ 39
Tyco................................................................................ 39
Carlisle............................................................................ 41
Post-Merger Dividend Policy......................................................... 41
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS..................................... 42
Notes to Unaudited Pro Forma Combined Financial Statements.......................... 46
BUSINESS OF TYCO...................................................................... 48
Disposable and Specialty Products................................................... 48
Fire Protection and Other Contracting Services...................................... 50
Flow Control Products............................................................... 51
Electrical and Electronic Components................................................ 52
BUSINESS OF CARLISLE.................................................................. 54
Business............................................................................ 54
Properties.......................................................................... 57
Legal Proceedings................................................................... 57
Directors and Executive Officers of Carlisle........................................ 58
Carlisle Executive Compensation..................................................... 59
Certain Relationships and Related Transactions of Carlisle.......................... 63
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OF CARLISLE........................................................................... 65
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF CARLISLE............ 70
DESCRIPTION OF CAPITAL STOCK OF TYCO.................................................. 72
COMPARISON OF STOCKHOLDER RIGHTS...................................................... 73
Special Meeting of Stockholders..................................................... 73
Inspection Rights................................................................... 73
Action by Consent of Stockholders................................................... 74
Cumulative Voting................................................................... 74
Dividends and Repurchase of Stock................................................... 74
Classification of the Board of Directors............................................ 74
Removal of Directors................................................................ 74
Vacancies on the Board of Directors................................................. 75
Exculpation of Directors............................................................ 75
Indemnification of Directors, Officers and Others................................... 75
Interested Director Transactions.................................................... 75
Sale, Lease or Exchange of Assets and Mergers....................................... 76
Amendments to Charter............................................................... 76
Amendments to By-laws............................................................... 76
Appraisal Rights.................................................................... 77
"Anti-Takeover" Statute............................................................. 77
Stockholder Rights Plan............................................................. 78
Consideration of Societal Factors................................................... 78
SECTION 16(A) COMPLIANCE.............................................................. 79
</TABLE>
ii
<PAGE>
<TABLE>
PAGE
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<S> <C>
OTHER MATTERS......................................................................... 79
LEGAL MATTERS......................................................................... 79
EXPERTS............................................................................... 79
STOCKHOLDER PROPOSALS................................................................. 80
INDEX TO FINANCIAL STATEMENTS OF CARLISLE............................................. F-1
Annexes:
A. Agreement and Plan of Merger....................................................... A-1
B. Opinion of Carlisle's Financial Advisor, Goldman, Sachs & Co....................... B-1
</TABLE>
iii
<PAGE>
SUMMARY
The following is a brief summary of certain information contained elsewhere
in this Proxy Statement/Prospectus and the Annexes hereto. This summary is not
intended to be complete, and is qualified in its entirety by reference to the
more detailed information and financial statements contained or incorporated by
reference in this Proxy Statement/Prospectus. Stockholders of Carlisle should
read carefully this Proxy Statement/Prospectus in its entirety. Certain
capitalized terms used in this summary are defined elsewhere in this Proxy
Statement/Prospectus.
THE COMPANIES
TYCO INTERNATIONAL LTD.
Tyco, through its divisions and operating subsidiaries, maintains strong
leadership positions in each of its segments in the respective markets for
disposable medical supplies and other specialty products, fire protection
systems and other contracting services, flow control products and electrical and
electronic components. Tyco, which operates in more than 50 countries around the
world, had fiscal 1995 sales of approximately $4.5 billion. See "Business of
Tyco." The executive offices of Tyco are located at One Tyco Park, Exeter, New
Hampshire 03833, and its telephone number is (603) 778-9700.
CARLISLE PLASTICS, INC.
Carlisle is a leading producer of consumer and industrial products made from
plastics. The Company's products include trash bags, flexible packaging, garment
hangers and sheeting. The Company's trash bag products include institutional
lines, as well as the Company's own national consumer brands. Carlisle had
fiscal 1995 sales of approximately $426 million, primarily in North America. See
"Business of Carlisle." The executive offices of Carlisle are located at 1314
North Third Street, Phoenix, Arizona 85004, and its telephone number is (602)
407-2100.
SPECIAL MEETING
TIME, PLACE AND DATE
A Special Meeting of Carlisle's stockholders will be held at Carlisle's
corporate headquarters, 1314 North Third Street, Phoenix Arizona 85004 on
September , 1996, at 10:00 a.m., Mountain Standard Time (including any and all
adjournments or postponements thereof, the "Special Meeting").
PURPOSE OF THE SPECIAL MEETING
The Merger. At the Special Meeting, holders of Carlisle Common Stock will
consider and vote upon a proposal to approve and adopt the Merger Agreement.
Other Matters. Carlisle stockholders also may consider and vote upon any
other matters that may properly come before the Special Meeting. Management of
Carlisle is presently unaware of any other matter to be brought before the
Special Meeting.
VOTE REQUIRED; RECORD DATE
The Merger will require approval and adoption of the Merger Agreement by the
affirmative vote of the holders of a majority of the voting power of the
outstanding shares of Carlisle Common Stock. The presence in person or by
properly executed proxy of holders of the issued and outstanding shares of
Carlisle Common Stock representing a majority of the votes entitled to be cast
at the Special Meeting is necessary to constitute a quorum at the Special
Meeting. In certain circumstances, including if Carlisle
<PAGE>
stockholders fail to approve and adopt the Merger Agreement, Carlisle may be
obligated to pay Tyco a termination fee of $4 million (plus expenses, subject to
certain limitations). Each outstanding share of Carlisle A Stock is entitled to
one vote and each outstanding share of Carlisle B Stock is entitled to 20 votes.
Only holders of Carlisle Common Stock at the close of business on August 7, 1996
(the "Record Date") will be entitled to notice of and to vote at the Special
Meeting. On the basis of the number of shares of each class of Carlisle Common
Stock outstanding as of the Record Date, holders of Carlisle B stock represented
95.4% of the voting power of the outstanding shares of Carlisle Common Stock
entitled to vote at the Special Meeting. See "The Special Meeting" and "The
Merger Agreement and Related Agreements--Termination--Fees and Expenses."
As of the Record Date, directors and executive officers of Carlisle and
their affiliates were beneficial owners of approximately 75% of the voting power
of the outstanding shares of Carlisle Common Stock and stock options. Holders of
approximately 92% of the voting power of the Carlisle Common Stock outstanding
as of the date of the Merger Agreement entered into certain Stockholder
Agreements with Tyco pursuant to which such holders agreed, subject to certain
terms and conditions, to vote in favor of approval and adoption of the Merger
Agreement. The vote of such holders at the Special Meeting in favor of the
Merger Agreement will be sufficient to approve and adopt the Merger Agreement,
irrespective of the votes cast by any other holders of Carlisle Common Stock.
See "The Merger Agreement and Related Agreements--Stockholder Agreements" and
"Security Ownership of Certain Beneficial Owners and Management of Carlisle."
CHANGE OF VOTE
Carlisle stockholders who have executed a proxy may revoke the proxy at any
time prior to its exercise at the Special Meeting by giving written notice to
the Secretary of Carlisle, by signing and returning a later dated proxy or by
voting in person at the Special Meeting. Accordingly, stockholders of Carlisle
who have executed and returned proxy cards in advance of the Special Meeting may
change their vote at any time prior to or at the meeting.
REASONS FOR THE MERGER
Tyco believes that the Merger is in keeping with its corporate growth
strategy, which includes growth through acquisitions where attractive
acquisition opportunities present themselves that are likely to benefit from
cost reductions and synergies with Tyco's existing operations and that are
expected to be non-dilutive.
RECOMMENDATION OF THE BOARD OF DIRECTORS OF CARLISLE
In reaching its decision to approve the Merger Agreement and to recommend
that Carlisle's stockholders vote to approve and adopt the Merger Agreement,
Carlisle's Board of Directors considered, the following material factors: (i)
the opportunity for Carlisle stockholders to participate, as holders of Tyco
Common Stock, in a larger, more strategically balanced company of which Carlisle
would become a part, and to receive shares of Tyco Common Stock in a tax-free
exchange valued at a significant premium over the existing market price for
shares of Carlisle A Stock; (ii) its knowledge of the business, operations,
properties, assets, financial condition and operating results of Carlisle and
Tyco; (iii) judgments as to Carlisle's future prospects, particularly in light
of Carlisle's historical earnings volatility and Carlisle's leverage; (iv)
presentations by Carlisle's management and by Goldman, Sachs & Co. ("Goldman
Sachs"), Carlisle's financial advisor, with respect to Carlisle and Tyco and the
opinion of Goldman Sachs as to the fairness of the Exchange Ratio to the
stockholders of Carlisle; and (v) Tyco Common Stock should provide Carlisle's
stockholders with greater liquidity in their investment.
2
<PAGE>
The Carlisle Board of Directors also considered the loss of independence
which would result from being a wholly-owned subsidiary of Tyco. The Board of
Directors concluded, however, that the benefits of the Merger to Carlisle and
its stockholders outweighed the loss of independence.
THE BOARD OF DIRECTORS OF CARLISLE UNANIMOUSLY HAS APPROVED THE MERGER AND
THE MERGER AGREEMENT AND RECOMMENDS THAT CARLISLE STOCKHOLDERS VOTE FOR APPROVAL
AND ADOPTION OF THE MERGER AGREEMENT. SEE "THE MERGER--BACKGROUND OF THE
MERGER," "--RECOMMENDATION OF THE BOARD OF DIRECTORS OF CARLISLE"; AND
"--INTERESTS OF CERTAIN PERSONS IN THE MERGER."
THE MERGER
MERGER CONSIDERATION
Pursuant to the Merger, each outstanding share of Carlisle Common Stock
(other than shares owned by Carlisle as treasury stock, or by its subsidiaries,
or by Tyco or any of its subsidiaries, all of which will be canceled) will be
converted into the right to receive 0.172185 shares of Tyco Common Stock and a
cash payment in lieu of any fractional share. See "The Merger Agreement--Terms
of the Merger."
EXCHANGE OF CERTIFICATES
As soon as practicable after the effective date of the Merger (the
"Effective Time"), Boston EquiServe, or another person mutually designated by
Tyco and Carlisle, in its capacity as exchange agent for the Merger (the
"Exchange Agent"), will send a transmittal letter to each Carlisle stockholder.
The transmittal letter will contain instructions with respect to the surrender
of certificates representing Carlisle Common Stock to be exchanged for Tyco
Common Stock. See "The Merger Agreement and Related Agreements--Exchange of
Certificates."
CARLISLE STOCKHOLDERS SHOULD NOT FORWARD CERTIFICATES FOR CARLISLE COMMON
STOCK TO THE EXCHANGE AGENT UNTIL THEY HAVE RECEIVED TRANSMITTAL LETTERS.
CARLISLE STOCKHOLDERS SHOULD NOT RETURN STOCK CERTIFICATES WITH THE ENCLOSED
PROXY.
CONDITIONS TO THE MERGER; TERMINATION; FEES
The obligations of Tyco and Carlisle to consummate the Merger are subject to
various conditions, including, but not limited to: (i) the effectiveness of the
Registration Statement; (ii) obtaining requisite Carlisle stockholder approval;
(iii) approval for listing on the NYSE, subject to official notice of issuance,
of the Tyco Common Stock to be issued in connection with the Merger; (iv) the
absence of any preliminary or permanent injunction or other order by any
domestic or foreign court preventing the consummation of the Merger or any
proceeding brought by any governmental authority seeking any of the foregoing;
and (v) receipt of opinions of counsel as to the tax treatment of the Merger.
See "The Merger Agreement and Related Agreements--Conditions to the Merger."
Neither Tyco nor Carlisle has any present intention of waiving any conditions to
the Merger set forth in the Merger Agreement.
The Merger Agreement may be terminated at any time prior to the Effective
Time, whether before or after approval of the matters presented in connection
with the Merger by the stockholders of Tyco or Carlisle: (i) by mutual written
consent of the Boards of Directors of Tyco and Carlisle; (ii) by either Tyco or
Carlisle, if the Merger shall not have been consummated by October 31, 1996;
(iii) by either Tyco or Carlisle, if a court shall have issued a nonappealable
final order permanently enjoining the Merger; (iv) by Tyco, if the requisite
vote of the stockholders of Carlisle shall not have been obtained by October 31,
1996; (v) by Tyco, if the Board of Directors of Carlisle modifies its approval
of the Merger Agreement or the Merger in a manner adverse to Tyco; recommends to
the stockholders of Carlisle an Alternative Transaction (as defined below); or
recommends that the stockholders of Carlisle tender
3
<PAGE>
their shares in a tender or exchange offer by a person other than Tyco for 25%
or more of the outstanding Carlisle Common Stock; (vi) by Tyco or Carlisle, upon
a Terminating Breach or Terminating Misrepresentation (each as defined) by the
other; (vii) by Tyco, if any representation or warranty of Carlisle shall have
been untrue when made or becomes untrue, or by Carlisle, if any representation
or warranty of Tyco shall have been untrue when made or becomes untrue, in each
case subject to certain exceptions; or (viii) by Carlisle, if the Board of
Directors of Carlisle modifies or changes its approval of the Merger Agreement
or the Merger in a manner adverse to Tyco or the Merger Sub. See "The Merger
Agreement and Related Agreements--Termination--Conditions to Termination."
"Alternative Transaction" means any of (i) a transaction pursuant to which
any person (or group of persons) other than Tyco or its affiliates (a "Third
Party") acquires or would acquire more than 25% of the outstanding shares of any
class of equity securities of Carlisle, or, in the case of any person (or group
of persons other than Parent and its affiliates) identified in Carlisle's proxy
statement dated March 15, 1996 as the beneficial owner of more than 25% of the
outstanding shares of the Carlisle A Stock or the Carlisle B Stock, would
acquire an additional 5% or more of such securities, whether from Carlisle or
pursuant to a tender offer or exchange offer or otherwise, (ii) a merger or
other business combination involving Carlisle pursuant to which any Third Party
acquires more than 25% of the outstanding equity securities of Carlisle or the
entity surviving such merger or business combination, or (iii) any other
transaction pursuant to which any Third Party acquires or would acquire control
of assets (including for this purpose the outstanding equity securities of
subsidiaries of Carlisle, and the entity surviving any merger or business
combination including any of them) of Carlisle, or any of its subsidiaries
having a fair market value (as determined by the Board of Directors of Carlisle
in good faith) equal to more than 25% of the fair market value of all the assets
of Carlisle and its subsidiaries, taken as a whole, immediately prior to such
transaction; provided, however, that the term Alternative Transaction does not
include any acquisition of securities by a broker dealer in connection with a
bona fide public offering of such securities.
Carlisle will pay Tyco a fee of $4 million plus actual, reasonable,
documented out-of-pocket expenses incurred from and after April 29, 1996
(subject to certain limitations, and in no event more than $500,000) if the
Merger is terminated (i) by Tyco, as a result of the failure to receive the
requisite vote for approval and adoption of the Merger Agreement by the
stockholders of Carlisle by October 31, 1996; (ii) by Tyco, if the Board of
Directors of Carlisle has modified its approval of the Merger Agreement or the
Merger in a manner adverse to Tyco or the Merger Sub; has recommended to the
stockholders of Carlisle an Alternative Transaction; or has recommended that the
stockholders of Carlisle tender their shares in a tender or exchange offer under
certain circumstances, as set forth above; (iii) by Tyco, on account of a
Terminating Breach by Carlisle; or (iv) by Carlisle, if the Board of Directors
of Carlisle has modified its approval of the Merger Agreement or the Merger in a
manner adverse to Tyco or the Merger Sub or has resolved to do so.
If the Merger is terminated as a result of any representation or warranty
having been untrue when made, the non-terminating party shall pay the
terminating party the actual, reasonable, documented out-of-pocket expenses of
the terminating party (subject to certain limitations), but in no event more
than $500,000.
LISTING
It is a condition to the Merger that the shares of Tyco Common Stock to be
issued in the Merger be authorized for listing on the NYSE, subject to official
notice of issuance.
DIVIDENDS
Tyco expects to continue to declare its regular quarterly dividends.
Carlisle has not paid dividends on its common stock and does not anticipate
payment of dividends in the near future. Under the terms of
4
<PAGE>
the Merger Agreement, Carlisle is not permitted to declare, set aside, make or
pay any dividend or other distribution in respect of its capital stock during
the period from the date of the Merger Agreement until the earlier of the
termination of the Merger Agreement or the Effective Time.
APPRAISAL RIGHTS
Under the General Corporation Law of the State of Delaware, the holders of
Carlisle Common Stock are not entitled to any appraisal rights with respect to
the Merger. See "The Merger--Appraisal Rights."
CERTAIN LEGAL MATTERS
Tyco and William H. Binnie have each filed a Notification and Report Form
under the Hart-Scott-Rodino Act of 1976, as amended, and early termination of
the waiting period with respect thereto has been granted. See "The
Merger--Certain Legal Matters."
ACCOUNTING TREATMENT
The Merger will be accounted for as a purchase by Tyco in accordance with
generally accepted accounting principles.
OPINION OF FINANCIAL ADVISOR
On May 14, 1996, Goldman Sachs delivered its oral opinion to the Board of
Directors of Carlisle that, as of the date of such opinion, the Exchange Ratio
pursuant to the Merger Agreement was fair to the holders of Carlisle Common
Stock. Goldman Sachs subsequently delivered its written opinion, dated as of the
date hereof, to the Board of Directors of Carlisle to the effect that, as of the
date hereof, the Exchange Ratio pursuant to the Merger Agreement is fair to the
holders of Carlisle Common Stock.
The full text of the written opinion of Goldman Sachs, dated as of the date
hereof, which sets forth assumptions made, matters considered and limitations on
the review undertaken in connection with the opinion, is attached hereto as
Annex B and is incorporated herein by reference. HOLDERS OF CARLISLE COMMON
STOCK ARE URGED TO, AND SHOULD, READ SUCH OPINION IN ITS ENTIRETY. See "The
Merger--Opinion of Carlisle's Financial Advisor."
CERTAIN CONSIDERATIONS
In deciding whether to approve and adopt the Merger Agreement, Stockholders
of Carlisle should carefully evaluate the information contained in this Proxy
Statement/Prospectus and, in particular, the following factors: (i) the relative
stock prices of Tyco Common Stock and Carlisle A Stock at the Effective Time may
vary significantly from the prices as of the date of execution of the Merger
Agreement, the date of this Proxy Statement/Prospectus or the date on which
stockholders vote on the Merger Agreement; (ii) the Merger Agreement does not
contain any provisions for adjustment of the Exchange Ratio based on
fluctuations in such stock prices; accordingly, the value of the consideration
to be received by stockholders of Carlisle upon consummation of the Merger will
depend on the market price of Tyco Common Stock at the Effective Time; (iii)
following the Merger, the trading price of Tyco Common Stock could be subject,
among other things, to fluctuations in response to general business and market
conditions, competitive factors in the various industries in which Tyco competes
and variations in Tyco's operating and financial results; and (iv) Tyco's
historical stock and earnings performance is not necessarily indicative of its
future stock price or earnings results.
5
<PAGE>
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Carlisle Board of Directors with
respect to the Merger Agreement and the transactions contemplated thereby,
Carlisle stockholders should be aware that certain members of Carlisle
management and the Carlisle Board of Directors have certain interests in the
Merger that are in addition to the interests of stockholders of Carlisle
generally. Pursuant to employment agreements between Carlisle and its Chief
Executive Officer and Chief Financial Officer (each of whom also is a member of
Carlisle's Board of Directors), if either officer's employment is terminated
(including a voluntary termination) within 36 months of a change of control (as
defined), such officer will receive a lump sum severance payment equal to 24
months average monthly compensation. The Merger is deemed a "change of control"
for the purposes of each such employment agreement. In addition, a $100,000 loan
by the Company to its Chief Executive Officer will be forgiven upon the
consummation of the Merger. The officers and directors of Carlisle also have
options to acquire an aggregate of 1,187,500 shares of Carlisle A Stock, which
options will be converted in the Merger into fully vested and exercisable
options to purchase Tyco Common Stock. In addition, there are certain
indemnification and insurance arrangements and other matters which Tyco will
assume or has agreed to provide after the Merger. See "The Merger--Interests of
Certain Persons in the Merger."
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
It is expected that the Merger will constitute a reorganization for Federal
income tax purposes and, accordingly, that no gain or loss will be recognized
for Federal income tax purposes by holders of Carlisle Common Stock upon the
conversion of Carlisle Common Stock into Tyco Common Stock in the Merger (except
with respect to any cash received in lieu of a fractional share interest in Tyco
Common Stock). See "The Merger--Material Federal Income Tax Consequences."
Carlisle stockholders are urged to consult their own tax advisors as to the
specific tax consequences to them of the Merger.
COMPARATIVE RIGHTS OF STOCKHOLDERS
The rights of stockholders of Carlisle currently are governed by Delaware
law, Carlisle's Certificate of Incorporation and Carlisle's By-Laws. Upon
consummation of the Merger, stockholders of Carlisle will become stockholders of
Tyco, which is a Massachusetts corporation, and their rights as stockholders of
Tyco will be governed by Massachusetts law, Tyco's Restated Articles of
Organization, as amended, and Tyco's By-Laws. For a discussion of various
differences between the rights of stockholders of Carlisle and the rights of
stockholders of Tyco, see "Description of Capital Stock of Tyco" and "Comparison
of Stockholder Rights."
COMPARATIVE PER SHARE PRICES
The closing prices per share as reported in the NYSE Composite Transactions
and the equivalent price per share on May 14, 1996 of Tyco Common Stock and
Carlisle A Stock were as follows:
<TABLE>
<CAPTION>
TYCO CARLISLE
------- --------
<S> <C> <C>
Closing Price per share................................. $39.125 $ 4.875
Equivalent price per share(1)........................... -- $ 6.74
</TABLE>
- ------------
(1) Calculated by multiplying the closing price for Tyco Common Stock by the
Exchange Ratio.
The public announcement of the Merger Agreement occurred prior to the
opening of trading on May 15, 1996. On August __, 1996, the most recent date for
which prices were available prior to printing this Proxy Statement/Prospectus,
the closing prices per share of Tyco Common Stock and Carlisle A
6
<PAGE>
Stock as reported in the NYSE Composite Transactions were $____ and $____,
respectively. See "Comparative Per Share Prices and Dividends."
SUMMARY HISTORICAL AND UNAUDITED
PRO FORMA COMBINED FINANCIAL DATA
The following tables set forth (i) summary historical financial data for
Tyco and Carlisle and (ii) summary unaudited pro forma combined financial data
giving effect to the Merger, and the acquisition by Tyco of several other
businesses since July 1, 1995, accounted for as purchases in accordance with
generally accepted accounting principles. The summary historical financial data
for the related fiscal year ends (June 30 for Tyco and December 31 for Carlisle)
have been obtained from audited financial statements of Tyco and Carlisle, as
the case may be. The summary financial data for the interim periods have been
obtained from the unaudited financial statements of Tyco and Carlisle, as the
case may be, and include, in the opinion of the management of Tyco and Carlisle,
as the case may be, all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the results for such periods. The
summary financial data should be read in conjunction with the separate
historical consolidated financial statements and notes thereto of Tyco, which
are incorporated by reference in this Proxy Statement/Prospectus, see
"Incorporation of Certain Documents by Reference," and of Carlisle, included
elsewhere in this Proxy Statement/Prospectus. The summary unaudited pro forma
combined financial data should also be read in conjunction with the Unaudited
Pro Forma Combined Financial Statements included elsewhere in this Proxy
Statement/Prospectus. Certain adjustments, as discussed in "Notes to Unaudited
Pro Forma Combined Financial Statements," have been made to conform the
companies' fiscal year ends. The unaudited pro forma combined financial data are
not necessarily indicative of actual or future operating results or financial
position that would have occurred prior to, or will occur upon, consummation of
the Merger.
7
<PAGE>
TYCO HISTORICAL(1)(2)
(in thousands except per share amounts)
<TABLE>
<CAPTION>
AT OR FOR THE NINE
MONTHS ENDED MARCH 31, AT OR FOR THE ONE YEAR ENDED JUNE 30,
----------------------- --------------------------------------------------------------
1995 1996 1991(3) 1992(4) 1993(5) 1994 1995(6)
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Income Statement Data:
Sales................... $3,286,995 $3,717,706 $3,107,891 $3,066,485 $3,919,357 $4,076,383 $4,534,651
Income before
extraordinary item and
cumulative effect of
accounting changes...... 144,964 215,909 117,485 95,266 94,458 189,191 216,593
Income per share before
extraordinary item and
cumulative effect of
accounting changes...... .96 1.41 1.28 1.03 .65 1.28 1.43
Cash dividends per
common share........... .15 .15 .175 .18 .19 .20 .20
Balance Sheet Data:
Working Capital......... $ 436,541 $ 403,200 $ 252,021 $ 274,278 $ 341,154 $ 329,918 $ 367,186
Total Assets............ 3,303,597 3,765,631 2,392,966 2,451,537 3,164,966 3,144,598 3,381,461
Long-term debt.......... 567,249 516,435 609,255 534,951 812,585 588,491 506,417
Shareholders' equity.... 1,584,099 1,831,573 905,151 1,040,551 1,138,786 1,367,026 1,634,681
</TABLE>
- ------------
(1) On October 11, 1995, Tyco's Board of Directors authorized a two-for-one
stock split to be effected in the form of a stock dividend. One additional
share of common stock was distributed on November 14, 1995 for each share of
common stock held by shareholders of record on October 30, 1995. Income per
share and cash dividends per share have been restated to reflect the stock
split.
(2) On October 19, 1994, a wholly-owned subsidiary of Tyco merged with Kendall
International, Inc. ("Kendall") in a transaction accounted for as a pooling
of interests. The historical data reflect the combined results of operations
and financial position of Tyco and Kendall for all periods subsequent to
June 30, 1992, the date on which Kendall undertook a financial
restructuring. The historical data at or for the years ended June 30, 1992
and 1991 reflect only the results of operations and financial position of
Tyco.
(3) Fiscal 1991 included the results of operations of Wormald International
Limited from the date of its acquisition, August 2, 1990.
(4) Fiscal 1992 included 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.
(5) Fiscal 1993 included 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 rate changes of $7.8 million and a special pension charge of $1.2
million after-tax.
(6) Fiscal 1995 results include a charge of $31.2 million after-tax for fees and
expenses related to the Kendall merger and integration of the combined
companies.
8
<PAGE>
CARLISLE HISTORICAL
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
AT OR FOR THE THREE
MONTHS ENDED MARCH
31, AT OR FOR THE YEAR ENDED DECEMBER 31,
------------------- ----------------------------------------------------
1995 1996 1991(A) 1992 1993 1994(A) 1995
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Statement of Operations Data:
Sales.......................... $103,160 $ 94,618 $343,637 $359,856 $360,895 $387,664 $426,272
Income (loss) before
extraordinary item and change
in accounting principle(b).... 633 1,538 5,393 (6,214) 5,832 2,999 (26,093)
Income (loss) per share before
extraordinary item and change
in accounting principle....... 0.04 0.09 0.36 (0.35) 0.33 0.17 (1.47)
Cash dividends per common
share.......................... -- -- -- -- -- -- --
Balance Sheet Data:
Working Capital (Deficit)...... $ 70,684 $ (8,143) $ 38,596 $ 61,852 $ 54,257 $ 65,227 $ 44,831
Total Assets................... 348,225 261,486 304,596 325,170 325,848 340,992 294,439
Long-term debt(c).............. 199,591 125,017 155,885 198,994 183,101 198,277 183,784
Stockholders' equity........... 70,853 46,401 68,448 62,179 69,266 70,260 44,866
</TABLE>
- ------------
(a) In May 1991, the Company acquired the remaining 21% of Poly-Tech, Inc. which
was not previously owned by the Company. In July 1991, the Company acquired
66.7% of the stock of Rhino-X Industries, Inc. and acquired the remaining
33.3% in January 1994. Results are included from the date of each respective
purchase.
(b) In 1995, pretax income was reduced by $33.9 million for a restructuring
charge and $1.0 million related to pension plan termination. In 1992, pretax
income was reduced by $7.7 million for a new product introduction and $4.3
million for a restructuring charge. In 1991, pretax income was reduced by
$3.4 million for a restructuring charge and the provision for income taxes
included a $3.0 million non-recurring deferred tax charge to recognize tax
effects of timing differences due to conversion of the Company from an "S"
corporation to a "C" corporation.
(c) Includes junior subordinated notes due to stockholders and affiliates in the
aggregate amount of $7.0 million in 1991.
9
<PAGE>
UNAUDITED PRO FORMA COMBINED(A)
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
AT OR FOR THE
NINE MONTHS FOR THE
ENDED YEAR ENDED
MARCH 31, 1996 JUNE 30, 1995
-------------- -------------
<S> <C> <C>
Income Statement Data:
Sales.......................................................... $4,469,390 $ 5,739,061
Income before extraordinary item............................... 175,583 203,624
Income per share before extraordinary item(b).................. 1.12 1.32
Cash dividends per common share(c)............................. .15 .20
Balance Sheet Data:
Working capital................................................ $ 345,471 --
Total assets................................................... 4,556,788 --
Long-term debt................................................. 898,912 --
Shareholders' equity........................................... 1,961,955 --
</TABLE>
- ------------
<TABLE>
<C> <S>
(a) The summary unaudited pro forma combined financial data give effect to (i) the Merger
and (ii) the acquisition by Tyco from July 1, 1995 through March 31, 1996 of several
businesses for its disposable and specialty products segment, its fire protection and
other contracting services segment and its flow control segment, and subsequent to
March 31, 1996, the acquisition of three companies through Tyco's Kendall subsidiary
and one company for its fire protection and other contracting services segment.
(b) The pro forma combined per share data have been prepared based upon the conversion of
each share of Carlisle Common Stock into 0.172185 shares of Tyco Common Stock and also
accounts for shares of Tyco Common Stock issued in one of Tyco's acquisitions since
July 1, 1995.
(c) Tyco currently pays a quarterly dividend of $0.05 per share. Although it is Tyco's
present intention to continue to pay such regular quarterly dividend, the payment of
dividends in the future is subject to the discretion of Tyco's Board of Directors,
which may consider such factors as Tyco's earnings, financial condition and other
matters which it deems relevant.
</TABLE>
COMPARATIVE PER SHARE DATA
The following table sets forth Tyco's and Carlisle's historical per share
data and unaudited pro forma combined per share data giving effect to the Merger
and the acquisition by Tyco of several other businesses since July 1, 1995,
accounted for as purchases in accordance with generally accepted accounting
principles. The pro forma combined data are not necessarily indicative of actual
or future operating results or financial position that would have occurred or
will occur upon consummation of the Merger. The data should be read in
conjunction with the Unaudited Pro Forma Combined Financial Statements and the
separate historical consolidated financial statements of Carlisle included
elsewhere in this Proxy Statement/Prospectus and the separate historical
consolidated financial statements of Tyco which are incorporated herein by
reference.
10
<PAGE>
The equivalent pro forma combined per share data of Carlisle are calculated
by multiplying the pro forma income before extraordinary item per Tyco share,
pro forma book value per Tyco share, and historical dividends per Tyco share by
the Exchange Ratio so that the per share amounts are equated to the comparative
values for each share of Carlisle.
<TABLE>
<CAPTION>
AT OR FOR THE
NINE MONTHS AT OR FOR THE
ENDED YEAR ENDED
MARCH 31, 1996 JUNE 30, 1995(A)
-------------- ----------------
<S> <C> <C>
Historical:
Per share of Tyco Common Stock
Income before extraordinary item............................. $ 1.41 $ 1.43
Book value................................................... 12.01 10.70
Dividends.................................................... 0.15 0.20
Per share of Carlisle Common Stock(b)
Income (loss) before extraordinary item...................... (1.49) .22
Book value................................................... 2.60 4.08
Dividends(c)................................................. -- --
Pro Forma(d):
Combined per share of Tyco Common Stock
Income before extraordinary item............................. 1.12 1.32
Book value................................................... 12.58
Dividends(e)................................................. .15 .20
Equivalent combined per share of Carlisle Common Stock
Income before extraordinary item............................. .19 .23
Book value................................................... 2.17
Dividends.................................................... .03 .03
</TABLE>
- ------------
<TABLE>
<C> <S>
(a) On October 11, 1995, Tyco's Board of Directors authorized a two-for-one stock split to
be effected in the form of a stock dividend. One additional share of common stock was
distributed on November 14, 1995 for each share of common stock held by shareholders of
record on October 30, 1995. Income per share and cash dividends per share have been
restated to reflect the stock split.
(b) The information for Carlisle for the year ended June 30, 1995 has been derived from
Carlisle's unaudited historical financial statements. Such historical financial
information has been adjusted to conform to Tyco's fiscal year end.
(c) Carlisle has not paid any cash dividends.
(d) The pro forma combined per share data give effect to the Merger and the acquisition by
Tyco of several other businesses since July 1, 1995 and have been prepared based upon
the conversion of each share of Carlisle Common Stock into 0.172185 shares of Tyco
Common Stock and also account for shares of Tyco Common Stock issued in one of Tyco's
acquisitions since July 1, 1995.
(e) Tyco currently pays a regular quarterly dividend of $0.05 per share. Although it is
Tyco's present intention to continue to pay such regular quarterly dividend, the
payment of dividends in the future is subject to the discretion of Tyco's Board of
Directors, which may consider such factors as Tyco's earnings, financial condition and
other matters which it deems relevant.
</TABLE>
11
<PAGE>
TYCO OPERATING RESULTS
YEAR ENDED JUNE 30, 1996
Tyco has announced results of operations for the fiscal year ended June 30,
1996 ("fiscal 1996"). Net income increased 25.1% to $310.1 million, or $2.03 per
share, for fiscal 1996, compared to $247.8 million, or $1.64 per share for the
fiscal year ended June 30, 1995 ("fiscal 1995") (before transaction costs
associated with the acquisition of Kendall International, Inc. in fiscal 1995).
Sales increased 12.2% to $5.090 billion in fiscal 1996 from $4.535 billion in
fiscal 1995. Earnings of Tyco's Disposable and Specialty Products group
increased 11.7% to $291.7 million in fiscal 1996 compared to $261.2 million in
fiscal 1995. The increase is attributable to market expansion, reduced
manufacturing costs and recent acquisitions for Kendall's health care business.
These were offset in part by lower earnings of Tyco's packaging business, which
was affected by pricing pressures due to uncertain raw material costs. Earnings
of Tyco's Fire Protection group increased 48.1% to $128.1 million in fiscal
1996, compared to $86.5 million in 1995. The increase reflects improved margins
in all geographic areas, particularly North America. Earnings of Tyco's Flow
Control group increased 26.2% to $114.1 million in fiscal 1996, compared to
$90.4 million fiscal 1995. The increase reflects higher earnings at each of the
group's operating units, as well as recent acquisitions. Earnings of Tyco's
Electrical and Electronic Components group increased 15.8% to $88.5 million in
fiscal 1996, compared to $76.4 million in fiscal 1995. The increase reflects
higher earnings at each of the group's operating units. See "Business of Tyco."
Earnings of Tyco's four business groups are stated before deduction for general
corporate expense, interest expense, extraordinary item and taxes.
The following table sets forth the announced summary results of operations
of Tyco for fiscal 1996, compared to Tyco's summary results of operations for
fiscal 1995.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
------------------------------
JUNE 30, 1996 JUNE 30, 1995
------------- -------------
(IN THOUSANDS EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C>
Sales.......................................................... $ 5,089,828 $ 4,534,651
------------- -------------
------------- -------------
Income before income taxes and extraordinary item.............. $ 523,897 $ 384,878(1)
Income taxes................................................... (213,750) (168,285)
------------- -------------
Income before extraordinary item............................... 310,147 216,593
Extraordinary item, net of tax................................. -- (2,600)(2)
------------- -------------
Net Income..................................................... $ 310,147 $ 213,993
------------- -------------
------------- -------------
EARNINGS PER SHARE:
Income before extraordinary item............................... $2.03 $1.43
Extraordinary item............................................. -- (0.02)
Net income per share(3)........................................ 2.03 1.42
Common equivalent shares(3).................................... 152,862 151,018
------------- -------------
------------- -------------
</TABLE>
- ------------
(1) Includes a charge of $37.2 million ($31.2 million after-tax) for fees and
expenses related to the Kendall merger and integration of the combined
companies.
(2) Resulting from the early extinguishment of $100 million of Kendall debt.
(3) All share and per share data has been restated to reflect the two-for-one
stock split which was distributed on November 14, 1995.
12
<PAGE>
THE SPECIAL MEETING
PURPOSE OF THE SPECIAL MEETING
At the Special Meeting, holders of Carlisle Common Stock will consider and
vote upon proposals to approve and adopt the Merger Agreement and such other
matters as may properly be brought before the Special Meeting. Holders of
approximately 92% of the voting power of the outstanding shares of Carlisle
Common Stock as of the date of the Merger Agreement entered into certain
Stockholder Agreements with Tyco pursuant to which such holders agreed, subject
to certain terms and conditions, to vote in favor of the Merger Agreement. In
the Merger, Carlisle will become a wholly-owned subsidiary of Tyco, and each
outstanding share of Carlisle Common Stock will be converted into the right to
receive that number of shares of Tyco Common Stock equal to the Exchange Ratio.
See "The Merger."
The Board of Directors of Carlisle has approved the Merger and the Merger
Agreement and recommends that Carlisle stockholders vote FOR approval and
adoption of the Merger Agreement. See "The Merger--Background of the Merger,"
"--Recommendations of the Board of Directors of Carlisle, and "--Interests of
Certain Persons in the Merger."
RECORD DATE; VOTING RIGHTS; PROXIES
The Carlisle Board of Directors has fixed the close of business on August 7,
1996, as the Record Date for determining holders entitled to notice of and to
vote at the Special Meeting.
As of the Record Date, there were 17,854,285 shares of Carlisle Common Stock
issued and outstanding, consisting of 8,468,788 shares of Carlisle A Stock, each
of which entitles the holder thereof to one vote, and 9,385,497 shares of
Carlisle B Stock, each of which entitles the holder thereof to twenty votes. All
shares of Carlisle Common Stock represented by properly executed proxies will,
unless such proxies have been previously revoked, be voted in accordance with
the instructions indicated in such proxies. IF NO INSTRUCTIONS ARE INDICATED,
SUCH SHARES OF CARLISLE COMMON STOCK WILL BE VOTED IN FAVOR OF APPROVAL AND
ADOPTION OF THE MERGER AGREEMENT.
Carlisle does not know of any matters other than as described in the
accompanying Notice of Special Meeting that are to come before the Special
Meeting. If any other matter or matters are properly presented for action at the
Special Meeting, the persons named in the enclosed form of proxy and acting
thereunder will have the discretion to vote on such matters in accordance with
their best judgment, unless such authorization is withheld. A stockholder who
has given a proxy may revoke it at any time prior to its exercise by giving
written notice thereof to the Secretary of Carlisle, by signing and returning a
later dated proxy, or by voting in person at the Special Meeting. Accordingly,
Carlisle stockholders who have executed and returned proxy cards in advance of
the Special Meeting may change their vote at any time prior to or at the Special
Meeting; however, mere attendance at the Special Meeting will not in and of
itself have the effect of revoking the proxy.
Votes cast by proxy or in person at the Special Meeting will be tabulated by
the election inspectors appointed for the meeting and will determine whether or
not a quorum is present. The election inspectors will treat abstentions as
shares that are present and entitled to vote for purposes of determining the
presence of a quorum but as unvoted for purposes of determining the approval of
any matter submitted to the stockholders for a vote. Similarly, if a broker
indicates on the proxy that it does not have discretionary authority as to
certain shares to vote on a particular matter, those shares will be considered
as present and unvoted with respect to that matter.
SOLICITATION OF PROXIES
Carlisle will bear its own cost of solicitation of proxies. Brokerage
houses, fiduciaries, nominees and others will be reimbursed for their
out-of-pocket expenses in forwarding proxy materials to beneficial owners of
stock held in their names.
13
<PAGE>
QUORUM
The presence in person or by properly executed proxy of holders of the
issued and outstanding shares of Carlisle Common Stock representing a majority
of the votes entitled to be cast at the Special Meeting is necessary to
constitute a quorum at the Special Meeting.
REQUIRED VOTE
The approval of the Merger Agreement requires the affirmative vote of the
holders of a majority of the voting power of the outstanding shares of Carlisle
Common Stock. Abstentions and broker non-votes will have the effect of votes
against approval of the Merger Agreement. In certain circumstances, including if
Carlisle stockholders fail to approve and adopt the Merger Agreement, Carlisle
may be obligated to pay Tyco a termination fee of $4 million, plus certain
expenses. See "The Merger Agreement and Related Agreements--Termination--Fees
and Expenses." As of the Record Date, directors and executive officers of
Carlisle and their affiliates were beneficial owners of approximately 75% of the
outstanding shares of Carlisle Common Stock. Holders of approximately 92% of the
voting power of the Carlisle Common Stock outstanding as of the date of the
Merger Agreement have entered into certain Stockholder Agreements with Tyco
pursuant to which such holders have agreed, subject to certain terms and
conditions, to vote in favor of the Merger Agreement. The vote of such holders
at the Special Meeting in favor of the Merger Agreement will be sufficient to
approve and adopt the Merger Agreement, irrespective of the votes cast by any
other holders of Carlisle Common Stock. See "The Merger Agreement and Related
Agreements" and "Security Ownership of Certain Beneficial Owners and Management
of Carlisle."
THE MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING ARE OF GREAT IMPORTANCE
TO THE STOCKHOLDERS OF CARLISLE. ACCORDINGLY, STOCKHOLDERS ARE URGED TO READ AND
CAREFULLY CONSIDER THE INFORMATION PRESENTED IN THIS PROXY STATEMENT, AND TO
COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENCLOSED
POSTAGE-PAID ENVELOPE.
THE MERGER
This section of the Proxy Statement/Prospectus, as well as the next section
of the Proxy Statement/Prospectus entitled "The Merger Agreement and Related
Agreements," describe certain aspects of the proposed Merger. To the extent that
it relates to the Merger Agreement, or the Stockholder Agreements, the following
description does not purport to be complete and is qualified in its entirety by
reference to the Merger Agreement, which is attached as Annex A to this Proxy
Statement/Prospectus and is incorporated herein by reference, and such
Stockholder Agreements, which are filed as exhibits to the Registration
Statement. All stockholders are urged to read the Merger Agreement in its
entirety.
GENERAL
The Merger Agreement provides that the Merger will be consummated if the
approval of the Carlisle stockholders required therefor is obtained and all
other conditions to the Merger are satisfied or waived. Upon consummation of the
Merger, Merger Sub will be merged with and into Carlisle, and Carlisle will
become a wholly-owned subsidiary of Tyco.
Pursuant to the Merger, each outstanding share of Carlisle Common Stock will
be converted into the right to receive 0.172185 shares of Tyco Common Stock and
a cash payment in lieu of any fractional share.
Based upon the outstanding shares of Tyco and Carlisle as of July 31, 1996
and an Exchange Ratio of 0.172185 shares of Tyco Common Stock for each share of
Carlisle Common Stock, the stockholders of Carlisle immediately prior to the
consummation of the Merger will own approximately 2% of the outstanding Tyco
Common Stock following consummation of the Merger.
14
<PAGE>
EFFECTIVE TIME
Consummation of the Merger will occur upon the filing of a Certificate of
Merger with the Secretary of State of the State of Delaware (the "Certificate of
Merger") or at such later time as is specified on such certificate (the
"Effective Time"). The filing of the Certificate of Merger will occur as soon as
practicable after the satisfaction or waiver of all conditions to the closing of
the transactions contemplated by the Merger Agreement. The Merger Agreement may
be terminated by either party if the Merger shall not have been consummated on
or before October 31, 1996.
CONVERSION OF SHARES; PROCEDURES FOR EXCHANGE OF CERTIFICATES
The conversion, at the Exchange Ratio, of Carlisle Common Stock into the
right to receive Tyco Common Stock will occur automatically at the Effective
Time.
As soon as practicable after the Effective Time, a transmittal letter will
be mailed by the Exchange Agent to each stockholder of Carlisle informing such
stockholder of the procedures to follow in forwarding stock certificates
representing Carlisle Common Stock to the Exchange Agent. Upon receipt of such
Carlisle stock certificates, the Exchange Agent will deliver full shares of Tyco
Common Stock to such stockholder and cash in lieu of fractional shares pursuant
to the terms of the Merger Agreement and in accordance with the transmittal
letter, together with any dividends or other distributions to which such
stockholder is entitled.
If any issuance of shares of Tyco Common Stock in exchange for shares of
Carlisle Common Stock is to be made to a person other than the Carlisle
stockholder in whose name the certificate is registered at the Effective Time,
it will be a condition of such exchange that the certificate so surrendered be
properly endorsed or otherwise in proper form for transfer and that the Carlisle
stockholder requesting such issuance either pay any transfer or other tax
required or establish to the satisfaction of Tyco that such tax has been paid or
is not payable.
After the Effective Time, there will be no further transfers of Carlisle
Common Stock on the stock transfer books of Carlisle. If a certificate
representing Carlisle Common Stock is presented for transfer, it will be
cancelled and a certificate representing the appropriate number of full shares
of Tyco Common Stock and cash in lieu of fractional shares and any dividends and
distributions will be issued in exchange therefor.
After the Effective Time and until surrendered, shares of Carlisle Common
Stock will be deemed for all corporate purposes, other than the payment of
dividends and distributions, to evidence ownership of the number of full shares
of Tyco Common Stock into which such shares of Carlisle Common Stock were
converted on the Effective Time. No dividends or other distributions, if any,
payable to holders of Tyco Common Stock will be paid to the holders of any
certificates for shares of Carlisle Common Stock until such certificates are
surrendered. Upon surrender of such certificates, all such declared dividends
and distributions which shall have become payable with respect to such Tyco
Common Stock in respect of a record date after the Effective Time will be paid
to the holder of record of the full shares of Tyco Common Stock represented by
the certificate issued in exchange therefor, without interest. See "The Merger
Agreement and Related Agreements--Exchange of Certificates."
CARLISLE STOCKHOLDERS SHOULD NOT FORWARD STOCK CERTIFICATES TO THE EXCHANGE
AGENT UNTIL THEY HAVE RECEIVED TRANSMITTAL LETTERS. CARLISLE STOCKHOLDERS SHOULD
NOT RETURN STOCK CERTIFICATES WITH THE ENCLOSED PROXY.
BACKGROUND OF THE MERGER
In early July 1995, Tyco identified Carlisle as a potential acquisition
opportunity. On July 14, 1995, after an initial meeting between representatives
of Tyco and William H. Binnie, Chairman of Carlisle, Tyco executed a
confidentiality letter with respect to its receipt of non-public information
from Carlisle.
Following execution of the confidentiality letter, during July, August and
September, Tyco conducted a due diligence investigation of Carlisle, including
document reviews, visits to Carlisle
15
<PAGE>
facilities and meetings with representatives of Carlisle. During September and
October, representatives of Tyco and Carlisle conducted a series of meetings and
conference calls to negotiate the terms of a possible business combination. The
representatives tentatively agreed that they would recommend to their respective
Boards of Directors a transaction in which each share of Carlisle Common Stock
would be exchanged for a fraction of a share of Tyco Common Stock, with an
exchange ratio based upon a per share value of Carlisle Common Stock of $6.00,
subject to increase or decrease of up to 5% depending on the average price of
Tyco Common Stock during a specified period prior to the Merger. The agreement
of the parties was subject to Tyco's satisfactory completion of its due
diligence, the negotiation of definitive merger documentation and approval by
the parties' respective Boards of Directors.
In October 1995, Tyco became concerned with the recent financial results of
Carlisle. On October 16, 1995, representatives of Tyco informed Mr. Binnie that
the Tyco Board of Directors had determined not to proceed with the proposed
business combination. The Carlisle Board of Directors was informed of this
decision in a telephonic meeting the next day. In a letter dated October 31,
1995, Carlisle requested the return of all due diligence materials from Tyco.
In February 1996, a representative of Tyco met with Mr. Binnie at Mr.
Binnie's request. At the meeting, Mr. Binnie reviewed Carlisle's restructuring
during the last quarter of 1995, pursuant to which Carlisle exited its private
label grocery and plastic container businesses, and Carlisle's implementation of
certain cost cutting programs. Mr. Binnie also discussed Carlisle's initial
operating results for January 1996. The Tyco representative indicated that,
depending on Carlisle's operating results for the first quarter of 1996, Tyco
might be interested in renewing negotiations regarding a possible business
combination.
In a telephone conversation on April 24, 1996, Mr. Binnie discussed
Carlisle's first quarter results with L. Dennis Kozlowski, Chairman, President
and Chief Executive Officer of Tyco. Based on this discussion, Mr. Kozlowski
indicated that Tyco was interested in reopening negotiations concerning an
acquisition of Carlisle. On April 26, 1996, Mr. Binnie met with senior
management of Tyco, who requested of Carlisle more detailed financial
information, including Carlisle's five-year business plan. During the week of
April 26, Tyco resumed its due diligence of Carlisle, which had been
discontinued after negotiations between the parties terminated in the fall of
1995.
On April 30, 1996, Carlisle retained Goldman Sachs as its financial advisor
in connection with the possible sale of all or a portion of the stock or assets
of Carlisle. Carlisle selected Goldman Sachs as its financial advisor because
Goldman Sachs is an internationally recognized investment banking firm having
substantial experience in transactions similar to the Merger.
On May 3, 1996, in a telephonic conference among representatives of Tyco and
Carlisle, the companies' representatives tentatively agreed that they would
recommend to their respective Boards of Directors a transaction in which Tyco
would acquire Carlisle in a stock-for-stock merger. Carlisle's representatives
proposed an exchange ratio based on a purchase price per share of Carlisle
Common Stock of $7.00 and Tyco's representatives proposed a per share price of
Carlisle Common Stock of $6.00. The companies' representatives arrived at an
agreement in which each outstanding share of Carlisle Common Stock would be
exchanged for 0.172185 shares of Tyco Common Stock and each outstanding option
to acquire Carlisle Common Stock would be exchanged for an option to acquire
Tyco Common Stock on an equivalent basis. The Exchange Ratio was based on a
purchase price per share of Carlisle Common Stock of $6.50, and a price per
share of Tyco Common Stock of $37.75, which was the closing price of Tyco Common
Stock on the New York Stock Exchange on May 3, 1996. The tentative agreement was
subject to Tyco's satisfactory completion of its due diligence, the negotiation
of definitive merger documentation and approval of the Boards of Directors of
Tyco and Carlisle. Tyco continued its due diligence investigation of Carlisle
during the first two weeks of May 1996, and counsel to Tyco circulated a draft
Merger Agreement based largely upon the documentation that had been negotiated
in the fall of 1995.
In telephonic meetings on May 7 and 13, 1996, the Board of Directors of
Carlisle considered the proposed terms of the Merger and various business issues
related to the transaction. On May 10, 1996,
16
<PAGE>
the Board of Directors of Tyco met by conference call to consider the terms of
the proposed merger transaction. The Tyco Board concluded that the Merger was in
the best interests of Tyco's stockholders, unanimously approved the proposed
terms and authorized Tyco's officers to complete and execute the documentation
for the transaction.
On May 14, 1996, representatives of Tyco and Carlisle, the parties'
respective legal counsel and Carlisle's financial advisor, met to negotiate
certain remaining legal issues relating to the Merger Agreement and to the
Stockholder Agreements to be executed by Carlisle's principal stockholders.
Later on the same day, Carlisle's Board of Directors convened a telephonic
meeting. The Carlisle Board was informed of the results of the negotiations
between the parties, and Goldman Sachs provided to the Carlisle Board its oral
opinion that the Exchange Ratio pursuant to the Merger Agreement was fair to the
Carlisle stockholders. The Carlisle Board of Directors then unanimously approved
the Merger.
After approval of the Merger by the Board of Directors of Carlisle, on May
14, 1996, the Merger Agreement and the Stockholder Agreements were executed by
the appropriate parties. The transaction was publicly announced before the
opening of business on the morning of May 15, 1996.
REASONS FOR THE MERGER
Tyco believes that the Merger is in keeping with its corporate growth
strategy, which includes growth through acquisitions where attractive
acquisition opportunities present themselves that are likely to benefit from
cost reductions and synergies with Tyco's existing operations and that are
expected to be non-dilutive. In particular, Tyco believes that there are several
significant benefits from this transaction, including: (i) utilization of Tyco's
existing manufacturing expertise in packaging, coatings, and polyethylene
products to expand production of higher margin products in the mass merchandise
and retail product markets in which Carlisle is active; (ii) utilization of
Carlisle's distribution network to support additional products to be developed
and/or acquired by Tyco or Carlisle; (iii) utilization of Tyco's strong presence
in the polyethylene film and packaging industry to support industrial sales of
Carlisle's plastic sheeting products; and (iv) reduction of certain Carlisle
corporate costs including possible elimination of excess facilities and
potential cost reductions for materials and services, including resin and
freight, due to increased economies of scale.
RECOMMENDATION OF THE BOARD OF DIRECTORS OF CARLISLE
The Board of Directors of Carlisle has unanimously approved the Merger
Agreement, has determined unanimously that the Merger is advisable and fair to,
and in the best interests of, Carlisle and its stockholders and recommends that
holders of shares of Carlisle Common Stock vote FOR approval and adoption of the
Merger Agreement.
In reaching its decision to approve the Merger Agreement and to recommend
that Carlisle's stockholders vote to approve and adopt the Merger Agreement,
Carlisle's Board of Directors considered the following material factors in
determining the Merger was in the best interests of Carlisle stockholders: (i)
the opportunity for Carlisle stockholders to receive shares of Tyco Common Stock
in a tax-free exchange valued at a significant premium over the existing market
price for shares of Carlisle A Stock prevailing prior to the public announcement
of the Merger; (ii) the opportunity for Carlisle stockholders to participate, as
holders of Tyco Common Stock, in a larger, more strategically balanced company
of which Carlisle would become a part; and (iii) the substantially larger public
float and trading volume of shares of Tyco Common Stock compared to the public
float and trading volume of Carlisle A Stock which should provide Carlisle's
stockholders with greater liquidity in their investment.
In addition, the Carlisle Board of Directors considered the following
factors in determining the financial fairness of the Merger to Carlisle: (i) its
knowledge of the business, operations, properties, assets, financial condition
and operating results of Carlisle and Tyco including, among other things, Tyco's
recent and historical stock and earnings performance, the demonstrated ability
of Tyco to successfully implement a consistent earnings growth strategy, the
ability of Tyco to access the capital markets and the possibility of
efficiencies and cost savings arising from the Merger; (ii) judgments as to
17
<PAGE>
Carlisle's future prospects, particularly in light of Carlisle's historical
earnings volatility; (iii) presentations by Carlisle's management and by Goldman
Sachs, Carlisle's financial advisor, with respect to Carlisle and Tyco; (iv) the
opinion of Goldman Sachs as to the fairness of the Exchange Ratio to the
stockholders of Carlisle (see "Opinion of Carlisle's Financial Advisor" below);
(v) the terms of the Merger Agreement, which were the product of extensive arm's
length negotiations (see "The Merger Agreement and Related Agreements"); (vi)
the historical trading prices, dividend rates and trading activity for Carlisle
Common Stock and Tyco Common Stock; (vii) Carlisle's relatively high degree of
financial leverage and the need to refinance $19.1 million and $105 million in
debt which is due in March 1997 and June 1997, respectively; (viii) the
compatibility of the respective business philosophies of Tyco and Carlisle; and
(ix) the ability of Carlisle's Board of Directors to terminate the Merger
Agreement under certain circumstances.
The Carlisle Board of Directors also considered the loss of independence
which would result from being a wholly-owned subsidiary of Tyco. The Board of
Directors concluded, however, that the benefits of the Merger to Carlisle and
its stockholders outweighed the loss of independence.
The foregoing discussion of the information and factors considered by the
Carlisle Board of Directors is not intended to be exhaustive. In view of the
variety of factors considered in connection with its evaluation of the Merger,
the Carlisle Board of Directors did not find it practicable to and did not
quantify or otherwise assign relative weights to the specific factors considered
in reaching its determination. In addition, individual members of the Carlisle
Board of Directors may have given different weights to different factors. For a
discussion of the interests of certain members of Carlisle's management and
Carlisle's Board of Directors in the Merger, see "Interests of Certain Persons
in the Merger" below.
THE CARLISLE BOARD OF DIRECTORS RECOMMENDS THAT THE HOLDERS OF CARLISLE
COMMON STOCK VOTE FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
OPINION OF CARLISLE'S FINANCIAL ADVISOR
On May 14, 1996, Goldman Sachs delivered its oral opinion to the Board of
Directors of Carlisle that, as of the date of such opinion, the Exchange Ratio
pursuant to the Merger Agreement was fair to the holders of Carlisle Common
Stock. Goldman Sachs subsequently delivered its written opinion, dated as of the
date hereof, to the Board of Directors of Carlisle to the effect that, as of the
date hereof, the Exchange Ratio pursuant to the Merger Agreement is fair to the
holders of Carlisle Common Stock.
THE FULL TEXT OF THE WRITTEN OPINION OF GOLDMAN SACHS, DATED AS OF THE DATE
OF THIS PROXY STATEMENT/PROSPECTUS, WHICH SETS FORTH ASSUMPTIONS MADE, MATTERS
CONSIDERED AND LIMITATIONS ON THE REVIEW UNDERTAKEN IN CONNECTION WITH THE
OPINION, IS ATTACHED AS ANNEX B TO THIS PROXY STATEMENT/PROSPECTUS AND IS
INCORPORATED HEREIN BY REFERENCE. STOCKHOLDERS OF CARLISLE ARE URGED TO, AND
SHOULD, READ SUCH OPINION IN ITS ENTIRETY.
In connection with its opinion, Goldman Sachs reviewed, among other things,
(i) the Merger Agreement; (ii) this Proxy Statement/Prospectus; (iii) the
Registration Statement on Form S-4 including the Joint Proxy
Statement/Prospectus dated September 21, 1994 of Tyco and Kendall; (iv) Annual
Reports to Stockholders and Annual Reports on Form 10-K of Carlisle for the five
18
<PAGE>
years ended December 31, 1995; (v) Annual Reports to Stockholders and Annual
Reports on Form 10-K of Tyco for the five fiscal years ended June 30, 1995; (vi)
certain interim reports to stockholders and Quarterly Reports on Form 10-Q of
Carlisle and Tyco; (vii) certain other communications from Carlisle and Tyco to
their respective stockholders; and (viii) certain internal financial analyses
and forecasts for Carlisle and Tyco prepared by their respective managements.
Goldman Sachs also held discussions with members of the senior management of
Carlisle and Tyco regarding the past and current business operations, financial
condition, and future prospects of their respective companies. In addition,
Goldman Sachs reviewed the reported price and trading activity for Carlisle A
Stock and Tyco Common Stock, compared certain financial and stock market
information for Carlisle and Tyco with similar information for certain other
companies the securities of which are publicly traded, reviewed the financial
terms of certain recent business combinations in the plastic consumer goods and
plastic packaging industries specifically and in other industries generally and
performed such other studies and analyses as it considered appropriate.
Goldman Sachs relied without independent verification upon the accuracy and
completeness of all of the financial and other information reviewed by it for
purposes of its opinion. In addition, Goldman Sachs has not made an independent
evaluation or appraisal of the assets and liabilities of Carlisle or Tyco or any
of their respective subsidiaries and Goldman Sachs has not been furnished with
any such evaluation or appraisal.
The following is a summary of certain of the financial analyses used by
Goldman Sachs in connection with providing its oral opinion to the Carlisle
Board of Directors on May 14, 1996. Goldman Sachs used substantially the same
type of financial analyses in connection with providing the written opinion
attached hereto as Annex B.
(i) Selected Companies Analysis. Goldman Sachs reviewed and compared certain
financial information relating to Carlisle to corresponding financial
information for eight publicly traded companies in the plastic packaging
industry: AEP Industries Inc., Applied Extrusion Technologies, Inc., Atlantis
Plastics, Inc., Bemis Co., Inc., Liqui-Box Corp., Sealright Co., Inc., Sonoco
Products Co. and Tuscarora Inc. (the "Selected Companies"). The public market
multiples of Carlisle and the Selected Companies were calculated using closing
stock prices on May 10, 1996. The multiples and ratios for Carlisle were based
on information provided by Carlisle management and the multiples for each of the
Selected Companies were based on the most recent publicly available information.
Goldman Sachs considered, among other multiples and ratios, levered market
capitalization (i.e., market value of common equity plus book value of debt,
less cash) as a multiple of last twelve months' ("LTM") sales (the "Sales
Multiple"), as a multiple of LTM earnings before interest, taxes, depreciation
and amortization ("EBITDA") (the "EBITDA Multiple"), and as a multiple of LTM
earnings before interest and taxes ("EBIT") (the "EBIT Multiple"). Goldman
Sachs' analyses indicated that (i) the Sales Multiple ranged from 0.56x to 1.18x
for the Selected Companies, compared with a Sales Multiple of 0.64x for
Carlisle; (ii) the EBITDA Multiple ranged from 5.2x to 8.4x for the Selected
Companies, compared with an EBITDA Multiple of 7.0x for Carlisle and (iii) the
EBIT Multiple ranged from 7.0x to 18.3x for the Selected Companies, compared
with an EBIT Multiple of 13.7x for Carlisle. Goldman Sachs also considered (i)
estimated calendar year 1996 and 1997 price/earnings ratios, which for the
Selected Companies ranged from 9.2x to 17.1x for estimated calendar year 1996
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and 7.7x to 18.2x for estimated calendar year 1997, compared with 13.5x and
9.8x, respectively, for Carlisle; (ii) LTM EBIT margins and LTM EBITDA margins,
which for the Selected Companies ranged from 4.1% to 15.3% and 7.7% to 20.6%,
respectively, compared with 4.7% and 9.2%, respectively, for Carlisle; (iii)
three-year compound annual growth rates ("CAGRs") of sales for the three most
recent fiscal years, which for the Selected Companies ranged from 3.7% to 88.7%,
compared with 5.8% for Carlisle; (iv) debt to total capitalization ratios, which
for the Selected Companies ranged from 0.0% to 81.2%, compared with 79.8% for
Carlisle; and (v) three-year CAGRs of EBIT, which for the Selected Companies
ranged from negative 25.1% to 220.6%, compared with 11.7% for Carlisle.
(ii) Selected Transactions Analysis. Goldman Sachs analyzed certain
information relating to selected transactions in the plastic consumer goods and
plastic packaging industries since 1983 (the "Selected Transactions"). Such
analysis indicated that, for the Selected Transactions, (i) levered aggregate
consideration as a multiple of LTM sales ranged from 0.37x to 2.02x, as compared
with 0.7x for the levered aggregate consideration to be received in the Merger,
(ii) levered aggregate consideration as a multiple of LTM EBITDA ranged from
3.2x to 13.6x, as compared with 7.8x for the levered aggregate consideration to
be received in the Merger, and (iii) levered aggregate consideration as a
multiple of LTM EBIT ranged from 3.9x to 43.1x, as compared with 15.3x for the
levered aggregate consideration to be received in the Merger. In all cases noted
above the consideration to be received in the Merger was valued based on a price
of $38.00 per share of Tyco Common Stock, the closing price on May 10, 1996. The
Selected Transactions are (the owner of a party is indicated in parentheses):
Tenneco Inc.'s acquisition of The Mobil Plastics Division (Mobil Corporation) in
November of 1995, LinPac Mouldings Ltd.'s acquisition of the 43% of Ropak Corp.
it did not then own in May of 1995, Applied Extrusion Technologies Inc.'s
acquisition of the packaging film group of Hercules Inc. in April of 1994, Altus
Finance S.A.'s (Credit Lyonnais S.A.) acquisition of Compagnie General de
Packaging S.A. (Finalliance S.A.) in December 1993, British Polythene Industries
Plc's acquisition of Sonoco Polysak Europe in March of 1993, Conagra Inc.'s
acquisition of United Plastic Films Inc. in February of 1993, Crown Cork & Seal
Company's acquisition of Constar International Inc. in October of 1992, Bowater
Plc's acquisition of DRG Packaging (Pembridge Investments Ltd.) in March of
1992, Ekco Group Inc.'s acquisition of Frem Corp. in January of 1992, Huhtamaki
OY's acquisition of Sweetheart International Ltd. (Fort Howard Corporation) in
December of 1991, JV-Viatech, Inc.'s acquisition of Continental Plastic
Containers Inc. in November of 1991, British Polythene Industries Plc's
acquisition of Courtalds Plastic Films Ltd. (Courtalds Plc) in September of
1991, Sealed Air Corporation's acquisition of Sentinel Holdings, Inc. in August
of 1991, Carlisle's acquisition of Rhino-X Industries in July of 1991, Mobil
Corporation's acquisition of Tucker Housewares Inc. (Hanson Plc) in October of
1990, Rubbermaid Inc.'s acquisition of Eldon Industries Inc. in October of 1990,
Reckitt & Colman Plc's acquisition of Boyle-Midway Household Products (American
Home Products Corporation) in June of 1990 Carlisle's acquisition of American
Western Corp. in March of 1990, a management group's acquisition of Chelsea
Industries Inc. in October of 1989, Salomon Brothers Holding Company Inc.'s and
D.P. Kelly & Associates L.P.'s acquisition of Envirodyne Industries Inc. in June
of 1989, Dowbrands Inc.'s (Dow Chemical) acquisition of the European household
business of First Brands Corporation in June of 1989, Carlisle's acquisition of
A&E Products Ltd in April of 1989, Carlisle's acquisition of Poly-Tech Inc. in
april of 1989, Sanford Corporation's acquisition of Sterling Plastics Company
(Borden, Inc.) in September of 1988, the Atlantis Group, Inc.'s acquisition of
Linear Films, Inc. in July of 1988, Centronics Corp.'s acquisition of Ekco Group
Inc. in October of 1987, Newell Company's acquisition of Anchor Hocking Corp. in
July of 1987, Envirodyne Industries Inc.'s acquisition of the Filmco Division of
RJR Nabisco Corporation in December of 1986, First Brands Corporation's (an
investor group led by First Boston) acquisition of the home and automotive
products business of Union Carbide Corporation in July of 1986, Fort Howard
Paper Company's acquisition of Lily-Tulip Inc. in June of 1986, Carlisle's
acquisition of Bercon Packaging Inc. in August of 1985, a management group's
acquisition of the Poly-Tech division of U.S. Industries, Inc. in October of
1984, and the Fort Howard Paper Company's acquisition of the Maryland Cup
Corporation in August of 1983.
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(iii) Discounted Cash Flow Sensitivity Analysis. Goldman Sachs performed a
discounted cash flow sensitivity analysis of the present value per share of
Carlisle Common Stock under a range of assumptions for Carlisle's future sales
growth and sustainable EBITDA margins. Goldman Sachs assumed a 12% discount
rate, a terminal (year 2005) EBITDA multiple of 6.0x, net debt of $179 million
and 17.85 million shares outstanding. Such analysis indicated that, assuming
sales growth rates ranging from 5.0% to 8.0% per year for the period 1997 to
2005 and sustainable EBITDA margins ranging from 12.0% to 14.0% for the period
1996 to 2005, the present value per share of Carlisle Common Stock ranged from
$4.71 (at 5.0% sales growth and a 12.0% EBITDA margin) to $11.07 (at 8.0% sales
growth and a 14.0% EBITDA margin).
(iv) Pro Forma Merger Analysis. Goldman Sachs prepared pro forma analyses of
the financial impact of the Merger. Using earnings estimates for Carlisle
prepared by Carlisle management for the years 1997 and 1998 (as adjusted by
Goldman Sachs to conform to Tyco's fiscal year) and IBES estimates for Tyco's
earnings for the fiscal years 1997 and 1998, along with certain other estimates
and assumptions, Goldman Sachs estimated the impact of the Merger on the
combined company's earnings per share ("EPS") for the fiscal years 1997 and
1998. If the Merger were accounted for as a stock purchase, Goldman Sachs'
analysis indicated that (i) assuming that the Merger produced no synergies, the
Merger would be non-dilutive to EPS in fiscal 1997 and would be slightly
accretive to EPS in fiscal 1998, and (ii) assuming that the Merger resulted in
$10 million worth of pre-tax synergies, the Merger would be slightly accretive
to EPS in fiscal 1997 and fiscal 1998.
(v) Contribution Analysis. Goldman Sachs reviewed certain historical
operating and financial information for Carlisle, Tyco and the pro forma
combined entity resulting from the Merger. Based on such information, Goldman
Sachs analyzed the actual relative income statement contributions of Carlisle
and Tyco to the combined company on a pro forma basis for the twelve months
ended December 31, 1995 and the three months ended March 31, 1996. The
contribution analysis indicated that (i) in the twelve months ended December 31,
1995 Carlisle would have contributed 8.1% of the revenues, 5.5% of the EBITDA,
3.4% of the EBIT and negative 1.0% of the net income of the combined company and
(ii) in the three months ended March 31, 1996 Carlisle would have contributed
7.0% of the revenues, 6.2% of the EBITDA, 5.1% of the EBIT and 1.9% of the net
income of the combined company. In addition to the contribution analysis,
Goldman Sachs also calculated the equity ownership of the combined company by
former Carlisle and Tyco shareholders based on the Exchange Ratio and the number
of shares of Carlisle and Tyco outstanding. The ownership analysis indicated
that former Carlisle shareholders would own approximately 2% of the equity of
the combined company.
(vi) Historical Exchange Ratio Analysis. Goldman Sachs calculated the
premium represented by the Exchange Ratio over the actual ratio of the stock
prices of Carlisle A Stock and Tyco Common Stock on May 10, 1996 (the "Reference
Date") and various historical periods prior to the Reference Date. Goldman
Sachs' analysis found that the Exchange Ratio represented a 30.9% premium over
the actual ratio on the Reference Date, a 35.0% premium over the weighted
average actual ratio for the month prior to the Reference Date, a 42.8% premium
over the weighted average actual ratio for the three months prior to the
Reference Date, a 32.9% premium over the weighted average actual ratio for the
six months prior to the Reference Date and an 11.1% premium over the weighted
average ratio for the twelve months prior to the Reference Date.
The foregoing summary does not purport to be a complete description of the
analyses performed by Goldman Sachs and is qualified by reference to the written
opinion of Goldman Sachs set forth in Annex B hereto. The preparation of a
fairness opinion is a complex process and is not necessarily susceptible to
partial analysis or summary description. Selecting portions of the analyses or
of the summary set forth above, without considering Goldman Sachs' analyses as a
whole, could create an incomplete view of the processes underlying Goldman
Sachs' opinion. In arriving at its fairness determination, Goldman Sachs
considered the results of all of its analyses and did not separately consider
the extent to which any one analysis supports the fairness determination. No
company or transaction used in the above analyses as a comparison is identical
to Carlisle or Tyco or the Merger.
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The analyses were prepared solely for purposes of Goldman Sachs' providing its
opinion to the Carlisle Board of Directors as to the fairness of the Exchange
Ratio pursuant to the Merger Agreement to the holders of Carlisle Common Stock
and do not purport to be appraisals or to necessarily reflect the prices at
which businesses or securities actually may be sold or may trade in the future.
Analyses based upon forecasts of future results are not necessarily indicative
of actual future results, which may be significantly more or less favorable than
suggested by such analyses. Because such analyses are inherently subject to
uncertainty, being based upon numerous factors or events beyond the control of
the parties or their respective advisors, none of Carlisle, Tyco, Goldman Sachs
or any other person assumes responsibility if future results are different from
those projected. As described above, Goldman Sachs' opinion to the Board of
Directors of Carlisle was one of many factors taken into consideration by the
Carlisle Board of Directors in making its determination to approve the Merger
Agreement.
Goldman Sachs, as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements,
and valuations for estate, corporate and other purposes.
Goldman Sachs provides a full range of financial, advisory and brokerage
services and in the course of its normal trading activities may from time to
time effect transactions and hold positions in the securities or options on
securities of Carlisle and/or Tyco for its own account and for the account of
customers.
Pursuant to a letter agreement dated April 30, 1996 (the "Engagement
Letter"), Carlisle engaged Goldman Sachs to act as its financial advisor in
connection with the possible sale of all or a portion of the stock or assets of
Carlisle. Pursuant to the terms of the Engagement Letter, Carlisle has agreed to
pay Goldman Sachs upon consummation of the Merger a transaction fee of 1% of the
aggregate consideration paid in the Merger. For this purpose, the term
"aggregate consideration" includes the total consideration paid in respect of
Carlisle equity securities and the principal amount of all indebtedness for
borrowed money as set forth on the most recent consolidated balance sheet of
Carlisle prior to the consummation of the Merger. Carlisle has also agreed to
reimburse Goldman Sachs for its reasonable out-of-pocket expenses, including
attorney's fees, and to indemnify Goldman Sachs against certain liabilities,
including certain liabilities under the federal securities laws.
CERTAIN CONSIDERATIONS
In deciding whether to approve and adopt the Merger Agreement, stockholders
of Carlisle should carefully evaluate the information contained in this Proxy
Statement/Prospectus and, in particular, the following factors: (i) the relative
stock prices of Tyco Common Stock and Carlisle A Stock at the Effective Time may
vary significantly from the prices as of the date of execution of the Merger
Agreement, the date of this Proxy Statement/Prospectus or the date on which
stockholders vote on the Merger Agreement; (ii) the Merger Agreement does not
contain any provisions for adjustment of the Exchange Ratio based on
fluctuations in such stock prices; accordingly, the value of the consideration
to be received by stockholders of Carlisle upon consummation of the Merger will
depend on the market price of Tyco Common Stock at the Effective Time; (iii)
following the Merger, the trading price of Tyco Common Stock could be subject,
among other things, to fluctuations in response to general business and market
conditions, competitive factors in the various industries in which Tyco competes
and variations in Tyco's operating and financial results; and (iv) Tyco's
historical stock and earnings performance is not necessarily indicative of its
future stock price or earnings results.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Carlisle Board of Directors with
respect to the Merger Agreement and the transactions contemplated thereby,
Carlisle stockholders should be aware that certain members of Carlisle
management and the Carlisle Board of Directors have certain interests in the
Merger that are in addition to the interests of stockholders of Carlisle
generally.
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Each of Clifford A. Deupree, a member of Carlisle's Board of Directors and
Carlisle's Chief Executive Officer, and Patrick J. O'Leary, a member of
Carlisle's Board of Directors and Carlisle's Chief Financial Officer is a party
to an employment agreement that provides that if his employment is terminated
within 36 months of a change in control (as defined) of Carlisle for reasons
other than death, good cause (as defined), retirement or resignation other than
for good reason (as defined), he will receive a lump sum severance payment equal
to 24 months average monthly compensation (based upon the average monthly
compensation for the 12 month period immediately preceding the date of
termination). Voluntary termination of employment for any reason by each such
officer during the period commencing on the 31st day following a change in
control and ending on the 360th day following such event is deemed good reason
for such purposes. The Merger will be deemed a "change in control" for the
purposes of each such employment agreement.
In 1994, Mr. Deupree received a $100,000 loan from Carlisle in connection
with his relocation to Phoenix, Arizona. Pursuant to the terms of such loan
agreement, the principal amount of the loan will be forgiven upon the occurrence
of a change in control.
Options to acquire 1,187,500 shares of Carlisle A Stock at a range of
$4-$9.50 per share have been granted to the officers and directors of Carlisle,
as a group. These options will be converted in the Merger, pursuant to the
Merger Agreement, into fully vested and exercisable options to purchase Tyco
Common Stock. See "Effect on Employee Benefits Plans" below and "The Merger
Agreement and Related Agreements--Terms of the Merger-Options."
The Merger Agreement provides that after the Effective Time, the Surviving
Corporation (as defined) shall, to the fullest extent permitted under the law or
Carlisle's or the Surviving Corporation's Certificate of Incorporation or
By-Laws indemnify and hold harmless each present and former director, officer or
employee of Carlisle and its subsidiaries, against any losses, claims, damages,
costs or expenses (including attorneys' fees), judgments, fines, liabilities and
amounts paid in settlement in connection with any claim, action, suit,
proceeding or investigation, arising out of the transactions contemplated by the
Merger Agreement, or otherwise with respect to any acts or omissions occurring
at or prior to the Effective Time, to the same extent as provided in Carlisle's
Certificate of Incorporation or By-Laws or any applicable contract or agreement
as in effect on the date of the Merger Agreement, for a period of six years
after such date. Tyco has agreed in the Merger Agreement that the provisions
with respect to indemnification in Carlisle's By-Laws existing on the date of
the Merger Agreement shall continue in full force and effect in the By-Laws of
the Surviving Corporation, and shall not be modified in any way that would
adversely affect the rights thereunder of any individuals who were directors,
officers, employees or agents of Carlisle as of the Effective Time, for a period
of not less than six years from the Effective Time. The Merger Agreement
provides that Tyco will cause the Surviving Corporation to maintain directors'
and officers' liability insurance policies as currently maintained by Carlisle
for three years after the Effective Time to the extent that such policies are
obtainable at an annual cost of not greater than twice Carlisle's annual premium
as of the date of the Merger Agreement; provided that if such coverage is not
available for such amount, the Surviving Corporation shall purchase as much
coverage as possible for such amount. Tyco has guaranteed the Surviving
Corporation's obligations under these provisions. See "The Merger Agreement and
Related Agreements--Additional Agreements."
MATERIAL FEDERAL INCOME TAX CONSEQUENCES
It is a condition to the obligations of Carlisle to consummate the Merger
that Carlisle receive an opinion of Weil, Gotshal & Manges LLP as of the
Effective Time that the Merger constitutes a reorganization under section 368 of
the Code, and a condition to the obligations of Tyco to consummate the Merger
that Tyco receive an opinion of Kramer, Levin, Naftalis & Frankel to the same
effect. Such opinions will be based upon facts existing at the date hereof and
at the Effective Time, and, in rendering the opinions of counsel referred to in
this section, such counsel will rely upon representations, made as of the
Effective Time, by Carlisle, Tyco and certain stockholders of Carlisle, which
counsel will assume to
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be true, correct and complete, including representations as to the intent of the
historic stockholders of Carlisle to retain ownership of the Tyco Common Stock
they receive in the Merger. If such representations are untrue, incorrect or
incomplete, the opinions could be adversely affected. No ruling has been sought
from the Internal Revenue Service as to the Federal income tax consequences of
the Merger, and the opinions of counsel set forth herein are not binding upon
the Internal Revenue Service or any court.
Subject to the limitations and qualifications referred to herein, and
assuming the Merger is treated as a reorganization under Section 368 of the
Code, Weil, Gotshal & Manges LLP, counsel to Carlisle, is of the opinion as to
the matters set forth in 1-3 below, and Kramer, Levin, Naftalis & Frankel,
counsel to Tyco, is of the opinion as to the matters set forth in 4 below.
1. No gain or loss will be recognized by a Carlisle stockholder upon the
exchange of his or her Carlisle Common Stock for Tyco Common Stock, except that
a Carlisle stockholder who receives cash proceeds in lieu of a fractional share
interest in Tyco Common Stock will recognize gain or loss equal to the
difference between such proceeds and the tax basis allocated to the fractional
share interest. Such gain or loss will constitute capital gain or loss if such
stockholder's Carlisle Common Stock is held as a capital asset at the Effective
Time and will be long-term capital gain or loss if shares of Carlisle Common
Stock have been held for more than one year at the Effective Time.
2. The tax basis of the Tyco Common Stock received by a Carlisle stockholder
will be the same as such stockholder's tax basis in the Carlisle Common Stock
surrendered in exchange therefor, decreased by the tax basis allocated to any
fractional share interest exchanged for cash.
3. The holding period of the Tyco Common Stock received by a Carlisle
stockholder will include the period during which the Carlisle Common Stock
surrendered in exchange therefor was held (provided that such Carlisle Common
Stock was held by such Carlisle stockholder as a capital asset at the Effective
Time).
4. No gain or loss will be recognized by Carlisle, Tyco or Merger Sub as a
result of the Merger.
THE FOREGOING DISCUSSION IS INTENDED ONLY AS A SUMMARY OF THE MATERIAL
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER AND DOES NOT PURPORT TO BE A
COMPLETE ANALYSIS OR LISTING OF ALL POTENTIAL TAX EFFECTS RELEVANT TO A DECISION
WHETHER TO VOTE IN FAVOR OF APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND
THE MERGER. THE DISCUSSION DOES NOT ADDRESS THE TAX CONSEQUENCES THAT MAY BE
RELEVANT TO A PARTICULAR CARLISLE STOCKHOLDER SUBJECT TO SPECIAL TREATMENT UNDER
CERTAIN FEDERAL INCOME TAX LAWS, SUCH AS DEALERS IN SECURITIES, BANKS, INSURANCE
COMPANIES, TAX-EXEMPT ORGANIZATIONS, NON-UNITED STATES PERSONS AND STOCKHOLDERS
WHO ACQUIRED CARLISLE COMMON STOCK PURSUANT TO THE EXERCISE OF CARLISLE OPTIONS
OR OTHERWISE AS COMPENSATION, NOR ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY
STATE, LOCALITY OR FOREIGN JURISDICTION. MOREOVER, THE TAX CONSEQUENCES TO
HOLDERS OF CARLISLE OPTIONS ARE NOT DISCUSSED. THE DISCUSSION IS BASED UPON THE
CODE, TREASURY REGULATIONS THEREUNDER AND ADMINISTRATIVE RULINGS AND COURT
DECISIONS AS OF THE DATE HEREOF. ALL OF THE FOREGOING ARE SUBJECT TO CHANGE, AND
ANY SUCH CHANGE COULD AFFECT THE CONTINUING VALIDITY OF THIS DISCUSSION.
CARLISLE STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS CONCERNING THE
FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE MERGER TO THEM.
ACCOUNTING TREATMENT
The Merger will be treated for accounting purposes in accordance with the
rules for purchase accounting, as a result of which the assets and liabilities
of Carlisle will be recorded on Tyco's books at their estimated fair market
value with the remaining purchase price reflected as goodwill. See the Notes to
the Pro Forma Financial Statements elsewhere in this Proxy Statement/Prospectus.
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EFFECT ON EMPLOYEE BENEFITS PLANS
At the Effective Time, each then outstanding option to purchase Carlisle
Common Stock granted under the Carlisle Plastics, Inc. 1991 Employee Incentive
Plan (the "Employee Plan"), an agreement to issue options to acquire Carlisle
Common Stock to a certain Director of Carlisle or any other stock plan or
agreement of the Company (collectively, the "Carlisle Stock Option Plans"),
whether or not then vested, will be assumed by Tyco and will be deemed to
constitute a fully vested and exercisable option to acquire shares of Tyco
Common Stock in an amount equal to (a) the number of shares of Carlisle Common
Stock purchasable pursuant to such option immediately prior to the effective
time (not taking into account whether such option was in fact exercisable)
multiplied by (b) the Exchange Ratio. The exercise price per share of Tyco
Common Stock will be equal to (x) the aggregate exercise price for Carlisle
Common Stock purchasable pursuant to such option immediately prior to the
effective time (not taking into account whether or not such option was in fact
exercisable) divided by (y) the number of shares of Tyco Common Stock
purchasable pursuant to such option immediately after the Effective Time;
provided, however, that the number of shares of Tyco Common Stock that may be
purchased upon exercise of any such stock option shall not include any
fractional share and, upon exercise of the stock option, a cash payment shall be
made for any fractional share based upon the Closing Price (as hereinafter
defined) of a share of Tyco Common Stock on the trading day immediately
preceding the date of exercise. "Closing Price" shall mean, on any day, the last
reported sale price of one share of Tyco Common Stock on the NYSE. As of June 7,
1996, there were outstanding options to acquire 1,260,100 shares of Carlisle
Common Stock under the Employee Plan and options to acquire 400,000 shares of
Carlisle Common Stock issued to a certain Director of Carlisle. See "The Merger
Agreement and Related Agreements--Terms of the Merger--Options."
Tyco has agreed to cause the shares of Tyco Common Stock issuable upon
exercise of options granted under the Carlisle Stock Option Plans, for which
options to acquire Tyco Common Stock will be substituted, to be registered under
the Securities Act as soon as practicable after the Effective Time and to use
its best efforts to maintain the effectiveness of such registration for so long
as the such options remain outstanding; except that with respect to the 400,000
options issued to the Director referred to in the preceding paragraph, Tyco has
agreed to maintain the effectiveness of such registration for a period of two
(2) years from the Effective Time.
CERTAIN LEGAL MATTERS
Pursuant to the requirements of the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), Tyco and William H. Binnie have each
filed a Notification and Report Form for review under the HSR Act with the
Federal Trade Commission (the "FTC") and the Antitrust Division of the
Department of Justice (the "Antitrust Division"). Early termination of the
waiting period under the HSR Act with respect to such filings was received on
June 7, 1996.
Tyco and Carlisle do not believe that any additional governmental filings in
the United States, other than the Certificate of Merger, are required with
respect to the Merger. It should be noted that even though early termination of
the HSR Act waiting period was received, the FTC or the Antitrust Division could
take such action under the antitrust laws as it deems necessary or desirable in
the public interest, including seeking divestiture of substantial assets of Tyco
or Carlisle. Consummation of the Merger is conditioned upon, among other things,
the absence of any preliminary or permanent injunction or other order issued by
any Federal or state court in the United States which prevents the consummation
of the Merger.
Tyco does not believe that consummation of the Merger will result in a
violation of any applicable antitrust laws. However, there can be no assurance
that a challenge to the Merger on antitrust grounds will not be made or, if such
a challenge is made, of the result.
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FEDERAL SECURITIES LAW CONSEQUENCES
All Tyco Common Stock issued in connection with the Merger will be freely
transferable, except that any Tyco Common Stock received by persons who are
deemed to be "affiliates" (as such term is defined under the Securities Act) of
Carlisle or Tyco prior to the Merger may be sold by them only in transactions
permitted by the resale provisions of Rule 145 under the Securities Act with
respect to affiliates of Carlisle, or Rule 144 under the Securities Act with
respect to persons who are or become affiliates of Tyco, or as otherwise
permitted under the Securities Act. Persons who may be deemed to be affiliates
of Carlisle or Tyco generally include individuals or entities that control, are
controlled by, or are under common control with, such corporation and may
include certain officers and directors of such corporation as well as principal
stockholders of such corporation.
Affiliates may not sell their shares of Tyco Common Stock acquired in
connection with the Merger, except pursuant to an effective registration under
the Securities Act covering such shares or in compliance with Rule 145 (or Rule
144 under the Securities Act in the case of persons who are or become affiliates
of Tyco) or another applicable exemption from the registration requirements of
the Securities Act. In general, under Rule 145, for two years following the
Effective Time an affiliate (together with certain related persons) would be
entitled to sell shares of Tyco Common Stock acquired in connection with the
Merger only through unsolicited "brokers' transactions" or in transactions
directly with a "market maker," as such terms are defined in Rule 145.
Additionally, the number of shares to be sold by an affiliate (together with
certain related persons and certain persons acting in concert) within any
three-month period for purposes of Rule 145 may not exceed the greater of 1% of
the outstanding shares of Tyco Common Stock or the average weekly trading volume
of such stock during the four calendar weeks preceding such sale. Rule 145 would
only remain available, however, to affiliates if Tyco remained current with its
informational filings with the commission under the Exchange Act. Two years
after the Effective Time, an affiliate would be able to sell such Tyco Common
Stock without such manner of sale or volume limitations provided that Tyco was
current with its Exchange Act informational filings and such affiliate was not
then an affiliate of Tyco. Three years after the Effective Time, an affiliate
would be able to sell such shares of Tyco Common Stock without any restrictions
so long as such affiliate had not been an affiliate of Tyco for at least three
months prior thereto.
STOCK EXCHANGE LISTING
It is a condition to the Merger that the shares of Tyco Common Stock to be
issued in connection with the Merger be authorized for listing on the NYSE,
subject to official notice of issuance.
DIVIDENDS
Tyco expects to continue to declare its regular quarterly dividends.
Carlisle does not currently pay dividends on the Carlisle Common Stock and is
not permitted under the terms of the Merger Agreement to declare, set aside,
make or pay any dividend or other distribution in respect of the Carlisle Common
Stock during the period from the date of the Merger Agreement until the earlier
of the termination of the Merger Agreement or the Effective Time.
APPRAISAL RIGHTS
Under the General Corporation Law of the State of Delaware, the holders of
Carlisle Common Stock are not entitled to any appraisal rights with respect to
the Merger.
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FEES AND EXPENSES
Carlisle has agreed to pay Tyco a fee (a "Fee") of $4 million plus actual,
reasonable, documented out-of-pocket expenses (subject to certain limitations
and in no event more than $500,000) if the Merger Agreement is terminated under
certain circumstances. Tyco and Carlisle have agreed that if the Merger
Agreement is terminated under certain other circumstances, the non-terminating
party shall pay the terminating party the reasonable documented out-of-pocket
expenses (subject to certain limitations and in no event more than $500,000) of
the terminating party. See "The Merger Agreement and Related
Agreements--Termination."
The Fee and expense reimbursements are intended, among other things, to
increase the likelihood that the Merger will be consummated in accordance with
the terms of the Merger Agreement. The Fee payable under certain circumstances
by Carlisle to Tyco may have the effect of discouraging persons who might now or
prior to the consummation of the Merger be interested in acquiring all of or a
significant interest in Carlisle from considering or proposing such an
acquisition by increasing the costs of any such acquisition.
Except as aforesaid, and except for printing and filing fees in respect of
this Proxy Statement/Prospectus and the Registration Statement, which will be
shared equally, Tyco and Carlisle will each pay its own expenses in connection
with the Merger.
THE MERGER AGREEMENT AND RELATED AGREEMENTS
The description of the Merger Agreement set forth below does not purport to
be complete and is qualified in its entirety by reference to the Merger
Agreement, a copy of which is attached to this Proxy Statement/Prospectus as
Annex A and incorporated herein by reference.
TERMS OF THE MERGER
The Merger. At the effective time and subject to and upon the terms and
conditions of the Merger Agreement and the Delaware General Corporation Law
("DGCL"), Merger Sub will be merged with and into Carlisle, the separate
corporate existence of Merger Sub will cease, and Carlisle will continue as the
Surviving Corporation ("Surviving Corporation").
Effective Time. As promptly as practicable after the satisfaction or waiver
of the conditions to the Merger set forth in the Merger Agreement, the Merger
will be consummated by filing a Certificate of Merger with the Secretary of
State of the State of Delaware in accordance with the provisions of the DGCL.
The time of such filing is referred to as the "Effective Time."
Certificate of Incorporation and By-laws. The Merger Agreement provides that
the certificate of incorporation and By-Laws of Carlisle, as in effect
immediately prior to the Effective Time, will be the certificate of
incorporation and by-laws of the Surviving Corporation, except that provisions
related to Carlisle's capital stock will be amended and the capital stock of the
Surviving Corporation shall consist of 100 shares of Common Stock, par value
$.01 per share.
Directors and Officers. The directors of Merger Sub immediately prior to the
Effective Time will be the initial directors of the Surviving Corporation, and
the officers of Carlisle immediately prior to the Effective Time will be the
initial officers of the Surviving Corporation.
Conversion of Carlisle Common Stock and the Stock of Merger Sub in the
Merger. At the Effective Time, each share of Carlisle Common Stock issued and
outstanding immediately prior to the Effective Time (excluding shares referred
to in the following paragraph) will be converted into the right to receive
0.172185 Shares of fully paid and nonassessable shares of Tyco Common Stock.
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Each share of Carlisle Common Stock held in the treasury of Carlisle and
each share of Carlisle Common Stock owned by Tyco, Merger Sub or any subsidiary
of Carlisle or Tyco immediately prior to the Effective Time will be canceled and
retired without payment of any consideration.
Each share of common stock of Merger Sub issued and outstanding immediately
prior to the Effective Time will be converted into one validly issued, fully
paid and nonassessable share of common stock of the Surviving Corporation.
Options. At the Effective Time, each outstanding option to purchase Carlisle
Common Stock granted under the Employee Plan, an agreement to issue options to
acquire Carlisle Common Stock to a certain Director or any other stock plan or
agreement of the Company will be assumed by Tyco and deemed to constitute a
fully vested and exercisable option to acquire the number of shares of Tyco
Common Stock as the holder of such stock option would have been entitled to
receive pursuant to the Merger had such holder exercised such option in full
immediately prior to the Effective Time, at a price per share equal to the
aggregate exercise price for Carlisle Common Stock purchasable pursuant to such
stock option divided by the number of shares of Tyco Common Stock purchasable
pursuant to such stock option; provided, however, that the number of shares of
Tyco Common Stock that may be purchased upon exercise of any such Stock Option
shall not include any fractional share and, upon exercise of the Stock Option, a
cash payment shall be made for any fractional share based upon the Closing Price
(as hereinafter defined) of a share of Tyco Common Stock on the trading day
immediately preceding the date of exercise. "Closing Price" shall mean, on any
day, the last reported sale price of one share of Tyco Common Stock on the NYSE.
Based upon the number of shares of Carlisle Common Stock outstanding on the
Carlisle Record Date, and assuming the exercise of all outstanding stock
options, a maximum number of 3,230,000 shares of Tyco Common Stock may be issued
in connection with the Merger.
Tyco has agreed to cause the shares of Tyco Common Stock issuable upon
exercise of options granted under the Carlisle Stock Option Plans, for which
options to acquire Tyco Common Stock will be substituted, to be registered under
the Securities Act as soon as practicable after the Effective Time and to use
its best efforts to maintain the effectiveness of such registration for so long
as the such options remain outstanding; except that with respect to the 400,000
options issued to the Director referred to in the preceding paragraph, Tyco has
agreed to maintain the effectiveness of such registration for a period of two
(2) years from the Effective Time.
Fractional Shares. No certificates representing any fractional shares of
Tyco Common Stock will be issued in connection with the Merger. In lieu of any
such fractional share, each Carlisle stockholder who would otherwise have been
entitled to a fractional share of Tyco Common Stock will be paid an amount equal
to such stockholder's proportionate interest in the net proceeds from the sale
or sales in the open market by the Exchange Agent of the aggregate fractional
shares of Tyco Common Stock that otherwise would have been issued in connection
with the Merger. As soon as practicable following the Effective Time, the
Exchange Agent will determine the excess of (i) the number of full shares of
Tyco Common Stock delivered to the Exchange Agent by Tyco over (ii) the
aggregate number of full shares of Tyco Common Stock to be distributed to
Carlisle stockholders, and the Exchange Agent will sell such excess number of
shares at the prevailing prices on the NYSE. The sale of the excess shares by
the Exchange Agent will be executed on the NYSE through one or more member firms
of the NYSE and will be executed in round lots to the extent practicable. Tyco
will pay all commissions, transfer taxes and other out-of-pocket transaction
costs, including the expenses and compensation of the Exchange Agent, incurred
in connection with such sale of the excess shares. Until the net proceeds of
such sale have been distributed to the former Carlisle stockholders, the
Exchange Agent will hold such proceeds in trust for such former stockholders. As
soon as practicable after the determination of the amount of cash to be paid to
former Carlisle stockholders in lieu of any fractional interests, the Exchange
Agent will make available such amounts to such former stockholders.
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EXCHANGE OF CERTIFICATES
Exchange Agent. Tyco will appoint Boston EquiServe, or such other bank or
trust company as shall be mutually designated by Carlisle and Tyco, to act as
Exchange Agent for the Merger.
Exchange Procedures. As soon as reasonably practicable after the Effective
Time, Tyco will instruct the Exchange Agent to mail to each holder of record of
Carlisle Common Stock a letter of transmittal and instructions to effect the
surrender of the certificates representing Carlisle Common Stock in exchange for
certificates evidencing Tyco Common Stock. Upon surrender of a certificate
representing Carlisle Common Stock for cancellation to the Exchange Agent
together with such letter of transmittal, duly executed, and such other
customary documents as may be required pursuant to such instructions, the holder
of such certificate will be entitled to receive in exchange (i) certificates
evidencing that number of whole shares of Tyco Common Stock which such holder
has the right to receive in the Merger, (ii) any dividends or other
distributions on the shares of Tyco Common Stock declared or made after the
Effective Time to which such holder is entitled, and (iii) cash in respect of
fractional shares of Tyco Common Stock as provided above (the Tyco Common Stock,
dividends, distributions and cash being, collectively, the "Merger
Consideration"), and the certificate so surrendered will be canceled. In the
event of a transfer of ownership of shares of Carlisle Common Stock which is not
registered in the transfer records of Carlisle as of the Effective Time, shares
of Tyco Common Stock, dividends and distributions may be issued and paid to a
transferee if the certificate evidencing such shares is presented to the
Exchange Agent, accompanied by all documents required to evidence and effect
such transfer and by evidence that any applicable stock transfer taxes have been
paid. Until so surrendered, each outstanding certificate that, prior to the
Effective Time, represented shares of Carlisle Common Stock will be deemed from
and after the Effective Time, for all corporate purposes, to evidence the
ownership of the number of full Tyco shares of Tyco Common Stock into which such
shares of Carlisle Common Stock shall have been so converted.
Distributions With Respect to Unexchanged Carlisle Common Stock. No
dividends or other distributions declared or made after the Effective Time with
respect to Tyco Common Stock will be paid to the holder of an unsurrendered
certificate representing shares of Carlisle Common Stock. Subject to applicable
law, following surrender of any certificate representing shares of Carlisle
Common Stock, there will be paid to the record holder of the certificates
representing shares of Tyco Common Stock issued in exchange, without interest,
at the time of surrender, the amount of dividends or other distributions with a
record date after the Effective Time previously declared with respect to such
shares of Tyco Common Stock.
Transfers of Ownership. If any certificate for shares of Tyco Common Stock
is to be issued in a name other than that in which the certificate representing
shares of Carlisle Common Stock surrendered in exchange is registered, it will
be a condition of the issuance that the certificate surrendered will be properly
endorsed and otherwise in proper form for transfer and that the person
requesting such exchange will have paid to Tyco or any designated agent any
transfer or other taxes required by reason of the issuance of a certificate for
shares of Tyco Common Stock in any name other than that of the registered holder
of the certificate surrendered, or established to the satisfaction of Tyco or
any designated agent that such tax has been paid or is not payable.
Escheat and Withholding. Neither Tyco, Merger Sub nor Carlisle will be
liable to any holder of Carlisle Common Stock for any Merger Consideration
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law. Tyco or the Exchange Agent will be entitled to deduct
and withhold from the Merger Consideration to any Carlisle stockholder such
amounts as Tyco or the Exchange Agent is required to deduct and withhold with
respect to the making of such payment under any provision of federal, state,
local or foreign tax law.
Lost, Stolen or Destroyed Certificates. In the event any certificates
representing shares of Carlisle Common Stock have been lost, stolen or
destroyed, the Exchange Agent will issue shares of Tyco
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Common Stock in exchange for such lost, stolen or destroyed certificates upon
the making of an affidavit of that fact by the owner of such certificates,
provided that Tyco may, in its discretion require the holder of such lost,
stolen or destroyed certificates to deliver a bond in a reasonable sum as
indemnity against any claim that may be made against Tyco or the Exchange Agent
with respect to the certificates alleged to have been lost, stolen or destroyed.
DETAILED INSTRUCTIONS, INCLUDING A TRANSMITTAL LETTER, WILL BE MAILED TO
CARLISLE STOCKHOLDERS PROMPTLY FOLLOWING THE EFFECTIVE TIME AS TO THE METHOD OF
EXCHANGING CERTIFICATES FORMERLY REPRESENTING SHARES OF CARLISLE COMMON STOCK.
CARLISLE STOCKHOLDERS SHOULD NOT SEND CERTIFICATES REPRESENTING THEIR SHARES TO
THE EXCHANGE AGENT PRIOR TO RECEIPT OF THE TRANSMITTAL LETTER.
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains various representations and warranties of
Carlisle, in respect of itself and its subsidiaries, and of Tyco and Merger Sub,
in respect of Tyco and its subsidiaries, relating, among other things, to the
following matters (which representations and warranties are subject, in certain
cases, to specified exceptions): (i) corporate organization, standing,
qualification and similar corporate matters; (ii) the absence of violation of
provisions of charter documents; (iii) capitalization; (iv) the authorization,
execution, delivery and enforceability of the Merger Agreement; (v) the absence
of conflict of the Merger Agreement with charter documents, laws or agreements
and required consents for the execution and delivery of the Merger Agreement;
(vi) the absence of conflict with, default under or violation of agreements and
laws, and the holding of permits necessary for the conduct of business, except
as could not reasonably be expected to have a material adverse effect on the
business, assets or financial condition of Carlisle or Tyco, as the case may be
(a "Material Adverse Effect"); (vii) reports and other documents filed with the
Commission, the absence of material misstatements in the information contained
therein, and the fair presentation of the financial statements contained therein
in accordance with generally accepted accounting principles; (viii) conduct of
business in the ordinary course and the absence of certain changes or events
since the close of the most recent fiscal year, of Carlisle or Tyco,
respectively, including the occurrence of a Material Adverse Effect; (ix) the
absence of undisclosed liabilities that could reasonably be expected to have a
Material Adverse Effect; (x) the absence of litigation that could reasonably be
expected to have a Material Adverse Effect; (xi) employee benefit matters; (xii)
labor matters; (xiii) the absence of any material untrue statements in the
Registration Statement and this Proxy Statement/Prospectus; (xiv) the absence of
restrictions on business, except as could not reasonably be expected to have a
Material Adverse Effect; (xv) title to property; (xvi) payment of taxes and
certain other tax matters; (xvii) compliance with environmental laws; (xviii)
brokers, finders and investment bankers; (xix) the absence of any material
untrue statements in certificates or schedules furnished in connection with the
Merger Agreement; (xx) ownership, rights to use and absence of violations or
claims in respect of intellectual property; (xxi) relationships or transactions
with affiliates; (xxii) maintenance of insurance; (xxiii) the absence of any
product liability claims or product recalls that could reasonably be expected to
have a Material Adverse Effect; (xxiv) inventory; and (xxv) the opinion of
Carlisle's financial advisor as to fairness.
CONDUCT OF BUSINESS PENDING THE MERGER
Conduct of Business by Carlisle. The Merger Agreement provides that, prior
to the Effective Time, unless Tyco otherwise agrees in writing, Carlisle will
conduct its business and cause the businesses of its subsidiaries to be
conducted only in the ordinary course of business and in a manner consistent
with past practice; and Carlisle will use reasonable commercial efforts to
preserve substantially intact the business organization of Carlisle and its
subsidiaries, to keep available the services of the present officers, employees
and consultants of Carlisle and its subsidiaries and to preserve the
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present relationships of Carlisle and its subsidiaries with customers, suppliers
and other persons with which Carlisle or any of its subsidiaries has significant
business relations. Except as contemplated by the Merger Agreement, neither
Carlisle nor any of its subsidiaries, without the prior written consent of Tyco,
will:
(i) amend or otherwise change Carlisle's Certificate of Incorporation or
By-Laws;
(ii) issue, sell, pledge, dispose of or encumber, or authorize the
issuance, sale, pledge, disposition or encumbrance of, any shares of capital
stock of any class, or any options, warrants, convertible securities or
other rights of any kind to acquire any shares of capital stock, or any
other ownership interest (including, without limitation, any phantom
interest) in Carlisle, any of its subsidiaries or affiliates (with
exceptions for shares and options issuable under the Carlisle Stock Option
Plans);
(iii) sell, pledge, dispose of or encumber any assets of Carlisle or any
of its subsidiaries (except for (i) sales of assets in the ordinary course
of business and in a manner consistent with past practice, (ii) dispositions
of obsolete or worthless assets, and (iii) sales of immaterial assets not in
excess of $500,000);
(iv) (1) declare, set aside, make or pay any dividend or other
distribution in respect of any of its capital stock, except that a wholly
owned subsidiary of Carlisle may declare and pay a dividend to its parent,
(2) split, combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in respect of, in
lieu of or in substitution for shares of its capital stock, or (3) amend the
terms or change the period of exercisability of, purchase, repurchase,
redeem or otherwise acquire, or permit any subsidiary to purchase,
repurchase, redeem or otherwise acquire, any of its securities or any
securities of its subsidiaries;
(v) (1) acquire any corporation, partnership or other business
organization or division (subject to certain exceptions); (2) incur any
indebtedness for borrowed money or issue any debt securities or assume,
guarantee (other than guarantees of bank debt of Carlisle's subsidiaries
entered into in the ordinary course of business) or endorse or otherwise as
an accommodation become responsible for, the obligations of any person, or
make any loans or advances, except in the ordinary course of business
consistent with past practice; (3) enter into or amend any resin purchase
contract that would be in effect after the Effective Time (subject to
certain limitations) or enter into or amend any other material contract or
agreement other than in the ordinary course of business; (4) authorize any
capital expenditures or purchase of fixed assets which are, in the
aggregate, in excess of a specified amount for Carlisle and its subsidiaries
taken as a whole; or (5) enter into or amend any contract, agreement,
commitment or arrangement to effect any of the foregoing;
(vi) increase the compensation payable to its officers or employees,
except for increases in salary or wages of employees of Carlisle or its
subsidiaries in accordance with past practices, grant severance or
termination pay to any director, officer or employee or establish, adopt,
enter into or amend any collective bargaining, employment, termination,
severance or benefit plan, agreement or policy for any directors, officers
or employees, except, in each case, as may be required by law;
(vii) take any action to change accounting policies or procedures;
(viii) make any material tax election inconsistent with past practice or
settle or compromise any material federal, state, local or foreign tax
liability or agree to an extension of a statute of limitations, except for
settlements the amount of which has been reserved for in Carlisle's
financial statements contained in reports previously filed with the
Commission;
(ix) pay, discharge or satisfy any claims, liabilities or obligations,
other than the payment, discharge or satisfaction in the ordinary course of
business and consistent with past practice of
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liabilities reflected or reserved against in Carlisle's financial statements
contained in reports previously filed with the Commission or incurred in the
ordinary course of business and consistent with past practice; or
(x) take, or agree to take, any of the foregoing actions, any action
which would make any of the representations or warranties of Carlisle
contained in the Merger Agreement untrue or incorrect or prevent Carlisle
from performing its covenants under the Merger Agreement.
No Solicitation by Carlisle. The Merger Agreement provides that Carlisle
will not, directly or indirectly, through any officer, director, employee,
representative or agent of Carlisle or any of its subsidiaries, solicit or
encourage the initiation of any inquiries or proposals regarding any merger,
sale of substantial assets, sale of shares of capital stock or similar
transactions involving Carlisle or any subsidiaries of Carlisle (the foregoing
being referred to as "Acquisition Proposals"). However, the Board of Directors
of Carlisle is not prevented from considering, negotiating, approving and
recommending to the stockholders of Carlisle a bona fide Acquisition Proposal
not solicited in violation of the Merger Agreement or take certain other
positions or make certain other disclosures, provided the Board of Directors of
Carlisle determines in good faith (upon advice of independent counsel) that it
is required to do so in order to discharge properly its fiduciary duties.
Under the Merger Agreement, Carlisle is required immediately to notify Tyco
after receipt of any Acquisition Proposal, or any modification of or amendment
to any Acquisition Proposal, or any request for nonpublic information relating
to Carlisle or any of its subsidiaries in connection with an Acquisition
Proposal or for access to the properties, books or records of Carlisle or any
subsidiary by any person or entity that informs the Board of Directors of
Carlisle or such subsidiary that it is considering making, or has made, an
Acquisition Proposal.
If the Board of Directors of Carlisle receives a request for material
nonpublic information by a person who makes a bona fide Acquisition Proposal,
and the Board of Directors determines in good faith and upon the advice of
independent counsel that it is required to cause Carlisle to provide such
information in order to discharge properly the directors' fiduciary duties,
then, provided the person making the Acquisition Proposal has executed a
confidentiality agreement substantially similar to the one then in effect
between Carlisle and Tyco, Carlisle may provide such person with access to
information regarding Carlisle and may request such person to make a proposal
concerning a transaction involving such person and the Company or the Company's
securityholders.
The Merger Agreement also provides that Carlisle will not release any third
party from the confidentiality provisions of any confidentiality agreement to
which Carlisle is a party.
Carlisle is required to ensure that the officers, directors and employees of
Carlisle and its subsidiaries and any investment banker or other advisor or
representative retained by Carlisle are aware of the foregoing restrictions.
Conduct of Business by Tyco. The Merger Agreement provides that, prior to
the Effective Time, unless Carlisle otherwise agrees in writing, Tyco will
conduct its business, and cause the businesses of its subsidiaries to be
conducted, in the ordinary course of business and consistent with past practice,
other than actions taken by Tyco or its subsidiaries in contemplation of the
Merger, and will not, without the prior written consent of Carlisle:
(i) amend or otherwise change Tyco's Articles of Organization or
By-Laws;
(ii) acquire or agree to acquire, by merging or consolidating with, by
purchasing an equity interest in or a portion of the assets of, or by any
other manner, any business or any corporation, partnership, association or
other business organization or division thereof, or otherwise acquire or
agree to acquire any assets of any other person, which, in any such case,
would materially delay or prevent the consummation of the transactions
contemplated by the Merger Agreement;
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(iii) declare, set aside, make or pay any dividend or other distribution
in respect of any of its capital stock, except that a wholly owned
subsidiary of Tyco may declare and pay a dividend to its parent, and except
that Tyco may declare and pay cash dividends of $0.05 per quarter consistent
with past practice; or
(iv) take, or agree to take, any action which would make any of the
representations or warranties of Tyco contained in the Merger Agreement
untrue or incorrect or prevent Tyco from performing its covenants under the
Merger Agreement.
ADDITIONAL AGREEMENTS
Access to Information; Confidentiality. The Merger Agreement provides that,
upon reasonable notice, each of Carlisle and Tyco will afford to the officers,
employees, accountants, counsel and other representatives of the other,
reasonable access, during the period prior to the Effective Time, to all its
properties, books, contracts, commitments and records and, during such period,
each of Carlisle and Tyco will furnish promptly to the other all information
concerning its business, properties and personnel as such other party may
reasonably request, and each will make available to the other the appropriate
individuals for discussion of the other's business, properties and personnel as
either Tyco or Carlisle may reasonably request. Each party shall keep such
information confidential in accordance with the terms of a confidentiality
letter between Tyco and Carlisle.
Consents; Approvals. Each of Carlisle and Tyco will use its best efforts to
obtain all consents, waivers, approvals, authorizations or orders, and make all
filings required in connection with the authorization, execution and delivery of
the Merger Agreement and the consummation of the transactions contemplated
thereby.
Indemnification and Insurance. The Merger Agreement provides that the
By-Laws of the Surviving Corporation will contain the provisions with respect to
indemnification set forth in the By-Laws of Carlisle, which will not be amended,
repealed or otherwise modified for a period of six years from the Effective Time
in any manner that would adversely affect the rights thereunder of individuals
who at the Effective Time were directors, officers, employees or agents of
Carlisle, unless such modification is required by law.
After the Effective Time, the Surviving Corporation will, to the fullest
extent permitted under applicable law or under the Surviving Corporation's
Certificate of Incorporation or By-Laws, indemnify and hold harmless, each
present and former director, officer or employee of Carlisle or any of its
subsidiaries against any costs or expenses (including attorneys' fees),
judgments, fines, losses, claims, damages, liabilities and amounts paid in
settlement in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of or pertaining to the transactions contemplated by the Merger Agreement,
or otherwise with respect to any acts or omissions occurring at or prior to the
Effective Time, to the same extent as provided in Carlisle's Certificate of
Incorporation or By-Laws or any applicable contract or agreement as in effect on
the date of the Merger Agreement, in each case for a period of six years after
the date of the Merger Agreement.
For a period of three years after the Effective Time, Tyco will cause the
Surviving Corporation to maintain in effect, if available, directors' and
officers' liability insurance covering those persons who are currently covered
by Carlisle's directors' and officers' liability insurance policy on terms
comparable to those now applicable to directors and officers of Carlisle,
provided that Tyco or the Surviving Corporation will not be required to expend
in excess of 200% of the annual premium currently paid by Carlisle for such
coverage, but if the premium for coverage exceeds such amount, Tyco or the
surviving corporation will purchase a policy with the greatest coverage
available for 200% of the current annual premium.
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Tyco has agreed to guarantee the obligations of the Surviving Corporation
under the foregoing provisions.
Notification of Certain Matters. Each of Carlisle and Tyco will give the
other prompt notice of the occurrence or non-occurrence of any event which would
be likely to cause any representation or warranty of the notifying party
contained in the Merger Agreement to be materially untrue or inaccurate, or any
failure of the notifying party materially to comply with any covenant, condition
or agreement in the Merger Agreement.
Further Action; Tax Treatment. Each of the parties to the Merger Agreement
agrees to use all reasonable efforts to take all actions and do any other things
necessary, proper or advisable to consummate as promptly as practicable the
transactions contemplated by the Merger Agreement, except that Tyco is under no
obligation to agree to divest, abandon, license or take similar action with
respect to any assets. In addition, each of the parties agrees to use its best
efforts to cause the Merger to qualify as a reorganization under the provisions
of Section 368 of the Code, and will not (both before and after consummation of
the Merger) take any actions which to its knowledge could reasonably be expected
to prevent the Merger from so qualifying.
Public Announcements. Tyco and Carlisle agree to consult with each other
before issuing any press release with respect to the Merger or the Merger
Agreement and will not issue any such press release or make any such public
statement without the prior consent of the other party, which consent will not
be unreasonably withheld, except as required by law or the regulations of the
NYSE.
Listing of Tyco Shares. The Merger Agreement provides that Tyco will use its
best efforts to cause the shares of Tyco Common Stock to be issued in the Merger
to be listed, upon official notice of issuance, on the NYSE prior to the
Effective Time.
Accountants' Letters. Upon reasonable notice from the other, Tyco shall use
its best efforts to cause Coopers & Lybrand L.L.P. to deliver to Carlisle, and
Carlisle shall use its best efforts to cause Deloitte & Touche LLP to deliver to
Tyco, a letter covering such matters as are requested by the other and as are
customarily addressed in accountants' "comfort" letters.
CONDITIONS TO THE MERGER
Conditions to Obligation of Each Party to Effect the Merger. The respective
obligations of each party to effect the Merger are subject to the satisfaction
at or prior to the Effective Time of the following conditions:
(i) Effectiveness of the Registration Statement. The Registration
Statement shall have been declared effective by the Commission under the
Securities Act. No stop order suspending the effectiveness of the
Registration Statement shall have been issued by the Commission and no
proceedings for that purpose and no similar proceeding in respect of this
Proxy Statement/Prospectus shall have been initiated or threatened by the
Commission;
(ii) Stockholder Approval. The Merger Agreement and the Merger shall
have been approved and adopted by the requisite vote of the stockholders of
Carlisle;
(iii) Listing. The shares of Tyco Common Stock issuable in the Merger
shall have been authorized for listing on the NYSE upon official notice of
issuance;
(iv) Illegality. No statute, rule, regulation or order shall be enacted,
entered, enforced or deemed applicable to the Merger which makes the
consummation of the Merger illegal;
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(v) Tax Opinions. Carlisle and Tyco shall have received written opinions
of Weil, Gotshal & Manges LLP and Kramer, Levin, Naftalis & Frankel,
respectively, in form and substance reasonably satisfactory to them to the
effect that the Merger will constitute a reorganization within the meaning
of Section 368 of the Code; and
(vi) Governmental Actions. There shall not have been instituted, pending
or threatened any action or proceeding (or any investigation or other
inquiry that might result in such an action or proceeding) by any
governmental authority or administrative agency before any governmental
authority, administrative agency or court of competent jurisdiction, nor
shall there be in effect any judgment, decree or order of any governmental
authority, administrative agency or court of competent jurisdiction, in
either case, seeking to prohibit or limit Tyco from exercising all material
rights and privileges pertaining to its ownership of the Surviving
Corporation or the ownership or operation by Tyco or any of its subsidiaries
of all or a material portion of the business or assets of Tyco or any of its
subsidiaries, or seeking to compel Tyco or any of its subsidiaries to
dispose of or hold separate all or any material portion of the business or
assets of Tyco or any of its subsidiaries, as a result of the Merger or the
transactions contemplated by the Merger Agreement.
Additional Conditions to Obligations of Tyco and Merger Sub. The obligations
of Tyco and Merger Sub to effect the Merger are also subject to the following
conditions:
(i) Representations and Warranties. The representations and warranties
of Carlisle contained in the Merger Agreement shall be true and correct in
all respects at and as of the Effective Time, except for (1) changes
contemplated by the Merger Agreement, (2) those representations and
warranties which address matters only as of a particular date (which shall
have been true and correct as of such date), and (3) where the failure to be
true and correct could not reasonably be expected to have a Material Adverse
Effect, with the same force and effect as if made on and as of the Effective
Time, and Tyco and Merger Sub shall have received a certificate to such
effect signed by the Chairman, President and the Chief Financial Officer of
Carlisle;
(ii) Agreements and Covenants. Carlisle shall have performed or complied
in all material respects with all agreements and covenants required by the
Merger Agreement to be performed or complied with by it on or prior to the
Effective Time, and Tyco and Merger Sub shall have received a certificate to
such effect signed by the Chairman, President and the Chief Financial
Officer of Carlisle;
(iii) Consents Obtained. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required
to be made, by Carlisle for the authorization, execution and delivery of the
Merger Agreement and the consummation by it of the transactions contemplated
thereby shall have been obtained and made by Carlisle, except where the
failure to receive such consents, waivers, approval, authorizations or
orders could not reasonably be expected to have a Material Adverse Effect on
Carlisle or Tyco;
(iv) Affiliate Agreements. Tyco shall have received from each person who
is identified as an "affiliate" of Carlisle an agreement to comply with
restrictions on such affiliates pursuant to Rule 145 under the Securities
Act.
Additional Conditions to Obligation of Carlisle. The obligation of Carlisle
to effect the Merger is also subject to the following conditions:
(i) Representations and Warranties. The representations and warranties
of Tyco and Merger Sub contained in the Merger Agreement shall be true and
correct in all respects at and as of the Effective Time, except for (1)
changes contemplated by the Merger Agreement, (2) those representations and
warranties which address matters only as of a particular date (which shall
have been true and correct as of such date), and (3) where the failure to be
true and correct could not
35
<PAGE>
reasonably be expected to have a Material Adverse Effect, with the same
force and effect as if made at and as of the Effective Time, and Carlisle
shall have received a certificate to such effect signed by the President and
Chief Financial Officer of Tyco;
(ii) Agreements and Covenants. Tyco and Merger Sub shall have performed
or complied in all material respects with all agreements and covenants
required by the Merger Agreement to be performed or complied with by them at
or prior to the Effective Time, and Carlisle shall have received a
certificate to such effect signed by the President and the Chief Financial
Officer of Tyco; and
(iii) Consents Obtained. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required
to be made, by Tyco and Merger Sub for the authorization, execution and
delivery of the Merger Agreement and the consummation by them of the
transactions contemplated thereby shall have been obtained and made by Tyco
and Merger Sub, except where the failure to receive such consents, etc.
could not reasonably be expected to have a Material Adverse Effect on
Carlisle or Tyco.
TERMINATION
Conditions to Termination. The Merger Agreement may be terminated at any
time prior to the Effective Time, notwithstanding approval thereof by the
stockholders of Carlisle:
(i) by mutual written consent duly authorized by the Boards of Directors
of Tyco and Carlisle; or
(ii) by either Tyco or Carlisle if the Merger shall not have been
consummated by October 31, 1996 (provided that the right to terminate the
Merger Agreement under this clause will not be available to any party whose
failure to fulfill any obligation under the Merger Agreement has been the
cause of or resulted in the failure of the Merger to occur on or before such
date); or
(iii) by either Tyco or Carlisle if a court of competent jurisdiction or
governmental, regulatory or administrative agency or commission shall have
issued a nonappealable final order, decree or ruling or taken any other
action having the effect of permanently restraining, enjoining or otherwise
prohibiting the Merger (provided that the right to terminate the Merger
Agreement under this clause will not be available to any party who has not
complied with its obligations described under "Additional
Agreements--Further Action; Tax Treatment" above, and such noncompliance
materially contributed to the issuance of any such order, decree or ruling
or the taking of such action); or
(iv) by Tyco, if the requisite vote of the stockholders of Carlisle
shall not have been obtained by October 31, 1996; or
(v) by Tyco, if (1) the Board of Directors of Carlisle shall withdraw,
modify or change its approval or recommendation of the Merger Agreement or
the Merger in a manner adverse to Tyco or shall have resolved to do so; (2)
the Board of Directors of Carlisle shall have recommended to the
stockholders of Carlisle an Alternative Transaction (as defined below); or
(3) a tender offer or exchange offer for 25% or more of the outstanding
shares of Carlisle Common Stock is commenced (other than by Tyco or an
affiliate of Tyco) and the Board of Directors of Carlisle recommends that
the stockholders of Carlisle tender their shares in such tender or exchange
offer; or
(vi) by Tyco or Carlisle, (1) if any representation or warranty of
Carlisle or Tyco, respectively, set forth in the Merger Agreement shall be
untrue when made, such that the condition set forth in "Conditions to the
Merger--Additional Conditions to Obligations of Tyco and Merger
Sub--Representations and Warranties" above, or in "Conditions to the
Merger--Additional
36
<PAGE>
Conditions to Obligation of Carlisle--Representations and Warranties" above,
as the case may be, will not be satisfied (a "Terminating
Misrepresentation") or (2) upon a breach of any covenant or agreement on the
part of Carlisle or Tyco, respectively, set forth in the Merger Agreement,
such that the conditions set forth in "Conditions to the Merger--Additional
Conditions to Obligation of Tyco and Merger Sub--Representations and
Warranties" or "--Agreements and Covenants" above, or in "Conditions to the
Merger--Additional Conditions to Obligation of Carlisle-- Representations
and Warranties" or "--Agreements and Covenants" above, as the case may be,
would not be satisfied (a "Terminating Breach"), provided that, if such
Terminating Breach or Terminating Misrepresentation is curable prior to
October 31, 1996 by Carlisle or Tyco, as the case may be, through the
exercise of its reasonable best efforts and for so long as Carlisle or Tyco,
as the case may be, continues to exercise such reasonable best efforts,
neither Tyco nor Carlisle, respectively, may terminate the Merger Agreement
under this clause; or
(vii) by Tyco, if any representation or warranty of Carlisle shall have
become untrue such that the condition set forth in "Conditions to the
Merger--Additional Conditions to Obligations of Tyco and Merger
Sub--Representations and Warranties" above would not be satisfied, or by
Carlisle, if any representation or warranty of Tyco shall have become untrue
such that the condition set forth in "Conditions to the Merger--Additional
Conditions to Obligation of Carlisle--Representations and Warranties" would
not be satisfied, in either case other than by reason of a Terminating
Breach, provided that if any such misrepresentation or breach of warranty is
curable prior to October 31, 1996 by Carlisle or Tyco, as the case may be,
through the exercise of its reasonable best efforts and for so long as
Carlisle or Tyco, as the case may be, continues to exercise such reasonable
best efforts, neither Tyco nor Carlisle, respectively, may terminate the
Merger Agreement under this clause; or
(viii) by Carlisle, if the Board of Directors of Carlisle shall
withdraw, modify or change its approval or recommendation of the Merger
Agreement or the Merger in a manner adverse to Tyco or Merger Sub or shall
have resolved to do so.
Fees and Expenses. Except as set forth below, all fees and expenses incurred
in connection with the Merger Agreement and the Merger will be paid by the party
incurring such expenses, whether or not the Merger is consummated, provided that
Tyco and Carlisle shall share equally all fees and expenses, other than
attorneys' fees, incurred in connection with the printing and filing of this
Proxy Statement/Prospectus and the Registration Statement.
The Merger Agreement provides that Carlisle will pay Tyco a fee of $4
million, plus actual, documented and reasonable out-of-pocket expenses of Tyco
incurred from and after April 29, 1996 and relating to the transactions
contemplated by the Merger Agreement (including, but not limited to, fees and
expenses of Tyco's counsel and accountants and out-of-pocket expenses (but not
fees) of Tyco's financial advisors, subject to certain limitations and in no
event more than $500,000 in the aggregate), upon the first to occur of any of
the following events:
(i) the termination of the Merger Agreement by Tyco as a result of the
failure to receive the requisite vote for approval and adoption of the
Merger Agreement by the stockholders of Carlisle by October 31, 1996; or
(ii) the termination of the Merger Agreement by Tyco pursuant to clause
(v) under "Conditions to Termination" above; or
(iii) the termination of the Merger Agreement by Tyco on account of a
Terminating Breach of Carlisle; or
(iv) the termination of this Agreement by Carlisle pursuant to clause
(viii) of "Conditions to Termination" above.
37
<PAGE>
The Merger Agreement provides that if the Merger is terminated on account of
a Terminating Misrepresentation, the non-terminating party will pay the
terminating party the actual, documented and reasonable out-of-pocket expenses
of the terminating party relating to the transactions contemplated by the Merger
Agreement (including, but not limited to, fees and expenses of the terminating
party's counsel and accountants and out-of-pocket expenses (but not fees) of
such terminating party's financial advisors, subject to certain limitations and
in no event more than $500,000 in the aggregate).
The aforesaid fee and related expenses are payable within one business day
after the occurrence of the event requiring such payment, provided that, in no
event will a party be required to pay such fees or expenses to the other if,
immediately prior to the termination of the Merger Agreement, the party to
receive the fee and related expenses was in material breach of its obligations
under the Merger Agreement.
Definition of Alternative Transaction. "Alternative Transaction" means any
of (1) a transaction pursuant to which any person (or group of persons) other
than Tyco or its affiliates (a "Third Party") acquires or would acquire more
than 25% of the outstanding shares of Carlisle Common Stock, whether from
Carlisle or pursuant to a tender offer or exchange offer or otherwise, (2) a
merger or other business combination involving Carlisle pursuant to which any
Third Party acquires more than 25% of the outstanding equity securities of
Carlisle or the entity surviving such merger or business combination, or (3) any
other transaction pursuant to which any Third Party acquires or would acquire
control of assets (including for this purpose the outstanding equity securities
of subsidiaries of Carlisle and the entity surviving any merger or business
combination including any of them) of Carlisle or any of its subsidiaries having
a fair market value (as determined by the Board of Directors of Carlisle in good
faith) equal to more than 25% of the fair market value of all the assets of
Carlisle and its subsidiaries, taken as a whole, immediately prior to such
transaction, provided that the term Alternative Transaction does not include any
acquisition of securities by a broker-dealer in connection with a bona fide
public offering of such securities.
AMENDMENT AND WAIVER
The Merger Agreement may be amended in writing by the parties by action
taken by or on behalf of their respective Boards of Directors at any time prior
to the Effective Time, provided that after approval of the Merger by the
stockholders of Carlisle, no amendment may be made which by law requires further
approval by such stockholders without such further approval.
At any time prior to the Effective Time, any party to the Merger Agreement
may, with respect to any other party, extend the time for the performance of any
of the obligations or other acts, waive any inaccuracies in the representations
and warranties contained in the Merger Agreement or in any document delivered
pursuant to the Merger Agreement, or waive compliance with any of the agreements
or conditions contained in the Merger Agreement. Any such extension or waiver
will be valid if set forth in an instrument in writing signed by the party or
parties to be bound thereby.
STOCKHOLDER AGREEMENTS
The description of the Stockholder Agreements set forth below does not
purport to be complete and is qualified in its entirety by reference to such
agreements, copies of which are filed as exhibits to the Registration Statement.
Concurrently with the execution of the Merger Agreement, Tyco and each of
William H. Binnie, Christos I. Grigoriou and the Grigoriou Family Limited
Partnership and Grant M. Wilson (together, the "Major Stockholders") entered
into certain agreements (collectively, the "Stockholder Agreements") with
respect to the securities of Carlisle held by each of the Major Stockholders,
respectively. See "Security Ownership of Certain Beneficial Owners and
Management of Carlisle."
38
<PAGE>
Agreement to Vote. Each of the Stockholder Agreements provides that the
respective Major Stockholder will vote the shares of Carlisle Common Stock
beneficially owned by it in favor of approval of the Merger Agreement and the
Merger and any matter necessary to facilitate the Merger and against approval of
any Acquisition Proposal made in opposition to or in competition with the
Merger, certain corporate transactions of Carlisle with any person other than
Tyco or its affiliates, and any liquidation or winding up of Carlisle (each, an
"Opposing Proposal").
The Major Stockholders collectively own approximately 92% of the voting
power of the outstanding shares of Carlisle Common Stock outstanding as of the
date of the Merger Agreement. The vote of such holders at the Special Meeting in
favor of the Merger Agreement will be sufficient to approve and adopt the Merger
Agreement, irrespective of the votes cast by any other holders of Carlisle
Common Stock.
Solicitation. The Stockholder Agreements provide that prior to the earlier
to occur of the Effective Time of the Merger or the Termination Date (as
defined) each of the Major Stockholders will not, and will not permit any entity
under its control to, solicit proxies or become a "participant" in a
"solicitation" (as such terms are defined in Regulation 14A under the Exchange
Act) with respect to an Opposing Proposal or otherwise encourage or assist any
person in taking or planning any action that would constitute an Opposing
Proposal or initiate a stockholders' vote or action by written consent of
Carlisle's stockholders with respect to an Opposing Proposal.
Transfer of Carlisle Securities. From and after the date of the Stockholder
Agreements until the earlier to occur of the Effective Time or the Termination
Date, each of the Major Stockholders has agreed to not effect any sales,
exchanges, transfers, pledges, dispositions or any other transactions which
would result in a reduction in the risk of ownership (any such transaction, a
"Sale") of any of Carlisle's securities to any person unless such person shall
agree in writing to be bound by all provisions of the respective Stockholder
Agreement; and provided that in no event shall such Major Stockholder effect a
Sale of any Carlisle B Stock to a person who is not a Permitted Transferee (as
that term is defined in Article FOURTH of Carlisle's Restated Certificate of
Incorporation).
The Stockholder Agreements also contain provisions relating to the
restrictions on sales of Tyco Common Stock received in the Merger by affiliates
of Carlisle pursuant to Rule 145 under the Securities Act, as they may apply to
the Major Stockholders.
Conversion. Prior to the earlier to occur of the Effective Time of the
Merger or the Termination Date, each Major Stockholder has agreed that it will
not convert or request that Carlisle convert any of their respective shares of
Carlisle Common Stock that are Carlisle B Stock to Carlisle A Stock.
Termination. The Stockholder Agreements terminate if the Merger Agreement is
terminated according to its terms.
COMPARATIVE PER SHARE PRICES AND DIVIDENDS
TYCO
Tyco Common Stock is listed and traded on the NYSE. The following table sets
forth the high and low sales prices per share of Tyco Common Stock as reported
in the NYSE Composite Transactions, and the dividends paid on Tyco Common Stock,
for the quarterly periods presented below, which correspond to Tyco's quarterly
fiscal periods for financial reporting purposes. The prices and dividends
39
<PAGE>
below have been restated to reflect a two-for-one stock split effected in the
form of a stock dividend which was distributed on November 14, 1995.
<TABLE>
<CAPTION>
TYCO COMMON STOCK
--------------------------------
HIGH LOW DIVIDEND
-------- -------- --------
<S> <C> <C> <C>
Fiscal 1994:
First quarter............................................... $23.4375 $19.375 $.05
Second quarter.............................................. 25.875 20.750 .05
Third quarter............................................... 27.625 24.4375 .05
Fourth quarter.............................................. 25.0625 22.000 .05
Fiscal 1995:
First quarter............................................... 24.1875 21.25 .05
Second quarter.............................................. 25.0625 21.8125 .05
Third quarter............................................... 26.8125 23.250 .05
Fourth quarter.............................................. 29.125 25.50 .05
Fiscal 1996:
First quarter............................................... 31.625 26.6875 .05
Second quarter.............................................. 35.625 29.5000 .05
Third quarter............................................... 39.250 32.375 .05
Fourth quarter.............................................. 41.375 35.125 .05
Fiscal 1997:
First quarter (through August __, 1996).....................
</TABLE>
On May 14, 1996, the last trading day prior to announcement of the execution
of the Merger Agreement, the closing price per share of Tyco Common Stock as
reported in the NYSE Composite Transactions was $39 1/8. On August , 1996, the
most recent date for which prices were available prior to printing this Proxy
Statement/Prospectus, the closing price per share of Tyco Common Stock as
reported in the NYSE Composite Transactions was $[ ]. Stockholders are
urged to obtain current market quotations.
40
<PAGE>
CARLISLE
The Carlisle A Stock is listed and traded on the NYSE. The following table
sets forth the high and low sales prices per share of Carlisle A Stock as
reported in the NYSE Composite Transactions for the calendar quarters presented
below:
<TABLE>
<CAPTION>
CARLISLE A STOCK
--------------------------------
HIGH LOW
------------ ------------
<S> <C> <C>
Calendar 1994:
First quarter.......................................................... $ 8 7/8 $ 6 5/8
Second quarter......................................................... 7 3/4 4 1/2
Third quarter.......................................................... 5 3 7/8
Fourth quarter......................................................... 4 7/8 3 3/4
Calendar 1995:
First quarter.......................................................... 5 1/2 4 1/8
Second quarter......................................................... 5 5/8 4 1/4
Third quarter.......................................................... 5 3/8 4 1/4
Fourth quarter......................................................... 6 3/8 4 1/8
Calendar 1996:
First quarter.......................................................... 4 5/8 3 7/8
Second quarter......................................................... 7 4
Third quarter (through August __, 1996)................................ -- --
</TABLE>
The indentures for Carlisle's senior notes generally prohibit Carlisle from
paying dividends on its common stock and Carlisle has not paid cash dividends on
its common stock. Under the terms of the Merger Agreement, Carlisle is not
permitted to declare, set aside, make or pay any dividend or distribution in
respect of its capital stock until the earlier of the termination of the Merger
Agreement and the Effective Time.
On May 14, 1996, the last trading day prior to announcement of the execution
of the Merger Agreement, the closing price per share of Carlisle A Stock as
reported in the NYSE Composite Transactions was $4 7/8. On August __, 1996, the
most recent date for which prices were available prior to printing this Proxy
Statement/Prospectus, the closing price per share of Carlisle A Stock as
reported in the NYSE Composite Transactions was $____. Stockholders are urged to
obtain current market quotations.
As of the Record Date, Carlisle estimates that it had approximately 8,600
beneficial owners of Carlisle A Stock. At such time, the Carlisle B Stock was
held by 5 holders of record.
POST-MERGER DIVIDEND POLICY
It is the current intention of the Board of Directors of Tyco to declare
dividends on the Tyco Common Stock following the Merger initially in the amount
of $.05 per share per quarter, or $0.20 per share per year. Stockholders should
note that no such dividends have been declared and that future dividends will be
determined by Tyco's Board of Directors in light of the earnings and financial
condition of Tyco and its subsidiaries and other factors.
41
<PAGE>
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following Unaudited Pro Forma Combined Financial Statements give effect
to the Merger pursuant to which Tyco will acquire Carlisle in a stock-for-stock
transaction. The transaction will be accounted for as a purchase. These
Unaudited Pro Forma Combined Financial Statements have been prepared from, and
should be read in conjunction with, the historical consolidated financial
statements of Tyco which are incorporated by reference in this Proxy
Statement/Prospectus, see "Incorporation of Certain Documents by Reference," and
of Carlisle, included elsewhere in this Proxy Statement/
Prospectus.
From July 1, 1995 through March 31, 1996, Tyco, through its divisions and
operating subsidiaries, acquired several businesses for its disposable and
specialty products segment, its fire protection and other contracting services
segment and its flow control segment. Subsequent to March 31, 1996 and prior to
the merger with Carlisle, Tyco, through its Kendall subsidiary acquired three
companies. In addition, on July 1, 1996, Tyco acquired Thorn Security Group
Limited, an alarm and detection company, for its fire protection and other
contracting services segment. All of these acquisitions are being accounted for
as purchases. Individually, none of these acquisitions is significant to Tyco's
financial position and earnings in the current year. The following Unaudited Pro
Forma Combined Financial Statements also give effect to the purchase of these
businesses on a combined basis under the columnar heading "Completed
Acquisitions."
The pro forma balance sheet information is presented as of March 31, 1996.
The pro forma income statement information is presented for the nine months
ended March 31, 1996 and for the year ended June 30, 1995.
42
<PAGE>
UNAUDITED PRO FORMA COMBINED
BALANCE SHEET
MARCH 31, 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
COMPLETED ------------------------ ------------------------
TYCO ACQUISITIONS ADJUSTMENTS COMBINED CARLISLE ADJUSTMENTS COMBINED
---------- ------------ ----------- ---------- -------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash
equivalents................. $ 61,617 $ 748 $ 62,365 $ 1,968 $ 64,333
Receivables, net........... 655,009 78,276 733,285 22,241 755,526
Contracts in process....... 123,772 886 124,658 124,658
Inventories................ 611,023 10,909 621,932 39,565 661,497
Deferred income taxes...... 109,391 78 $ 10,000 119,469 5,233 $ 5,000 129,702
Prepaid expenses........... 68,463 105 68,568 7,078 75,646
---------- ------------ ----------- ---------- -------- ----------- ----------
1,629,275 91,002 10,000 1,730,277 76,085 5,000 1,811,362
---------- ------------ ----------- ---------- -------- ----------- ----------
Property, plant and
equipment, net............. 710,895 29,581 (5,000) 735,476 122,116 857,592
Goodwill and other
intangible assets.......... 1,168,335 34,541 287,339 1,490,215 58,961 77,152 1,626,328
Reorganization value in
excess of identifiable
assets...................... 104,116 104,116 104,116
Deferred income taxes....... 77,594 77,594 77,594
Other assets................ 75,416 56 75,472 4,324 79,796
---------- ------------ ----------- ---------- -------- ----------- ----------
Total assets........... $3,765,631 $155,180 $ 292,339 $4,213,150 $261,486 $82,152 $4,556,788
---------- ------------ ----------- ---------- -------- ----------- ----------
---------- ------------ ----------- ---------- -------- ----------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Loans payable and current
maturities of long-term
debt........................ $ 186,099 $ 592 $ 186,691 $ 28,049 $ 214,740
Accounts payable........... 404,183 52,207 456,390 41,537 497,927
Accrued expenses........... 450,827 65,282 $ 20,000 536,109 14,642 $12,500 563,251
Contracts in
process-billings in
excess of costs............. 96,523 96,523 96,523
Income taxes............... 77,558 5,007 82,565 82,565
Deferred income taxes...... 10,885 10,885 10,885
---------- ------------ ----------- ---------- -------- ----------- ----------
1,226,075 123,088 20,000 1,369,163 84,228 12,500 1,465,891
---------- ------------ ----------- ---------- -------- ----------- ----------
Deferred income taxes....... 9,354 9,354 4,376 13,730
Long-term debt.............. 516,435 15,359 242,101 773,895 125,017 898,912
Other liabilities........... 182,194 3,642 29,000 214,836 1,464 216,300
Commitments and
contingencies
Shareholders' equity:
Preferred stock............
Common stock............... 76,260 16,831 (16,639) 76,452 179 1,358 77,989
Capital in excess of par,
net of deferred
compensation................ 606,323 12,697 1,440 620,460 69,107 45,409 734,976
Currency translation
adjustment.................. (29,335) (29,335) (29,335)
Retained earnings.......... 1,178,325 (16,437) 16,437 1,178,325 (22,885) 22,885 1,178,325
---------- ------------ ----------- ---------- -------- ----------- ----------
1,831,573 13,091 1,238 1,845,902 46,401 69,652 1,961,955
---------- ------------ ----------- ---------- -------- ----------- ----------
Total liabilities and
shareholders' equity........ $3,765,631 $155,180 $ 292,339 $4,213,150 $261,486 $82,152 $4,556,788
---------- ------------ ----------- ---------- -------- ----------- ----------
---------- ------------ ----------- ---------- -------- ----------- ----------
</TABLE>
See accompanying notes to unaudited pro forma combined financial statements.
43
<PAGE>
UNAUDITED PRO FORMA COMBINED
STATEMENT OF INCOME
NINE MONTHS ENDED MARCH 31, 1996
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
COMPLETED ------------------------ ------------------------
TYCO ACQUISITIONS ADJUSTMENTS COMBINED CARLISLE ADJUSTMENTS COMBINED
---------- ------------ ----------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Sales..................... $3,717,706 $446,574 $4,164,280 $ 305,110 $4,469,390
---------- ------------ ----------- ---------- ---------- ----------- ----------
Cost of sales............. 2,715,724 316,466 3,032,190 244,587 3,276,777
Selling, general and
administrative............ 586,260 112,809 7,373 706,442 48,105 1,018 755,565
Restructuring............. 33,935 33,935
Interest expense.......... 46,646 6,262 21,137 74,045 16,169 90,214
---------- ------------ ----------- ---------- ---------- ----------- ----------
3,348,630 435,537 28,510 3,812,677 342,796 1,018 4,156,491
---------- ------------ ----------- ---------- ---------- ----------- ----------
Income before income
taxes..................... 369,076 11,037 (28,510) 351,603 (37,686) (1,018) 312,899
Income taxes.............. 153,167 2,425 (7,141) 148,451 (11,135) 137,316
---------- ------------ ----------- ---------- ---------- ----------- ----------
Net income................ $ 215,909 $ 8,612 $ (21,369) $ 203,152 $ (26,551) $ (1,018) $ 175,583
---------- ------------ ----------- ---------- ---------- ----------- ----------
---------- ------------ ----------- ---------- ---------- ----------- ----------
Net income per share...... $ 1.41 $ 1.33 $ 1.12
Common equivalent
shares.................... 152,809 153,193 156,501
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
See accompanying notes to unaudited pro forma combined financial statements.
44
<PAGE>
UNAUDITED PRO FORMA COMBINED
STATEMENT OF INCOME
YEAR ENDED JUNE 30, 1995
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
COMPLETED ------------------------ ------------------------
TYCO ACQUISITIONS ADJUSTMENTS COMBINED CARLISLE ADJUSTMENTS COMBINED
---------- ------------ ----------- ---------- -------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Sales....................... $4,534,651 $782,060 $5,316,711 $422,350 $5,739,061
---------- ------------ ----------- ---------- -------- ----------- ----------
Cost of sales............... 3,313,301 535,338 3,848,639 325,049 4,173,688
Selling, general and
administrative............. 735,917 210,397 $ 11,169 957,483 71,385 $ 1,427 1,030,295
Merger and transaction
related costs.............. 37,170 37,170 37,170
Interest expense............ 63,385 10,368 32,473 106,226 20,842 127,068
---------- ------------ ----------- ---------- -------- ----------- ----------
4,149,773 756,103 43,642 4,949,518 417,276 1,427 5,368,221
---------- ------------ ----------- ---------- -------- ----------- ----------
Income before income taxes
and extraordinary item..... 384,878 25,957 (43,642) 367,193 5,074 (1,427) 370,840
Income taxes................ 168,285 6,559 (8,877) 165,967 1,249 167,216
---------- ------------ ----------- ---------- -------- ----------- ----------
Income before extraordinary
item........................ $ 216,593 $ 19,398 $ (34,765) $ 201,226 $ 3,825 $(1,427) $ 203,624
---------- ------------ ----------- ---------- -------- ----------- ----------
---------- ------------ ----------- ---------- -------- ----------- ----------
Income per share before
extraordinary item.......... $ 1.43 $ 1.33 $ 1.32
Common equivalent shares.... 151,018 151,402 154,782
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
See accompanying notes to unaudited pro forma combined financial statements.
45
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
(IN THOUSANDS)
1. Tyco has a fiscal year ending June 30 and Carlisle has a calendar year end.
Certain of the other businesses acquired by Tyco during fiscal 1996 had
fiscal year ends other than June 30. Accordingly, the Unaudited Pro Forma
Combined Financial Statements include Carlisle's financial statements and
the financial statements for the other acquisitions adjusted to Tyco's year
end. This pro forma combined information is not necessarily indicative of
actual or future operating results or the financial position that would have
occurred prior to, or will occur upon, the consummation of the Merger.
2. The unaudited pro forma combined balance sheet combines the consolidated
balance sheet of Tyco at March 31, 1996 with the balance sheet of Carlisle
at March 31, 1996. The balance sheets for the four companies acquired
subsequent to March 31, 1996 (the "Companies") are also included in the pro
forma balance sheet. The unaudited pro forma combined balance sheet reflects
certain adjustments to the historical balance sheets of Carlisle and the
Companies to record goodwill, to adjust assets and liabilities to their fair
values, to record the issuance of Tyco Common Stock for the purchase of
Carlisle and one of the Companies, to reflect bank borrowings for the
purchase of the other Companies and to eliminate the historical
shareholders' equity accounts of the acquired businesses. The pro forma
combined data is based upon a conversion of each share of Carlisle Common
Stock into 0.172185 shares of Tyco Common Stock and assumes that Tyco's
stock price is $37 7/8 per share (closing price on May 3, 1996).
3. Under purchase accounting, the total purchase price for Carlisle will be
allocated to Carlisle's assets and liabilities based on their relative fair
values. These allocations are subject to valuations and studies which are
currently under development and will be completed after the Merger is
consummated. While certain reorganization costs relative to headcount
reductions are under consideration, no specific plans have been developed
and accordingly associated reserves for such costs have not been considered
in the purchase price allocation at this time. Specific costs which have
been identified relative to the acquisition include transaction-related
professional fees of $7,500 and debt settlement costs associated with the
change of control which are estimated at $5,000.
4. With respect to purchase accounting for the companies, Tyco is in the
process of determining fair value for the acquired assets and liabilities
and at this time has adjusted the historical balances of the acquired
businesses for the following items: headcount reductions, $15,000; writedown
of fixed assets to their fair values, $5,000; excess facility costs, $1,000;
other miscellaneous reserves, $4,000. While development of rationalization
plans is ongoing, changes from amounts reflected above are not expected to
be material to Tyco's results of operations.
5. The unaudited pro forma combined statement of income for the nine months
ended March 31, 1996 combines the results of operations of Tyco, Carlisle
and the other acquisitions as if Tyco owned these entities as of July 1,
1995. The historical results of operations of the completed acquisitions and
related pro forma adjustments have been presented for the period from July
1, 1995 through the date of acquisition.
6. The unaudited pro forma combined statement of income for the year ended June
30, 1995 combines the results of operations of Tyco, Carlisle, and the other
acquisitions as if Tyco owned these entities as of July 1, 1994.
7. Goodwill amortization of $8,123 and $12,169 for the completed acquisitions
was recorded for the nine months ended March 31, 1996 and for the year ended
June 30, 1995, respectively. Goodwill for the completed acquisitions has an
original basis of $486,709. For Carlisle, goodwill has an original basis of
$136,113 and amortization of $1,018 and $1,427 has been recorded for the
nine months ended March 31, 1996 and for the year ended June 30, 1995,
respectively. Amortization for Carlisle represents the incremental
adjustment in excess of amortization recorded in Carlisle's historical
accounts. Goodwill for all acquisitions is amortized on a straight-line
basis over 40 years.
8. In connection with writedown of fixed assets on one of the acquisitions
subsequent to March 31, 1996, depreciation expense has been reduced by $750
and $1,000 for the nine months ended March 31, 1996 and for the year ended
June 30, 1995, respectively.
9. Incremental interest expense of $21,137 and $32,473 for the nine months
ended March 31, 1996 and for the year ended June 30, 1995, respectively, has
been recorded on the completed acquisitions
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related to the incremental borrowings of $519,600 incurred to acquire these
businesses. Interest expense adjustments reflected in the unaudited pro
forma combined statements of income have been calculated assuming an
interest rate of 6.25%, which approximates Tyco's borrowing rate for debt
incurred to fund the acquisitions.
10. Adjustments to income tax expense reflect the estimated income tax effects
of the results of operations of the acquired businesses and certain
associated pro forma adjustments.
11. The pro forma combined income per share amounts are based on the weighted
average number of shares of Tyco Common Stock adjusted for the shares issued
for the merger with Carlisle as well as the outstanding Carlisle stock
options and for the shares issued for one of Tyco's fiscal 1996
acquisitions.
12. There were no material transactions between Tyco, Carlisle or the other
acquired businesses during any of the periods presented.
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<PAGE>
BUSINESS OF TYCO
Tyco, through its divisions and operating subsidiaries, maintains strong
leadership positions in each of its segments in the respective markets for
disposable medical supplies and other specialty products, fire protection
systems and other contracting services, flow control products and electrical and
electronic components. Tyco, which operates in more than 50 countries around the
world, had fiscal 1995 sales of approximately $4.5 billion.
DISPOSABLE AND SPECIALTY PRODUCTS
Tyco's Disposable and Specialty Products Group consists of Kendall
International Inc. ("Kendall"), Ludlow Corporation ("Ludlow") and Armin Plastics
("Armin"). Kendall manufacturers, markets and distributes medical supplies and
adhesive products and tapes. Ludlow is a manufacturer of disposable medical
products, technical products, laminated and coated products, 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 during October 1994. Kendall conducts its operations
through three business units: Kendall Healthcare, Kendall International
("International") and Polyken. Kendall's products are manufactured at 18
locations in North America, the United Kingdom, Germany, Mexico, China, Thailand
and Malaysia.
Kendall Healthcare. 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 SCDTM 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's Superior Healthcare Group, Inc. manufactures a broad line of
disposable medical supplies including respiratory, urology and nursing care
products. Kendall's Sheridan Catheter Corporation is a manufacturer of airway
management, temperature monitoring and specialty products serving patients in
anesthesia, critical care and emergency medicine. In February 1996, Kendall
acquired Professional Medical Products, Inc., a manufacturer of incontinent care
and other patient care products.
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 its wound care and other health care
products.
International. 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,
although the mix of product lines varies from country to country. International
markets directly to hospital and medical professionals and through independent
distributors.
Polyken. The Polyken divisions manufacturers and markets specialty adhesive
products and tapes for industrial applications including external corrosion
protection tape products for oil, gas and water
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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
others.
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 manufacturers 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, hydrogels, 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.
Ludlow's Uni-Patch, Inc. subsidiary manufactures and distributes
transcutaneous electrical nerve simulation ("TENS") electrodes and related
products which are used primarily in physical therapy and other forms of
rehabilitation medicine. Classic Medical Products manufactures medical
electrodes for EKGs and similar diagnostic tests. Ludlow's Promeon business is a
leading manufacturer of gels which are used with medical electrodes for testing
and other monitoring purposes. In fiscal 1995, the Company acquired LMI, a
manufacturer of medical electrodes and Cambrex, which produces hydrogel wound
care products.
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 Twitchell division of Ludlow manufacturers 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.
Ludlow's Accurate Forming division manufacturers deep-drawn metal parts,
primarily barrels, caps and clips for pens and pencils and containers, caps and
closures for cosmetics, pharmaceutical packaging and automotive applications.
Accurate sells it products on a direct basis through its internal sales force
and also utilizes manufacturers' representatives. Accurate's facility is located
in New Jersey.
Armin
Armin manufactures polyethylene film and packaging products in a wide range
of size, gauge, construction strength, stretch capacity, clarity and color.
Armin extrudes low density, high density and linear low density polyethylene
film from resin purchased in pellet form, using such additives as coloring, slip
and anti-block chemicals. Examples of Armin's product mix include plastic
supermarket
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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 manufacturers 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. A majority of 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 California, Georgia,
New Jersey, North Carolina, Oklahoma and South Carolina.
FIRE PROTECTION AND OTHER CONTRACTING SERVICES
Tyco engages in fire protection contracting and in the manufacture and
distribution of fire protection products and equipment.
Tyco's Grinnell subsidiary ("Grinnell"), which was founded in 1850, is the
largest installer, manufacturer and supplier of automatic sprinkler and fire
protection and detection systems in North America. Wormald International Limited
("Wormald"), which was founded in 1889 and whose business and assets were
acquired by Tyco in 1990, 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, Tyco designs,
fabricates, installs and services automatic sprinkler and fire suppression
systems in buildings and other installations. Tyco 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 reduced
insurance premiums available 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
during Tyco's prior three fiscal years.
A majority of the fire suppression systems installed by Tyco are
water-based, but Tyco is also the world's leader in providing custom designed
special hazard fire protection systems 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(R) fire suppression products. INERGEN(R), 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.
Tyco also services, maintains, repairs and inspects fire suppression systems
installed by Tyco and other contractors. In Australia, New Zealand and Asia, the
Company, through its O'Donnell Griffin division, also engages in the
installation of electrical wire and related electrical equipment in new and
existing structures and offers specialized electrical 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 system installed by the Company are
manufactured in the Company's own facilities. Tyco also has fabrication plants
worldwide that cut, thread and weld pipe, which is then shipped with other
prefabricated components to job sites for installation. Tyco also installs
alarms, detection and
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activation devices and centralized monitors. Tyco 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.
On July 1, 1996, Tyco acquired Thorn Security Group Limited ("Thorn")
headquartered in Sunbury-on-Thames, United Kingdom, for approximately $214
million. Thorn, with annual sales of approximately $300 million, designs,
manufactures, installs and services a broad range of systems used in fire alarm
detection and building security applications in the United Kingdom, Europe,
United States and the Far East.
Manufacturing and Distribution
Tyco 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 mechanical
sprinkler components used in an automatic fire suppression system. In the United
Kingdom, France, Germany and Asia-Pacific, 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 extinguisher,
fire hose and related equipment.
At Ansul, Incorporated (Wisconsin) and Total Parsch (Mexico), the Company
manufactures and sells various lines of dry chemical, liquid and gaseous
portable fire extinguisher and related agents for industrial, government,
commercial and consumer applications. These operating units also manufacture 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 Incorporated also manufactures spill
control products designed to absorb, neutralize and solidify spills of various
hazardous materials.
Fire protection products are sold through the Company's flow control
products distribution network discussed in "Flow Control," below, and through
independent distributors.
Environmental Services
In January 1996, Tyco acquired The Earth Technology Corporation
("EarthTech"), a provider of a broad range of environmental, consulting, and
engineering services throughout the United States. The principal services of
EarthTech consist of: (i) full-spectrum environmental and hazardous waste
management services; (ii) infrastructure design and construction services; (iii)
facilities engineering and construction management services for institutional,
civic, commercial, and industrial clients; and (iv) contract operations and
management services for water, wastewater, and remediation treatment facilities
for municipal and industrial clients.
FLOW CONTROL PRODUCTS
Tyco 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 22 plants in
North America, the United Kingdom, Germany and Switzerland, and distributed
through the Company's own worldwide distribution network and through independent
distributors. Tyco's Flow Control Group includes Allied Tube and Conduit
Corporation ("Allied"), Mueller Co. ("Mueller") and Tyco's worldwide flow
control operations.
Manufacturing
In North America Tyco manufactures and distributes a wide range of flow
control products, including pipe and pipe fittings, tubing, forged steel
fittings and valves, meters, couplings, pipe hangers,
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strut 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, petrochemical and
numerous other industrial applications. Tyco also manufacturers certain related
products such as steel tubing, custom iron castings, malleable iron pipe
fittings and fencing materials. In Europe Tyco manufactures Teflon lined
specialty valves for use in highly corrosive environments and specialty high
performance butterfly valves and ball valves that are used principally in the
oil and gas, chemical and processing industries.
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, iron butterfly and gate valves, service line brass valves and
fittings, gas valves and meter bars, 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.
Distribution
Tyco operates through a 49 branch distribution network for the sale of flow
control and fire protection products in North America. Three Regional
Distribution Centers ("RDC's") are strategically located in Georgia, Illinois
and California to support the branches' product needs and to ship directly to
customers. Each RDC stocks over 8,500 products. Tyco also stocks and sells
products through various distribution centers in Europe, Australia, New Zealand,
the Middle East and Asia. In Europe, the Company distributes fire protection
products through warehouses located in the Netherlands, the United Kingdom,
Germany and France. In the Asia-Pacific region, the Company distributes fire
protection and flow control products through warehouses located in Australia,
New Zealand and Singapore. Through the various distribution channels, the
Company offers its products to distributors and fire protection 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 77% of its North American distribution sales in fiscal 1995.
ELECTRICAL AND ELECTRONIC COMPONENTS
Tyco'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 manufacturers 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 manufacturers 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 86% of
its revenues in fiscal 1995.
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Under a multi-year engineering development program, Simplex and AT&T Bell
Laboratories, Inc. have developed a proprietary encapsulation process for AT&T
supplied optic fibers used in underwater telecommunications cables. Simplex
manufacturers the cable and performs system assembly and has proprietary rights
to the encapsulation process. From 1986 through June 30, 1995, Simplex
manufactured in excess of 100,000 kilometers of undersea optical cable deployed
by AT&T. In fiscal 1995 Simplex delivered the first of a new generation of high
capacity undersea systems. These systems have enhanced operating capabilities
including much greater data rates, increased capacity and a new fiber design.
Simplex's encapsulation and systems' assembly and testing processes are being
adapted to incorporate the new technology.
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.
Printed Circuit Group
Tyco's Printed Circuit Group of companies (the "Group") 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, and can 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 required to accommodate powerful and sophisticated
components. Backplanes include printed circuit boards and are assemblies of
connectors 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 flexrigid circuits 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
customer's specifications.
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.
Allied
Allied's electrical conduit division 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 building structures. Steel conduit also serves as an electrical
ground which ensures proper operation of circuit interrupters and provides a
channel into which additional wires can be inserted or removed as electrical
needs change. The division manufactures a full line of electrical conduit at
plants in Illinois and Pennsylvania. The division also manufactures metal
framing and other products at a plant in Michigan. The division's electrical
conduit and related products are sold to wholesale electrical distributors
through Allied's distribution facilities by an internal sales force and by a
network of commissioned sales agents.
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BUSINESS OF CARLISLE
BUSINESS
General. Carlisle is a leading producer of consumer and industrial products
made from plastics. Carlisle's products include trash bags, flexible packaging,
garment hangers and sheeting. Carlisle's trash bag products include
institutional lines, as well as Carlisle's own national consumer brands. In the
fourth quarter of 1995, Carlisle elected to exit its private label grocery and
plastic container businesses. Sales are primarily in North America.
The following table sets forth Carlisle's major product categories as a
percentage of net sales for each of the three years ended December 31:
<TABLE>
<CAPTION>
1995 1994 1993
------ ----- -----
<S> <C> <C> <C>
Hangers............................................................... 33.0% 31.9% 26.6%
Consumer Bags......................................................... 23.8 25.0 28.3
Sheeting.............................................................. 18.4 16.6 16.1
Packaging/Other....................................................... 14.3 14.5 14.9
Institutional Bags.................................................... 10.5 12.0 14.1
------ ----- -----
100.0% 100.0% 100.0%
------ ----- -----
------ ----- -----
</TABLE>
History. Carlisle was incorporated in Delaware in 1985 and adopted its
present name in February 1989. In 1989, Carlisle acquired 79% ownership in
PolyTech, Inc. ("Polytech"). In 1990, Carlisle, through PolyTech, purchased 100%
of the outstanding capital stock of American Western Corporation ("American
Western"). In March of 1995, PolyTech was merged into Carlisle.
In 1991, Carlisle completed an initial public offering (the "Carlisle A
Stock Offering"). In conjunction with the Carlisle A Stock Offering, Carlisle
converted all shares of Carlisle's outstanding common stock into shares of
Carlisle B Stock; acquired the 21% minority interests in its directly owned
subsidiaries in exchange for shares of Carlisle A Stock; and changed its tax
status from a "S" corporation to a "C" corporation.
In July 1991, Carlisle purchased a two-thirds interest in Rhino-X
Industries, Inc. ("Rhino-X"). On January 1, 1994 Carlisle purchased the
remaining one-third minority interest shares of its subsidiary Rhino-X.
Products. Carlisle supplies plastic trash bags to three major markets: mass
merchandise, grocery chains, and institutional. Carlisle provides Ruffies(R), a
national brand consumer trash bag, for mass merchandise and other retail stores.
For institutional customers, such as food service distributors, janitorial
supply houses, restaurants, hotels and hospitals, Carlisle provides heavy duty
trash can liners.
In the consumer trash bag market, Carlisle competes primarily with two
advertised national brands. Carlisle has historically concentrated on mass
merchandisers as the primary market for its branded Ruffies(R) trash bags, while
the other major national brands are marketed primarily through food retailers.
Film-Gard(R), Carlisle's leading plastic sheeting product, is sold to
consumers and professional contractors through do-it yourself outlets, home
improvement centers and hardware stores. A wide range of Film-Gard(R) products
are sold for various uses, including painting, renovation, construction,
landscaping and agriculture. Carlisle's industrial packaging film is sold
through distributors and manufacturers for use as shrink wrap and other
packaging requirements.
Molded plastic garment hangers are sold by Carlisle to four markets: garment
manufacturers, national retailers, regional or local retailers, and mass
merchandisers. Garment manufacturers place
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their clothes on Carlisle's hangers before shipping to retail outlets. Carlisle
creates and sells customized hanger designs to national retailers. Regional or
local retailers buy standard Carlisle hanger lines for retail clothing display.
Carlisle also supplies mass merchandise stores with consumer plastic hangers for
sale to the general public.
Carlisle operates in a competitive marketplace where success is dependent
upon price, service and quality. Carlisle has positioned itself as a major
supplier of innovative plastic products to large, rapidly growing national
customers at the highest levels of value, service and quality.
Raw Materials. The primary raw materials used by Carlisle in the manufacture
of its products are various plastic resins, primarily polyethylene. Carlisle's
financial performance is thus dependent to a substantial extent on the
polyethylene resin market. The primary plastic resins used by Carlisle are
produced from petrochemical intermediates derived from products of the natural
gas and crude oil refining processes, respectively. Because plastic resins are
commodity products, price is a significant factor in the selection of suppliers.
Consequently, Carlisle's sources for plastic resins tend to vary from year to
year. Shortages of plastic resins have been infrequent.
Natural gas and crude oil markets experience substantial cyclical price
fluctuations as well as other market disturbances, including shortages of
supply, the effect of OPEC policy and crises is the oil producing regions of the
world. The capacity, supply and demand for plastic resins and the petrochemical
intermediates from which they are produced are also subject to cyclical and
other market factors. Consequently, plastic resin prices may fluctuate as a
result of changes in natural gas and crude oil prices and the capacity, supply
and demand for resin and petrochemical intermediates from which they are
produced.
Carlisle uses in excess of 425 million pounds of plastic resins annually. At
this level, Carlisle is one of the largest purchasers of plastic resin in the
United States. Management believes that large volume purchases of plastic resin
result in lower unit raw material costs.
Carlisle may not always be able to pass through increases in the cost of its
raw materials to its customers in the form of price increases. To the extent
that increases in the cost of plastic resin cannot be passed on to its
customers, such increases may have an adverse impact on profit margins and the
overall profitability of Carlisle.
Major Customers. Carlisle has one customer (Wal*Mart) that accounts for
approximately 10% of its consolidated net sales for the year ended December 31,
1995 and 7% of its consolidated sales for the years ended December 31, 1994 and
1993.
Employees. As of December 31, 1995, Carlisle employed approximate 2,500 (550
in Mexico) full-time employees, of whom approximately 2,050 are in manufacturing
and approximately 450 are in administration and sales. Approximately 675 (550 in
Mexico) and 175 of Carlisle's total work force are represented by labor unions
under contracts which are due to expire in 1996 and 1997, respectively. Carlisle
is currently in the early stages of re-negotiating the union contracts which
expire in 1996 and will renegotiate the union contract which expires in 1997 in
due course. Carlisle has historically enjoyed satisfactory relations with both
union and non-union employees.
Seasonality of Portions Of Business. Historically, Carlisle's results have
been affected, in part, by the nature of its customers' purchasing trends for
various seasonal and promotional programs. The first quarter is typically the
least profitable quarter, and the third quarter is the strongest due to demands
for hangers during the holiday season, lawn and leaf bags in the fall and strong
promotional activity by major mass merchandisers.
Environmental And Safety Matters. Carlisle routinely monitors environmental
compliance at its manufacturing facilities. The cost of such compliance has not
been significant. Carlisle is currently not
55
<PAGE>
subject to any environmental proceedings. During 1995, Carlisle did not make any
material capital expenditures for environmental control facilities, nor does it
anticipate any in the near future.
Actions by federal, state and local governments concerning environmental
matters could result in laws or regulations that could increase the cost of
producing the products manufactured by Carlisle or otherwise adversely affect
the demand for its products.
At present, environmental laws and regulations do not have a material
adverse effect upon the demand for Carlisle's products. Carlisle is aware,
however, that certain local governments have adopted ordinances prohibiting or
restricting the use or disposal of certain plastic products that are among the
types of products produced by Carlisle. If such prohibitions or restrictions
were widely adopted, such regulatory and environmental measures could have a
material adverse effect upon Carlisle. In addition, a decline in consumer
preferences for plastic products due to environmental considerations could have
a material adverse effect upon Carlisle.
Certain of Carlisle's operations are subject to federal, state and local
environmental laws and regulations that impose limitations on the discharge of
pollutants into the air and water and establish standards for the treatment,
storage and disposal of solid and hazardous wastes. While historically Carlisle
has not had to make significant capital expenditures for environmental
compliance, Carlisle cannot predict with any certainty its future capital
expenditures for environmental compliance because of continually changing
compliance standards and technology. Carlisle does not currently have any
insurance coverage for environmental liabilities and does not anticipate
obtaining such coverage in the future.
PROPERTIES
Carlisle utilizes approximately 598,000 square feet of leased space and
approximately 1,563,000 square feet of space owned by Carlisle.
56
<PAGE>
The principal properties of Carlisle are as follows:
<TABLE>
<CAPTION>
LEASED OWNED
LOCATION DESCRIPTION OF PROPERTY (SQ.FT.) (SQ.FT.)
- ----------------------------------- ----------------------------------- -------- -------
<S> <C> <C> <C>
Phoenix, Arizona Corporate and Divisional Office 33,000
Corona, California Distribution Warehouse 7,000
San Francisco, California Distribution Warehouse 11,000
Santa Ana, California Distribution Warehouse 103,000
Portland, Maine Manufacturing 17,000
Jessup, Maryland Manufacturing 60,000
Los Pinos, New Mexico Manufacturing 45,000
Tijuana, Mexico Manufacturing 37,000 100,000
Fairmont, Minnesota Manufacturing and Distribution
Warehouse 66,000
Minneapolis, Minnesota Manufacturing, Distribution
Warehouse and Divisional Offices 189,000
North Bergen, New Jersey Distribution Warehouse 110,000
Wellington, New Jersey Manufacturing 10,000
Battleboro, North Carolina Manufacturing and Distribution
Warehouse 391,000
Forest City, North Carolina Manufacturing and Distribution
Warehouse 180,000
Thomasville, North Carolina Manufacturing and Distribution
Warehouse 145,000
Ringtown, Pennsylvania Manufacturing and Distribution
Warehouse 232,000
Sioux Falls, South Dakota Manufacturing and Distribution
Warehouse 221,000
Dallas, Texas Distribution Warehouse 20,000
Victoria, Texas Manufacturing and Distribution
Warehouse 184,000
</TABLE>
- ------------
Carlisle also leases properties in Hong Kong and Costa Rica.
LEGAL PROCEEDINGS
Carlisle is subject to legal proceedings and claims which arise in the
ordinary course of its business. In the opinion of management, the amount of
ultimate liability with respect to these actions will not materially affect the
financial position, results of operations, or cash flows of Carlisle.
57
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS OF CARLISLE
The directors and executive officers of Carlisle and their respective ages
(as of March 15, 1996), principal occupation and other positions and year each
has been a director are listed below:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION AND OTHER DIRECTOR
NAME AND AGE DIRECTORSHIPS SINCE
- ----------------------------------------- ----------------------------------------- --------
<S> <C> <C>
William H. Binnie (38)................... Chairman of the Board of Directors of 1985
Carlisle since 1985 and President and
Chief Executive Officer of Carlisle from
1985 to 1994.
Clifford A. Deupree (59)................. Chief Executive Officer of Carlisle since 1991
1995; President of Carlisle since 1994;
President of Carlisle's Molded Products
Group since 1992; President of Carlisle's
Plastic Hangers Division since 1989;
Plant Manager of Carlisle's hanger
facilities in California and Mexico since
1989.
Patrick J. O'Leary (38).................. Chief Financial Officer and Secretary of 1994
the Company since September 1994; Partner
in Deloitte & Touche LLP, an accounting,
auditing and consulting firm, from 1988
to 1994.
David E. Wilbur, Jr. (53)................ Vice-Chairman of the Board of Directors 1992
of Carlisle since September 1994;
President of Wilbur and Associates (a
consulting and merger and acquisition
company) since September 1994 and from
1990 to 1992; President of Carlisle's
Film Products Group from 1992 to
September 1994; Vice Chairman, Edina
Group, Inc. (a merger and acquisition
company); President and Chief Operating
Officer of Poly-Tech from 1984 to 1990.
Yehochai Schneider (62).................. Private investor in numerous acquisitions 1991
within the plastics industry for more
than the past five years.
Clarence M. Schwerin III (63)............ Private investor for more than the past 1991
five years.
Samuel H. Smith, Jr. (66)................ Chairman of the Board and President of 1991
Classic Plastic Machinery Company since
1990 and President of the Samuel Smith
Group, Inc. (a plastics industry
consulting company) since 1989; Director
of EASCO Corporation since 1992;
President of Van Dorn Plastic Machinery
Co. from 1965 to 1988; Chairman of the
Society of Plastics Industry Inc. from
1986 to 1988.
Grant M. Wilson (55)..................... Vice Chairman of the Board of Directors 1985
of Carlisle since February 1994; private
investor and Chairman of Cohasset Capital
Corporation for more than the past five
years.
</TABLE>
58
<PAGE>
CARLISLE EXECUTIVE COMPENSATION
Summary of Cash and Certain Other Compensation
The following table shows, for the years ending December 31, 1995, 1994 and
1993, the cash compensation paid by Carlisle, as well as certain other
compensation paid or accrued for those years, to William H. Binnie, the Chairman
of the Board of Directors of Carlisle, and each of the other executive officers
of Carlisle as of December 31, 1995 (together with Mr. Binnie, the "Named
Executives"), whose total annual salary and bonus exceeded $100,000 during 1995
in all capacities in which they served:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES
----------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) COMPENSATIONS($)
- ----------------------------------- ---- --------- ---------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
William H. Binnie.................. 1995 (1) -0- -0- -0-
Chairman of the Board 1994 (1) -0- -0- -0-
1993 (1) -0- -0- -0-
Clifford A. Deupree................ 1995 $ 400,000 $ 50,000 -0- -0-
President and Chief 1994 312,682 250,000 225,000 $110,097(2)
Executive Officer 1993 200,819 100,000 100,000 -0-
Patrick J. O'Leary................. 1995 250,000 -0- -0- -0-
Chief Financial Officer 1994 76,912(3) 100,000(3) 350,000 50,000(3)
and Secretary 1993 -0- -0- -0- -0-
David E. Wilbur, Jr................ 1995 102,692(4) -0- -0- -0-
Vice Chairman 1994 330,000 -0- -0- (4) -0-
of the Board 1993 300,834 -0- -0- -0-
</TABLE>
- ------------
(1) Carlisle paid management fees to a management company or companies owned
directly or indirectly by Mr. Binnie in the amounts of $.75 million in 1995,
$1.25 million in 1994 and $1.5 million in 1993. See "Certain
Transactions--Management Fees."
(2) Amount represents the reimbursement for the loss incurred on the sale of Mr.
Deupree's residence and other relocation costs.
(3) Mr. O'Leary became Chief Financial Officer and Secretary effective September
12, 1994 and received a salary for only four months in 1994. The amount
indicated under "Bonus" represents a $75,000 signing bonus he received upon
commencing employment and a $25,000 Management Incentive Bonus. The amount
included under "All Other Compensation" represents a relocation expense
payment of $50,000.
(4) Mr. Wilbur received a salary through the expiration of his employment
agreement in September 1995. Mr. Wilbur was granted an option to purchase
200,000 shares of Class A Stock in January 1994 and the option was cancelled
in September 1994 in accordance with an amendment to Mr. Wilbur's employment
agreement.
Stock Options
There were no options granted under Carlisle's 1991 Employee Incentive Plan
to the Named Executives during 1995.
59
<PAGE>
Option Exercises and Holdings
None of the Named Executives exercised stock options in 1995. The following
table sets forth information with respect to the Named Executives concerning the
unexercised options held by them as of December 31, 1995:
YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY
AT 12/31/95(#) OPTIONS AT 12/31/95($)(1)
---------------------------- ----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
William H. Binnie............................ -0- -0- N/A N/A
Clifford A. Deupree.......................... 130,000 270,000 $ 22,500 $ 90,000
Patrick J. O'Leary........................... 50,000 300,000 25,000 150,000
David E. Wilbur, Jr.......................... 400,000 -0- 200,000 N/A
</TABLE>
- ------------
(1) Based on the closing price of $4.50 per share for Carlisle's A Stock on
December 31, 1995.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee")
consists of two non-employee directors who make decisions pertaining to
executive compensation and benefits. The members of the Committee are currently
Messrs. Smith and Schwerin. All decisions by the Committee relating to the
compensation of Carlisle's executive officers are reviewed by the full Board of
Directors, except for decisions about awards under Carlisle's 1991 Employee
Incentive Plan (the "Plan"), which must be made solely by the Committee in order
for the grants or awards under such plan to satisfy Rule 16b-3 under the
Securities Exchange Act of 1934. Set forth below is a report submitted by
Messrs. Smith and Schwerin in their capacity as the Board's Compensation
Committee addressing Carlisle's compensation policies for 1995 as they affected
the Named Executives.
Compensation Policies Toward Executive Officers. The Committee's executive
compensation policies are designed to provide competitive levels of compensation
that are consistent with Carlisle's annual and long-term performance goals,
reward above-average corporate performance, recognize individual initiative and
achievements, and assist Carlisle in attracting and retaining qualified
executives. Executive compensation is targeted at levels that the Committee
believes are consistent with others in Carlisle's industry and reflect corporate
performance. As a result, the Named Executives' actual compensation levels in a
particular year may be above or below those of Carlisle's competitors, depending
upon Carlisle's and the individual executive's performance. Carlisle previously
retained a compensation consulting firm to analyze the compensation data of
manufacturing companies of similar size to Carlisle. The Committee will continue
to use this comparative information, in addition to information on corporate
performance and the performance of individual executives, for purposes of
evaluating compensation for 1996.
The Committee also endorses the position that stock ownership by management
and stock-based performance compensation arrangements are beneficial in aligning
management's and shareholders' interests in the enhancement of shareholder
value. Thus, the Committee has utilized these elements in Carlisle's
compensation packages for executive officers. Awards of stock options under the
Plan are designed to promote the identity of long-term interests between
Carlisle's executives and its shareholders and assist in the retention of
executives.
Compensation to the Named Executives for 1995, as reflected in the foregoing
tables, consisted of base salary and annual bonus. The Committee did not award
stock options under the Plan in 1995.
60
<PAGE>
Salary. The base salary of each of the Named Executives was adjusted during
1995 as a result of changes in the duties and responsibilities of the Named
Executives.
Bonus. Mr. Deupree received a bonus of $50,000 in April 1995 in connection
with his appointment as Chief Executive Officer. Otherwise, the committee
recommended that no bonuses be paid with respect to 1995, based upon the
Committee's evaluation and weighing of corporate, business unit and individual
performance in 1995. Measures of corporate performance include Carlisle's
operating income and net income. Measures of business unit performance include
sales growth, market share and operating income for the business unit.
Individual performance measures are established annually by management. After
the end of each year, the Committee determines the bonus for each executive
based on the individual's value, experience level and the attainment of the
pre-established performance goals.
Options/Stock Based Compensation. During 1995, the Committee did not grant
any stock options under the Plan to any of the Named Executives.
Under the Plan, the Committee may also award stock appreciation rights and
restricted stock to key employees. To date, no awards of stock appreciation
rights or restricted stock have been made under the Plan.
Mr. Binnie's Compensation. Mr. Binnie, the Chairman of the Board of
Directors of Carlisle, is not compensated directly by Carlisle. Instead,
Carlisle pays management fees to a management company owned by Mr. Binnie under
a management agreement that is renewable annually. See "Certain
Transactions--Management Fees."
SUBMITTED BY THE COMPENSATION COMMITTEE OF CARLISLE'S BOARD OF DIRECTORS:
SAMUEL H. SMITH, JR. CLARENCE M. SCHWERIN III
61
<PAGE>
Stock Performance
The following graph sets forth a comparison of the cumulative shareholder
return of Carlisle A Stock from May 16, 1991 (the effective date of the Carlisle
A Stock Offering) to the end of 1991, 1992, 1993, 1994 and 1995 with the
cumulative total return for the same periods for the S&P 500 Stock Index and for
the Value Line Household Products Industry Index (the "Household Products")
based upon a hypothetical $100 investment in Carlisle A Stock and in each Index
on May 16, 1991, assuming the reinvestment of dividends (Carlisle has not paid
dividends on either the Carlisle A Stock or Carlisle B Stock).
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
CARLISLE PLASTICS INC, STANDARD & POORS 500 AND HOUSEHOLD PRODUCTS
(PERFORMANCE RESULTS THROUGH 12/31/95)
______________ CARLISLE PLASTICS INC.
______________ Standard & Poors 500
______________ Household Products
<TABLE>
<S> <C> <C> <C> <C> <C>
$250.00
$200.00
$150.00
[GRAPH]
$100.00
$50.00
$0.00
5/16/91 1991 1992 1993 1994 1995
<CAPTION>
5/16/91 1991 1992 1993 1994 1995
------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
CARLISLE PLASTICS INC.................... 100.00 90.88 49.47 67.87 37.96 41.41
Standard & Poors 500..................... 100.00 113.64 122.49 134.85 137.01 188.39
Household Products....................... 100.00 119.91 133.96 144.21 154.05 204.70
</TABLE>
Employment Agreements
Mr. Wilbur entered into an employment agreement with Carlisle in July 1992
for a term of three years beginning September 1, 1992. The agreement was amended
effective September 7, 1994. Under the amended agreement, Mr. Wilbur was
entitled to a base salary of $150,000 per annum, through the expiration of the
agreement in September 1995. The agreement expired at that time and was not
renewed.
Mr. Deupree entered into an employment agreement with Carlisle in September
1994. Under the agreement, Mr. Deupree is entitled to a base salary of $400,000
per annum, plus a bonus based on a combination of the performance of Carlisle
and his own contribution as President of Carlisle. The agreement may be
terminated by Mr. Deupree or Carlisle upon written notice. If the agreement is
terminated by Mr. Deupree for good reason, or by Carlisle without good cause,
Mr. Deupree is entitled to receive salary continuation for a period of 24
months. In conjunction with Mr. Deupree's employment agreement, a Deferred
Compensation Agreement was also executed. Under the provisions of the Deferred
Compensation Agreement, Mr. Deupree, or his beneficiary, is entitled to receive
$1,000 per month for 120 consecutive months upon the later of his 62nd birthday
or termination of employment. All benefits under the Deferred Compensation
Agreement are forfeited if Mr. Deupree's employment is terminated for good
cause, or by violation of the confidential information, disclosure and transfer
of product developments, and non-competition clauses of Mr. Deupree's employment
agreement.
62
<PAGE>
Mr. O'Leary entered into an employment agreement with Carlisle in September
1994. Under the agreement, Mr. O'Leary is entitled to a base salary of $250,000
per annum, plus a bonus based on a combination of the performance of Carlisle
and his own contribution as Chief Financial Officer of Carlisle. The agreement
may be terminated by Mr. O'Leary or Carlisle upon written notice. If the
agreement is terminated by Mr. O'Leary for good reason, or by Carlisle without
good cause, Mr. O'Leary is entitled to receive salary continuation for a period
of 12 months.
Mr. Deupree's and Mr. O'Leary's employment agreements each contain a
provision for change in control whereby if their employment is terminated
(including a voluntary termination) within 36 months following any change in
control, Mr. Deupree and Mr. O'Leary are entitled to receive a lump sum
severance payment equal to 24 months average compensation. See "The
Merger--Interests of Certain Persons in the Merger."
Director Compensation
During 1995, each non-employee director other than Mr. Wilson (Messrs.
Schwerin, Smith, Schneider and Mr. Wilbur, upon expiration of his employment
agreement) received $2,500 per meeting attended. Mr. Wilson received directors
fees totalling $60,000 in 1995. In addition to directors' fees paid, Carlisle
also provided medical insurance coverage for Mr. Schwerin at a cost to Carlisle
of $3,624. No additional compensation was paid to directors for serving on any
committees.
Under the 1991 Employee Incentive Plan, all directors serving on the
Compensation Committee of the Board of Directors annually receive an automatic
grant of a non-qualified option to purchase 2,500 shares of Carlisle A Stock at
an exercise price equal to the fair market value of the Class A Stock on the
date of grant. Pursuant to the Plan, on April 18, 1995, Messrs. Schwerin and
Smith were each granted an option to purchase 2,500 shares of Carlisle A Stock
at an option price of $5.53 per share, which was the average of the high and low
price of the Carlisle A Stock on April 18, 1995, as reported by the New York
Stock Exchange.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS OF CARLISLE
Management Fees. Carlisle entered into a three-year Management Agreement
(the "Management Agreement") dated May 22, 1991 with Carlisle Plastics
Management Corporation ("CPMC", a wholly owned subsidiary of Carlisle Capital
Corporation ("CCC")) (CCC, in turn, is wholly owned by Mr. Binnie). The
Management Agreement was extended in May 1994 and amended in September 1995 to
provide for a term of one year with an annual fee of $.75 million. Mr. Binnie
has been the president of CCC since 1983. Since Carlisle's inception, it has
compensated CCC for its services through management fees. Carlisle paid
management fees to companies owned directly or indirectly by Mr. Binnie of $.75
million in 1995, $1.25 million in 1994 and $1.5 million in 1993. Pursuant to the
Management Agreement, CPMC provides management and oversight assistance to
Carlisle in the areas of strategic planning, financial and banking
relationships, executive resource management, coordination of legal, accounting,
taxation, pension, actuarial and other required professional services and other
business decision-making strategies. Because Mr. Binnie controls the stock of
Carlisle and CPMC, he indirectly has the power to extend, amend or terminate the
Management Agreement, including the power to adjust the management fee payable
thereunder.
Note Receivable from Affiliate. At December 31, 1995, Carlisle had a note
receivable from Mr. Deupree, the President of Carlisle, in the amount of $0.1
million, with interest payable annually at a rate of 6%, compounded monthly. The
note becomes due in August 1997. However, pursuant to its terms, such note will
be forgiven upon the consummation of the Merger. See "The Merger--Interests of
Certain Persons in the Merger."
63
<PAGE>
Leases. Carlisle leases a 17,000 sq. ft. plastic container manufacturing
facility in Portland, Maine from Sturbridge Yankee Workshop, Inc. (a corporation
wholly owned equally by Mr. Binnie and one of his brothers). The lease expires
in 1997. Rent paid by Carlisle to lease this space in 1995 was $0.1 million.
Management of Carlisle believes that the terms of the lease were negotiated on
an arm's-length basis and reflect the fair market value of the leased premises.
Carlisle leased an aircraft from Carlisle Air Corporation, which is
indirectly owned by Mr. Binnie. In January 1995, the aircraft lease was
terminated and lease termination costs of $55.885 were paid. Management believes
that the terms of the lease reflected the fair value of the aircraft at the time
Carlisle entered into the lease.
64
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF CARLISLE
RESULTS OF OPERATIONS: THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE
MONTHS ENDED MARCH 31, 1995
NET SALES
Carlisle's net sales for the three months ended March 31, 1996 decreased
8.3% to $94.6 million from $103.2 million for the three months ended March 31,
1995. Net sales decreased $8.8 million primarily due to the Company's exit from
the private label grocery and containers businesses. Sales related to the
private label grocery and containers businesses were $3.5 million and $2.4
million, respectively for the three months ended March 31, 1996 and $7.6 million
and $7.1 million, respectively for the comparable 1995 period.
GROSS PROFIT
Gross profit decreased to $22.5 million from $23.4 million and increased to
23.8% as a percentage of sales from 22.7% for the three months ended March 31,
1996 and 1995, respectively. The increase in gross profit as a percentage of
sales is attributable to product mix changes and a more favorable resin cost
mix.
OPERATING EXPENSES
Operating expenses, exclusive of goodwill and other amortization, decreased
13.2% to $13.6 million from $15.7 million for the three months ended March 31,
1996 and 1995, respectively. The decrease in operating expenses for the three
month period is primarily attributable to decreases in selling and advertising
and promotions. Such decreases are primarily the result of Carlisle's exit from
the private label grocery and containers businesses and other cost reduction
measures implemented during 1995.
INTEREST EXPENSE
Interest expense decreased 6.6% to $5.4 million for the three months ended
March 31, 1996 from $5.8 million for the comparable three month period in 1995.
The decrease in interest expense is attributable to a decrease in Carlisle's
average outstanding debt. Cash paid for interest decreased 22.1% from $2.3
million for the three months ended March 31, 1995 to $1.8 million for the three
months ended March 31, 1996.
INCOME TAXES
Carlisle recorded a tax provision of $1.3 million reflecting an effective
tax rate of 45% for the three months ended March 31, 1996.
NET INCOME
Net income for the three months ended March 31, 1996 increased to $1.5
million from $.6 million for the three months ended March 31, 1995.
RESTRUCTURING STATUS
During the first quarter of 1996, Carlisle continued to implement its
restructuring plan and successfully exited its remaining private label customer
relationships and disposed of its remaining private label inventory. In
addition, Carlisle has completed the sale of property and equipment for two more
of its container manufacturing facilities. Principal items charged against the
restructuring reserve for the three months ended March 31, 1996 were losses
related to the disposal of property and equipment, severance, and lease
termination costs.
65
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Carlisle's working capital decreased to a deficit of $(8.1) million as of
March 31, 1996 from $44.8 million as of December 31, 1995. The decrease in
working capital is primarily the net effect of decreases in accounts receivable
and increases in the current portion of long-term debt. The decrease in accounts
receivable is attributable to the sale of accounts receivable in the amount of
$29.2 million to reduce long-term lines of credit in accordance with the
Receivables Purchase and Servicing Agreement executed on March 26, 1996
(discussed below). The increase in the current portion of long-term debt is
attributable to re-classification of the $19.1 million Senior Variable Rate
Notes which become due in March 1997.
For the three months ended March 31, 1996, net cash provided by operations
was $15.7 million compared to net cash used by operations of $.3 million for the
comparable period in 1995. The increase in net cash provided by operations is
attributable to reduced cash requirements to meet working capital needs. During
the comparable period in 1995, accounts receivable and inventories increased
significantly primarily as a result of increased resin raw material costs and
unit selling prices.
Net cash used for investing activities increased $2.9 million to $5.1
million for the three months ended March 31, 1996 from $2.2 million for the
comparable 1995 period. During the first quarter of 1996, Carlisle continued to
invest in production equipment in order to improve manufacturing efficiency and
capacity. The 1996 period also includes proceeds received from the sale of
property and equipment related to Carlisle's container business. Carlisle
anticipates that capital expenditures for fiscal year 1996 will approximate the
annual charge for depreciation.
Net cash used for financing activities was $10.5 million compared to net
cash provided by financing activities of $1.4 million for the three months ended
March 31, 1996 and 1995, respectively. The 1996 use of cash primarily represents
utilization of cash provided by operations to reduce outstanding debt.
On March 26, 1996, Carlisle terminated its Receivables Funding and Servicing
Agreement and entered into a Receivables Purchase and Servicing Agreement. Under
the Receivables Purchase and Servicing Agreement, Carlisle sells its receivables
into a defined pool of trade accounts receivable. A yield discount rate is
charged to Carlisle which is based on the average commercial paper rate (5.4% at
March 31, 1996) plus 1.25%. As collections reduce accounts receivable included
in the pool, Carlisle sells new receivables up to the maximum permitted under
the agreement of $45 million or 85% of eligible accounts receivable or
Carlisle's desired funding level, whichever is less. Under the terms of the
agreement Carlisle has retained substantially the same risk of credit loss as if
the receivables had not been sold. Carlisle, as servicing agent for the
purchaser, retains collection and administrative responsibilities. Carlisle sold
$29.2 million of accounts receivable at March 31, 1996 and the proceeds from the
sales were used to reduce borrowings under its accounts receivable working
capital line of credit.
Carlisle had available funding through the sale of accounts receivable under
its Receivables Purchase and Servicing Agreement of $5.5 million at March 31,
1996. At March 31, 1996 Carlisle's revolving inventory credit facility had
available borrowings of $17.2 million and no outstanding borrowings.
Management currently expects its cash on hand, funds from operations and
borrowings available under existing credit facilities will be sufficient to
cover future operating requirements in 1996. In 1997 Carlisle has $136.0 million
in principal indebtedness which becomes due. On May 14, 1996, Carlisle entered
into a definitive merger agreement with Tyco International Ltd., pursuant to
which Carlisle will be acquired in a stock for stock transaction. The debt of
Carlisle will be assumed by Tyco.
66
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth certain operating data as a percentage of net
sales for each of the three years ended December 31:
<TABLE>
<CAPTION>
1993 1994 1995
----- ----- -----
<S> <C> <C> <C>
Net sales............................................................. 100.0% 100.0% 100.0%
Gross profit.......................................................... 27.4 25.0 19.6
Operating expenses.................................................... 17.9 17.9 14.6
Goodwill and other amortization....................................... .8 .8 .7
Pension termination expense........................................... -- -- .2
Restructuring......................................................... -- -- 8.0
Total operating expenses.......................................... 18.7 18.7 23.5
Operating income (loss)............................................... 8.7 6.3 (3.9)
Interest expense...................................................... 6.3 5.0 5.4
Other income.......................................................... (.1) -- (.2)
Income (loss) before extraordinary item and change in
accounting principle................................................ 1.6 .8 (6.1)
Net income (loss)..................................................... 2.0 .1 (6.1)
</TABLE>
1995 COMPARED WITH 1994
Net sales increased $38.6 million, or 10.0%, to $426.3 million in 1995
compared to $387.7 million in 1994. The net increase is primarily attributable
to increases in selling price.
Gross profit decreased 14.0% to $83.5 million, or 19.6% of net sales in
1995, from $97.1 million, or 25.0% of net sales in 1994. The decrease in gross
profit is primarily attributable to plastic resin raw material cost increases
through the third quarter of 1995.
Operating expenses decreased $7.3 million to $62.1 million, or 10.5% in 1995
from $69.4 million in 1994. The 1995 decrease as compared to 1994 is primarily
attributable to decreases in freight, advertising and promotions, management
fees and administrative costs. The decreases in advertising and promotions, and
administrative costs are primarily the result of company-wide strategic cost
reduction measures and the consolidation of our corporate offices in Boston and
our hanger divisional offices in North Carolina into Phoenix, Arizona.
Operating income (loss) decreased $41.2 million to $(16.6) million in 1995
from $24.6 million in 1994. The decrease in operating income is attributable to
lower gross margins, recording of a restructuring charge of $33.9 million and
realizing costs related to the termination of Carlisle's defined benefit pension
plan of $1.0 million, partially offset by reduced operating expenses. During the
fourth quarter of 1995, Carlisle's Board of Directors approved a plan of
restructuring relating to the exit of two unprofitable business units: private
label grocery and containers. Principal items included in the charge are
estimated contract termination costs, severance for workforce reductions, losses
on contracts and the write-off of assets including goodwill. As of December 31,
1995 Carlisle had disposed of two container manufacturing facilities and
completed the majority of its workforce reductions. Management estimates that
the cash generated from the sale of assets will cover the estimated cash
requirements related to the restructuring.
Sales related to the private label grocery and containers businesses for the
year ended December 31, 1995 totaled $25.6 and $30.1 million, respectively, and
operating losses, before restructuring charges, totaled $1.9 and $.9 million,
respectively.
Interest expense, including deferred financing and swap and corridor
amortization, increased 18.6% to $23.0 million in 1995 from $19.4 million in
1994. The increase in interest expense is
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attributable to the amortization of swap and corridor termination costs and a
higher overall average borrowings and market rate of interest for the year.
Carlisle recorded a tax benefit of $12.6 million in 1995 compared to a tax
provision of $2.3 million in 1994 reflecting effective tax rates of 32.6% and
43.9% for the years ended 1995 and 1994, respectively. The decrease in the
effective tax rate is principally due to the amortization and write-off of
goodwill which is not deductible for tax purposes. Amortization related to
goodwill was $2.1 million for the years ended December 31, 1995 and 1994.
Goodwill written off through restructuring totaled $4.5 million in 1995.
Net income (loss) decreased to $(26.1) million in 1995 from $.5 million in
1994. The decrease in net income is related to decreased gross profit, the
recording of $33.9 million in restructuring charges and $1.0 million in pension
termination costs, partially offset by reduced operating expenses. Net income
for 1994 included an after-tax extraordinary charge of $2.5 million related to
the early extinguishment of debt.
1994 COMPARED WITH 1993
Net sales increased $26.8 million, or 7.4%, to $387.7 million in 1994
compared to $360.9 million in 1993. The net growth was driven primarily by
increased hanger sales. Unit volume for Carlisle for 1994 increased 9% from
1993.
Gross profit decreased 1.9% to $97.1 million, or 25.0% of net sales in 1994,
from $98.9 million, or 27.4% of net sales in 1993. The decrease in gross profit
is primarily attributable to plastic resin raw material cost increases affecting
the third quarter of 1994. Gross profit in the fourth quarter was restored to
26.7% due to sales price increases.
Operating expenses increased 7.5% in 1994 to $72.5 million from $67.4
million in 1993, due to increases in freight, sales and marketing, and other
administrative costs. The increase in freight and sales and marketing is
attributable to increased unit volume. The increase in other administrative
costs is attributable to increased salaries and expenses related to the
relocation of our corporate offices from Boston and our hanger divisional
offices from North Carolina to Phoenix, Arizona. Operating expenses as a percent
of sales remained flat at 18.7%.
Interest expense, including amortization of deferred financing costs,
decreased 13.9% to $19.4 million in 1994 from $22.5 million in 1993 due to the
refinancing of 13.75% fixed rate debt with lower rate variable rate debt.
Carlisle recorded a tax provision of $2.3 million in 1994, reflecting an
effective tax rate of 43.9%, compared to a provision of $3.5 million in 1993,
reflecting an effective tax rate of 37.2%. The increase in the effective tax
rate is due to the effect of goodwill amortization which is not deductible for
tax purposes and a lower pre-tax income for 1994. Amortization related to
goodwill was $2.1 million, or 39.5% of pretax income and $2.1 million, or 22.8%
of pretax income for the years ending December 31, 1994 and 1993, respectively.
Net income decreased to $.5 million in 1994 from $7.2 million in 1993. The
decrease in net income is attributable to the effect of decreased gross margins,
increased operating expenses, and the recording of an after-tax extraordinary
charge of $2.5 million related to early extinguishment of debt. Net income in
1993 included after-tax extraordinary charge of $0.2 million and a $1.6 million
benefit from the adoption of Statement of Financial Accounting Standards
("SFAS") No. 109, "Accounting for Income Taxes."
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital decreased $20.4 million to $44.8 million at
December 31, 1995, compared to $65.2 million at December 31, 1994. The decrease
in working capital is attributable to
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decreases in accounts receivable and inventories and an increase in current
liabilities primarily as a result of the restructuring.
For the year ended December 31, 1995, net cash provided by operations
increased $21.7 million to $24.8 million from $3.1 million for the year ended
December 31, 1994. The net cash provided by operations for the year ended
December 31, 1995 primarily represents non-cash charges for depreciation and
amortization. For the year ended December 31, 1994, the effect of such non-cash
charges was reduced by increases in inventories and accounts receivable due to
the impact of rising raw material costs and selling prices during the second
half of 1994.
Net cash used for investing activities decreased $9.6 million to $12.7
million for the year ended December 31, 1995. Carlisle continued to invest in
production facilities in order to improve manufacturing efficiency. In addition,
Carlisle received proceeds related to the sale of fixed assets of $3.1 million
in 1995. The fixed assets which were disposed of during the year principally
relate to assets of the private label grocery and container businesses. Carlisle
anticipates that capital expenditures for fiscal year 1996 will be equal to the
annual charge for depreciation.
Net cash provided (used) in financing activities decreased $18.7 million to
$(14.7) million for the year ended December 31, 1995 from $4.0 million for the
year ended December 31, 1994 and primarily represents debt reduction under
Carlisle's sale and leaseback agreement.
Management currently expects its cash on hand, funds from operations and
borrowings available under existing credit facilities to be sufficient to cover
operating requirements in 1996. In 1997 Carlisle has $136.0 million in principal
indebtedness which becomes due. Management of Carlisle believes that adequate
debt financing will be available to provide the cash necessary for these
payments.
ACCOUNTING PRONOUNCEMENTS
During 1995 the Financial Accounting Standards Board issued SFAS No. 121
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of" and SFAS No. 123 "Accounting for Stock Based Compensation."
Management of Carlisle does not believe implementation of SFAS No. 121 will have
a significant impact on the financial statements. With regard to SFAS No 123,
Carlisle has determined that it will not change to the fair value method and
will continue to use Accounting Principles Board Opinion No. 25 for measurement
and recognition of employee stock based transactions.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF CARLISLE
The following table includes information as of June , 1996 concerning (i)
the beneficial ownership of the Carlisle A Stock and Carlisle B Stock (together,
the "Common Stock") of Carlisle by shareholders known to Carlisle to
beneficially own more than five percent of either class, by each other director
of the Company, each executive officer of Carlisle and by all officers and
directors of Carlisle as a group, and (ii) the percentage of voting power
represented by the Common Stock held by such holders:
<TABLE>
<CAPTION>
CARLISLE B STOCK
--------------------- CARLISLE A STOCK
--------------------------
BENEFICIALLY OWNED PERCENT OF
(1) BENEFICIALLY OWNED (1)(2) VOTE OF ALL
--------------------- -------------------------- CLASSES OF
NAME AND ADDRESS NUMBER PERCENT NUMBER PERCENT COMMON
OF BENEFICIAL OWNER OF SHARES OF CLASS OF SHARES OF CLASS STOCK (3)
- ------------------------------------- --------- -------- --------- -------- -----------
<S> <C> <C> <C> <C> <C>
William H. Binnie.................... 5,940,313(4) 63.3% 28,282(4)(5) * 60.6%
One Harbor Place
Portsmouth, NH 03801
Christos I. Grigoriou................ 1,707,448(6) 18.2% 338,700(6) 4.0% 17.6%
699 Middle Street
Middletown, CT 06457
Grant M. Wilson...................... 1,374,119 14.6% 291,354 3.4% 14.2%
111 Pond Street
Cohasset, MA 02025
Ingalls & Snyder..................... -- -- 1,404,115(7) 23.8% *
61 Broadway
New York, NY 10008
FMR Corp............................. -- -- 2,301,500(8) 27.6% 1.2%
82 Devonshire Street
Boston, MA 02109
Clifford A. Deupree.................. -- -- 134,000(9) 1.6% *
Patrick J. O'Leary................... -- -- 62,303(9) * *
David E. Wilbur, Jr.................. -- -- 637,239(9) 7.2% *
Yehochai Schneider................... -- -- 110,642(9) 1.3% *
Clarence M. Schwerin III............. -- -- 22,500(9) * *
Samuel H. Smith, Jr.................. -- -- 16,500(9) * *
All officers and directors of the
Company as a group (9 persons)....... 7,314,432 77.9% 1,307,319(8) 14.4% 75.0%
</TABLE>
- ------------
* Less than 1%
(1) Except as otherwise indicated, all shares are beneficially owned and the
sole voting and investment power is held by the person indicated.
(2) Excludes beneficial ownership of Carlisle B Stock, which is convertible into
Carlisle A Stock at any time on a one-for-one basis, and which automatically
converts into Carlisle A Stock upon a transfer of Carlisle B Stock to any
person who is not one of the holders of Carlisle B Stock, certain family
members of certain holders of Carlisle B Stock, trusts for the benefit of
such family members or entities controlled by the holders of such shares of
Carlisle B Stock.
(3) Each share of Carlisle A Stock is entitled to one vote, and each share of
Carlisle B Stock is entitled to 20 votes.
(4) Excludes 66,543 shares of Carlisle B Stock and 114,815 shares of Carlisle A
Stock owned by members of Mr. Binnie's immediate family, as to which Mr.
Binnie disclaims beneficial ownership.
(5) Includes 4,000 shares of Carlisle A Stock owned by William H. Binnie as
custodian for one of his children, as to which shares Mr. Binnie disclaims
beneficial ownership.
(6) Includes 1,707,448 shares of Carlisle B Stock and 300,000 shares of Carlisle
A Stock owned by the Grigoriou Family Limited Partnership.
(7) Based upon information included in Schedule 13G filed with the Securities
and Exchange Commission. Consists of 73,000 shares over which the owner
exercises sole voting and dispositive power and 1,331,115 shares over which
the owner exercises no voting power and sole dispositive power.
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(8) Based upon information included in Schedule 13G filed with the Securities
and Exchange Commission and consists of shares over which the owner
exercises no voting power and sole dispositive power.
(9) Includes the following number of shares of Carlisle A Stock which may be
purchased pursuant to the exercise of currently exercisable outstanding
options: Mr. Deupree, 130,000 shares; Mr. O'Leary, 50,000 shares; Mr.
Wilbur, 400,000 shares; Mr. Schneider, 2,500 shares; Mr. Schwerin, 12,500
shares; Mr. Smith, 12,500 shares; and all officers and directors as a group,
610,500 shares.
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DESCRIPTION OF CAPITAL STOCK OF TYCO
The following description does not purport to be complete and is subject in
all respects to the applicable provisions of Tyco'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 Tyco consists of 2,000,000 shares of
preferred stock, par value $1 per share ("Tyco Preferred Stock"), of which no
series was authorized or shares outstanding at July 31, 1996, and 180,000,000
shares of Tyco Common Stock, of which 152,976,801 shares were issued and
outstanding at July 31, 1996. Tyco 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 them may be fixed,
by the Board of Directors of Tyco.
The holders of Tyco Common Stock are entitled to receive dividends when and
as declared by Tyco's Board of Directors but only out of funds legally available
for the payment thereof, subject to restrictions imposed by certain indebtedness
of Tyco. No cash payment or distribution may be made to holders of Tyco Common
Stock until all accrued dividends on all series of Tyco 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 Tyco Common Stock are entitled to one vote per share at any
annual or special meeting of stockholders. Holders of Tyco Preferred Stock, if
any, are entitled to the voting rights fixed by the Board of Directors of Tyco
for their respective series. Voting rights are not cumulative, and therefore
holders of more than 50% of the voting power of Tyco 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 Tyco's By-Laws provides that any person (a "Related
Person") who together with its Affiliates and Associates (each as defined in
Tyco's By-Laws) owns 5% or more of the outstanding shares of Voting Stock
(defined in Tyco's By-Laws to include all outstanding shares of capital stock of
Tyco entitled to vote in the election of directors upon the occurrence of a
specified event or condition) of Tyco, and any Affiliate or Associate of such
person (other than Tyco and its Subsidiaries (as defined in Tyco's By-Laws)),
must comply with certain minimum price and procedural requirements or, in the
alternative, obtain the advance approval of a majority of Tyco's Continuing
Directors (as defined in Tyco's By-Laws) or holders of not less than 80% of
Tyco's Voting Stock in order to effect a merger or other Business Combination
involving Tyco. The various transactions in the definition of "Business
Combination" include: any merger or consolidation of Tyco or a Subsidiary with
or into a Related Person; any sale, lease, exchange, transfer, or other
disposition, in one transaction or a series of transaction, (i) to a Related
Person or an Affiliate or Associate of a Related Person of any Substantial Part
(as defined in Tyco's By-Laws) of the assets of Tyco 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 Tyco; any
issuance or sale by Tyco 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
stockholders of Tyco; any acquisition by Tyco 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 Tyco 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 Tyco or any other
transaction that has the effect of increasing the proportion of the outstanding
shares of any class of Tyco'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
Tyco confer upon a majority of the Continuing Directors the authority to
determine, among other things, whether a person is a Related 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
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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 Tyco.
Upon the dissolution of Tyco or upon any distribution of Tyco's assets,
holders of Tyco Common Stock are entitled to all of Tyco's assets available for
distribution to stockholders after the holders of all series of Tyco Preferred
Stock, if any, have received the preference fixed by the Tyco Board of Directors
for their respective series. Holders of Tyco 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 Tyco.
Mellon Bank, N.A. is the registrar and transfer agent of the shares of Tyco
Common Stock.
COMPARISON OF STOCKHOLDER RIGHTS
At the Effective Time, the stockholders of Carlisle will become stockholders
of Tyco. As stockholders of Carlisle, their rights are presently governed by
Delaware law and by the Third Amended and Restated Certificate of Incorporation,
as amended (the "Carlisle Certificate"), and By-laws of Carlisle. As
stockholders of Tyco, their rights will be governed by Massachusetts law and by
the Restated Articles of Organization (the "Tyco Restated Articles") and By-laws
of Tyco. The following discussion summarizes the material differences between
the rights of holders of Carlisle Common Stock and holders of Tyco Common Stock
and differences between the charters and by-laws of Carlisle and Tyco. This
summary does not purport to be complete and is qualified in its entirety by
reference to the Carlisle Certificate and the By-Laws of Carlisle, the Restated
Articles of Organization and the By-Laws of Tyco and the relevant provisions of
Delaware and Massachusetts law.
SPECIAL MEETING OF STOCKHOLDERS
Delaware law provides that special meetings of stockholders may be called
only by the directors or by any other person as may be authorized by the
corporation's certificate of incorporation or by-laws. Carlisle's By-Laws
provide that special meetings may be called by the directors or by any officer
instructed by the directors to call the meeting. Massachusetts law provides that
special meetings of stockholders of a corporation with a class of voting stock
registered under the Exchange Act (a "public company") may be called by a
corporation's president or directors, and, unless otherwise provided in the
articles of organization or by-laws, must be called by its clerk or any other
officer upon written application of the owners of at least 40% of the
corporation's stock entitled to vote at such meeting. Tyco's By-Laws provide for
the call of a special meeting of stockholders by the chief executive officer or
by the Board of Directors or as otherwise provided by law.
INSPECTION RIGHTS
Inspection rights under Delaware law are more extensive than under
Massachusetts law. Under Delaware law, stockholders, upon the demonstration of a
proper purpose, have the right to inspect a corporation's stock ledger,
stockholder list, and other books and records. Under Massachusetts law, a
corporation's stockholders have the right for a proper purpose to inspect the
corporation's articles of organization, by-laws, records of all meetings of
incorporators and stockholders, and stock and transfer records, including the
stockholder list. In addition, stockholders of a Massachusetts business
corporation have a qualified common law right under certain circumstances to
inspect other books and records of the corporation.
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ACTION BY CONSENT OF STOCKHOLDERS
Under Delaware law, unless the certificate of incorporation provides
otherwise, any action to be taken by stockholders may be taken without a
meeting, without prior notice, and without a vote, if the stockholders having
the number of votes that would be necessary to take such action at a meeting at
which all stockholders were present and voted consent to the action in writing.
The Carlisle Certificate does not permit any action to be taken by Carlisle's
stockholders except at a duly called annual or special meeting. Under
Massachusetts law, any action to be taken by stockholders may be taken without a
meeting if all stockholders entitled to vote on the matter consent to the action
in writing, and a corporation may not provide otherwise in its articles of
organization or by-laws.
CUMULATIVE VOTING
Under Delaware law, a corporation may provide in its certificate of
incorporation for cumulative voting by stockholders in elections of directors
(i.e., each stockholder casts as many votes for directors as he has shares of
stock multiplied by the number of directors to be elected). The Carlisle
Certificate does not provide for cumulative voting. Massachusetts has no
cumulative voting provision, and the Tyco Restated Articles do not provide for
such cumulative voting.
DIVIDENDS AND REPURCHASE OF STOCK
Under Delaware law, a corporation generally is permitted to declare and pay
dividends out of surplus or out of net profits for the current and/or preceding
fiscal year, provided that such dividends will not reduce capital below the
amount of capital represented by all classes of stock having a preference upon
the distribution of assets. Also, under Delaware law a corporation may generally
redeem or repurchase shares of its stock if such redemption or repurchase will
not impair the capital of the corporation. Under Massachusetts law, the payment
of dividends and the repurchase of a corporation's stock are generally
permissible if such actions are not taken when the corporation is insolvent, do
not render the corporation insolvent, and do not violate the corporation's
articles of organization.
CLASSIFICATION OF THE BOARD OF DIRECTORS
Delaware law permits (but does not require) classification of a
corporation's board of directors into one, two or three classes. Massachusetts
law permits classification of a corporation's board of directors, but, in the
case of a publicly-held company, Massachusetts law requires classification into
three classes and imposes certain other requirements unless the directors of
such public company elect by vote to be exempt from such requirements. The
Carlisle Certificate does not provide for classification of Carlisle's Board of
Directors and the By-Laws of Carlisle provide for annual election of all
directors. Tyco has elected to be exempt from the requirements of a staggered
board under Massachusetts law, and the By-Laws of Tyco provide for annual
election of all directors. However, the Board of Directors of Tyco may vote at
any time to rescind Tyco's exemption from the requirements of a staggered board.
REMOVAL OF DIRECTORS
Under Delaware law, stockholders may remove directors with or without cause
by a majority vote. Unlike Massachusetts law, Delaware law does not permit
directors to remove other directors. Under Massachusetts law, except as
otherwise provided in a corporation's articles of organization or by-laws,
directors may be removed from office with or without cause by the holders of a
majority of shares entitled to vote for the election of directors and for cause
by a majority of the directors then in office. The Tyco By-Laws provide that a
director may be removed from office with or without cause by a vote of a
majority of the shares of stock entitled to vote in the election of directors or
for cause by a vote of a majority of the directors then in office. The Tyco
By-Laws also provide that a director may be removed
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for cause only after reasonable notice and opportunity to be heard before the
body proposing to remove such director.
VACANCIES ON THE BOARD OF DIRECTORS
Under Delaware law and the Carlisle By-Laws, vacancies on the Board of
Directors may be filled by either shareholders or directors. Conversely, under
Massachusetts law unless otherwise provided in the charter and by-laws,
vacancies on the Board of Directors may be filled only by the Board of
Directors. Tyco's By-Laws provide that any vacancy on the board shall be filled
by the remaining directors.
EXCULPATION OF DIRECTORS
Delaware law and Massachusetts law have substantially similar provisions
relating to exculpation of directors. Each state's law permits, and the Carlisle
Certificate and the Tyco Restated Articles provide, that no director shall be
personally liable to Carlisle and Tyco, respectively, or any of their respective
stockholders for monetary damages for breaches of fiduciary duty except where
such exculpation is expressly prohibited. The circumstances under which such
exculpation is prohibited are substantially similar, except that in
Massachusetts a director is not exculpated from liability under provisions of
Massachusetts law relating to unauthorized distributions and loans to insiders,
while in Delaware a director is not exculpated from liability under provisions
of Delaware law relating to unlawful payments of dividends and unlawful stock
purchases or redemptions.
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS
Both Delaware and Massachusetts law generally permit indemnification of
directors and officers for expenses incurred by them by reason of their position
with the corporation, if the director or officer has acted in good faith and
with the reasonable belief that his conduct was in the best interest of the
corporation. However, Delaware law, unlike Massachusetts law, does not permit a
corporation to indemnify persons against judgments in actions brought by or in
the right of the corporation (although it does permit indemnification in such
situations if approved by the Delaware Court of Chancery and for expenses of
such actions). Carlisle's By-Laws provide that Carlisle shall indemnify its
directors and officers in connection with proceedings brought against such
persons by reason of their position with Carlisle and provide to any such person
advances for expenses incurred in defending any such proceeding, upon receipt by
Carlisle of an undertaking by or on behalf of such person to repay such advances
unless it is ultimately determined that such person is entitled to
indemnification by Carlisle. The Tyco Restated Articles provide for the
indemnification of each director of Tyco and any other person who serves in any
other office filled by election or appointment by Tyco stockholders or the Tyco
Board of Directors against all expenses, including any judgments, amount
reasonably paid in settlement and reasonably incurred professional fees and
other disbursements incurred in connection with each suit or proceeding in which
such person is involved as a result of serving or having served in such office
or at Tyco's request as a director, officer, employee or other agent of any
other organization. No indemnification is available with respect to any matter
or to which there shall have been an adjudication that the person seeking
indemnification did not act in good faith in the reasonable belief that such
person's action was in the best interest of Tyco. Neither Massachusetts law nor
the Tyco Restated Articles prohibit or limit the rights to indemnification for
judgments in derivative actions, but it is not clear that a Massachusetts court
would permit indemnification in such circumstances.
INTERESTED DIRECTOR TRANSACTIONS
Delaware law provides that no transaction between a corporation and one or
more of its directors or officers or an entity in which one or more of its
directors or officers are directors or officers or have a
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financial interest shall be void or voidable solely for that reason, or solely
because the director or officer is present at, participates in, or votes at the
meeting of the board of directors or committee which authorizes the transaction.
In order that such a transaction not be found void or voidable, it must, after
disclosure of material facts, be approved by the disinterested directors, a
committee of disinterested directors, or the stockholders, or the transaction
must be fair as to the corporation. Massachusetts law has no comparable
provision. However, the Tyco Restated Articles provide that, unless entered into
in bad faith, no contract or transaction by Tyco shall be void or voidable by
reason of the fact that it is with an officer, director, stockholder, employee
or other interested person, and such person shall not be liable to Tyco or any
other person because of such interest. These provisions apply notwithstanding
that such interested person was necessary to constitute a quorum at the meeting
at which such contract or transaction was authorized or that the vote of such
person was necessary for authorization of such contract or transaction.
SALE, LEASE OR EXCHANGE OF ASSETS AND MERGERS
Delaware law requires the approval of the directors and the vote of the
holders of a majority of the outstanding stock entitled to vote thereon for the
sale, lease, or exchange of all or substantially all of a corporation's property
and assets or a merger or consolidation of the corporation into any other
corporation, although the certificate of incorporation may require a higher
stockholder vote. The Carlisle Certificate does not require a higher vote.
Massachusetts law provides that a vote of two-thirds of the shares of each class
of stock outstanding and entitled to vote thereon is required to authorize the
sale, lease, or exchange of all or substantially all of a corporation's property
and assets or a merger or consolidation of the corporation into any other
corporation, except that the articles of organization may provide that the vote
of a greater or lesser proportion, but not less than a majority of the
outstanding shares of each class is required. See "Description of Capital Stock
of Tyco." Under Massachusetts law, the articles of organization or by-laws may
provide that all outstanding classes of stock shall vote as a single class, but,
in the case of a merger or consolidation, the separate vote of all classes of
stock, the rights of which would be adversely affected by the transaction is
also required. Tyco's By-laws provide for additional voting requirements in the
case of Business Combinations with Related Persons (both as defined).
AMENDMENTS TO CHARTER
Under Delaware law, charter amendments require the approval of the directors
and the vote of the holders of a majority of the outstanding stock and a
majority of each class of stock outstanding and entitled to vote thereon as a
class, unless the certificate of incorporation requires a greater proportion.
The Carlisle Certificate does not require a greater proportion. In addition,
Delaware law requires a class vote when, among other things, an amendment will
adversely affect the powers, preferences or special rights of a class of stock.
Under Massachusetts law, amendments to a corporation's articles of organization
relating to certain changes in capital or in the corporate name require the vote
of at least a majority of each class of stock outstanding and entitled to vote
thereon. Amendments relating to other matters require a vote of at least
two-thirds of each class outstanding and entitled to vote thereon or, if the
articles of organization so provide, a greater or lesser proportion but not less
than a majority of the outstanding shares of each class. Tyco's Restated
Articles contain no such provision. Under Massachusetts law, the articles of
organization or by-laws may provide that all outstanding classes of stock shall
vote as a single class, but the separate vote of any class of stock the rights
of which would be adversely affected by the amendment is also required.
AMENDMENTS TO BY-LAWS
Under Delaware law, the power to adopt, amend or repeal by-laws lies in
stockholders entitled to vote; provided, however, that any corporation may, in
its certificate of incorporation, confer the power to
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adopt, amend or repeal by-laws upon the directors. Under Massachusetts law, the
power to make, amend or repeal by-laws also lies in the stockholders; provided
that, if authorized by the articles of organization, the by-laws may provide
that the directors may also make, amend or repeal the by-laws, except with
respect to any provision which by law, the articles of organization or the
by-laws requires action by the stockholders. The Carlisle Certificate and
Carlisle's By-laws provide that the By-laws may be amended by affirmative vote
of either the Carlisle Board of Directors then in office or by the holders of a
majority of the outstanding capital stock entitled to vote in the election of
any directors of Carlisle. The Tyco Restated Articles provide that the Tyco
Board of Directors, as well as the stockholders, may amend Tyco's By-Laws to the
extent permitted by law. Tyco's By-Laws provide that any amendment or By-Law
adopted by the Tyco board may be amended or repealed by the stockholders. The
Tyco By-Laws further provide that the provisions of the By-Laws relating to
Business Combinations with Related Persons may only be amended or repealed by
the vote of the holders of not less than 80% of the Voting Stock (all as
defined), unless such amendment is approved by the majority of Continuing
Directors (as defined), in which case such amendment shall only require the
affirmative vote of the stockholders otherwise required by law, Tyco's By-Laws
or the Tyco Restated Articles.
APPRAISAL RIGHTS
The rights of dissenting stockholders to obtain the fair value of their
shares (so-called "appraisal rights") are more limited under Delaware law than
under Massachusetts law. Under Delaware law, appraisal rights are available in
connection with a statutory merger or consolidation in certain specified
situations. Appraisal rights are not available under Delaware law when a
corporation is to be the surviving corporation and no vote of its stockholders
is required to approve the merger. In addition, unless otherwise provided in the
charter, no appraisal rights are available under Delaware law to holders of
shares of any class of stock which is either: (a) listed on a national
securities exchange or designated as a national market system security on an
inter-dealer quotation system by the National Association of Securities Dealers,
Inc. or (b) held of record by more than 2,000 stockholders, unless such
stockholders are required by the terms of the merger to accept anything other
than: (i) shares of stock of the surviving corporation; (ii) shares of stock of
another corporation which are or will be so listed on a national securities
exchange or designated as a national market system security on an interdealer
quotation system by the National Association of Securities Dealers, Inc. or held
of record by more than 2,000 stockholders; (iii) cash in lieu of fractional
shares of such stock; or (iv) any combination thereof. Appraisal rights are not
available under Delaware law in the event of the sale, lease, or exchange of all
or substantially all of a corporation's assets or the adoption of an amendment
to its certificate of incorporation, unless such rights are granted in the
corporation's certificate of incorporation. The Carlisle Certificate does not
grant such rights. Given that (a) Carlisle A Stock is listed on the NYSE and (b)
that holders of Carlisle Common Stock will only be receiving shares of Tyco
Common Stock, which is listed on the NYSE, and cash in lieu of fractional shares
of Tyco Common Stock, no appraisal rights are available to Carlisle stockholders
in the Merger. Under Massachusetts law, a properly dissenting stockholder is
entitled to receive the appraised value of his shares when the corporation votes
(i) to sell, lease, or exchange all or substantially all of its property and
assets, (ii) to adopt an amendment to its articles of organization which
adversely affects the rights of the stockholder, or (iii) to merge or
consolidate with another corporation, unless a vote of the stockholders was not
required to approve such merger or consolidation.
"ANTI-TAKEOVER" STATUTE
Business Combination Statute. Delaware's "business combination" statute is
substantially similar to Massachusetts' business combination statute. However,
while the Delaware statute provides that, if a person acquires 15% or more of
the stock of a Delaware corporation without the approval of the board of
directors of that corporation (an "interested stockholder"), he may not engage
in certain transactions with the corporation for a period of three years, the
Massachusetts statute has lowered the 15%
77
<PAGE>
threshold to 5% with certain persons excluded. Both the Delaware and
Massachusetts statutes include certain exceptions to this prohibition; for
example, if the board of directors approves the acquisition of stock or the
transaction prior to the time that the person became an interested stockholder,
or if the interested stockholder acquires 85% (in the Delaware statute) or 90%
(in the Massachusetts statute) of the voting stock of the corporation (excluding
voting stock owned by directors who are also officers and certain employee stock
plans) in one transaction, or if the transaction is approved by the board of
directors and by the affirmative vote of two-thirds of the outstanding voting
stock which is not owned by the interested stockholder. Carlisle currently is
subject to the Delaware business combination statute, and Tyco is subject to the
Massachusetts business combination statute.
Control Share Acquisition. Under the Massachusetts control share acquisition
statute for Massachusetts corporations, a person (hereinafter, the "acquirer")
who makes a bona fide offer to acquire, or acquires, shares of stock of a
corporation that, when combined with shares already owned, would increase the
acquirer's ownership to at least 20%, 33 1/3% or a majority of the voting stock
of the corporation, the acquirer must obtain the approval of a majority of
shares held by all stockholders except the acquirer and the officers and inside
directors of the corporation in order to vote the shares acquired. The statute
does not require the acquirer to consummate the purchase before the stockholder
vote is taken. The control share acquisition statute permits a Massachusetts
corporation to elect not to be governed by these provisions by including such an
election in its articles of organization or by-laws. The Tyco Restated Articles
and Tyco's By-Laws have no such provision.
STOCKHOLDER RIGHTS PLAN
Unlike Massachusetts law, Delaware law does not specifically authorize the
adoption of stockholder rights plans. The Delaware courts have generally upheld
the adoption of such plans by Delaware corporations but, as of yet, have not
addressed the validity of an adverse person provision in such plans.
Massachusetts law provides specific statutory authorization for the adoption of
stockholder rights plans by Massachusetts corporations and for such plans to
include an adverse person provision. Under an adverse person provision, a board
of directors may trigger a stockholder rights plan based on the "nature or
identity of a stockholder" if the directors determine that such action is
reasonable and in the best interests of the corporation. Neither Tyco nor
Carlisle have adopted a stockholder rights plan.
CONSIDERATION OF SOCIETAL FACTORS
Unlike Massachusetts law, Delaware law does not explicitly provide for the
consideration of societal interests by a corporation's board of directors in
making decisions. The Delaware Supreme Court has held that, in discharging their
responsibilities, directors may consider constituencies other than stockholders,
such as creditors, customers, employees and perhaps even the community in
general, as long as there are rationally related benefits accruing to
stockholders as well. The Delaware Supreme Court has held, however, that concern
for non-stockholder interests is inappropriate when a sale of the company is
inevitable and an auction among active bidders is in progress. The Carlisle
Certificate and Carlisle's By-laws do not discuss consideration of societal
factors.
Massachusetts law expressly provides that, in determining what a director
reasonably believes to be in the best interests of the corporation, he may
consider the interests of the corporation's employees, suppliers, creditors and
customers; the economy of the state, region and nation; community and societal
considerations; and the long-term as well as short-term interests of the
corporation and its stockholders, including the possibility that these interests
may be best served by the continued independence of the corporation. Thus, these
interests could be considered even in connection with a decision to sell the
company. The Tyco Restated Articles and Tyco's By-laws do not discuss the
consideration of societal factors.
78
<PAGE>
SECTION 16(A) COMPLIANCE
Pursuant to Section 16(a) under the Exchange Act, executive officers,
directors and 10% shareholders ("insiders") of Carlisle are required to file
reports on Forms 3, 4 and 5 of their beneficial holdings and transactions in
Carlisle's Common Stock. To Carlisle's knowledge, based on review of the copies
of such reports furnished to Carlisle and written representations that no other
reports were required during 1995, all Section 16(a) filing requirements
applicable to its insiders were complied with.
OTHER MATTERS
It is not expected that any matters other than those described in this Proxy
Statement/Prospectus will be brought before the Special Meeting. If any other
matters are presented, however, it is the intention of the persons named in the
Carlisle proxy to vote the proxy in accordance with the discretion of the
persons named in such proxy.
LEGAL MATTERS
Certain legal matters with respect to the validity of the securities offered
hereby and the Merger will be passed upon for Tyco by M. Brian Moroze, General
Counsel of Tyco. Mr. Moroze owns approximately 20,800 shares of Tyco Common
Stock. Certain other legal matters in connection with the Merger will be passed
upon by Kramer, Levin, Naftalis & Frankel, New York, New York. Joshua M. Berman,
a director and secretary of Tyco, is counsel to Kramer, Levin, Naftalis &
Frankel and owns 36,000 shares of Tyco Common Stock. Certain legal matters in
connection with the Merger will be passed upon for Carlisle by Weil, Gotshal &
Manges LLP, New York, New York.
EXPERTS
The consolidated financial statements of Tyco for the years ended June 30,
1995 and 1994 and the combination of the financial statements of Tyco and
Kendall for the year ended June 30, 1993 incorporated by reference in this Proxy
Statement/Prospectus have been so incorporated by reference 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 Tyco for the years ended June 30,
1993 (prior to retroactive restatement to account for the pooling of interests
with Kendall on October 19, 1994) incorporated by reference in this Proxy
Statement/Prospectus have been so incorporated by reference in reliance on the
report (which includes an explanatory paragraph relating to the fact that Tyco
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 that firm as experts in
accounting and auditing.
The consolidated financial statements of The Earth Technology Corporation
(USA), incorporated by reference in The Earth Technology Corporation (USA)
Annual Report (Form 10-K) for the year ended August 25, 1995, have been audited
by Ernst & Young LLP, independent auditors, as set forth in their report thereon
incorporated by reference therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
The consolidated financial statements of Carlisle as of December 31, 1995
and 1994 and for each of the three years in the period ended December 31, 1995
included in this Proxy Statement/Prospectus have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their report appearing
79
<PAGE>
herein, and have been so included in reliance upon the reports of such firm
given upon their authority as experts in accounting and auditing.
Representatives of Deloitte & Touche LLP will be present at the Special Meeting,
will have an opportunity to make a statement if they desire to do so, and will
be available to respond to appropriate questions.
STOCKHOLDER PROPOSALS
Any Carlisle stockholder who wishes to submit a proposal for presentation to
Carlisle's 1997 Annual Meeting of Stockholders (if the Merger has not been
consummated prior to the date the meeting is to be held) must submit the
proposal to Carlisle, 1314 North Third Street, Phoenix, Arizona 85004,
Attention: Secretary. Such proposal must be received not later than November 20,
1996 for inclusion, if appropriate, in Carlisle's proxy statement and form of
proxy relating to its 1997 Annual Meeting.
80
<PAGE>
INDEX TO FINANCIAL STATEMENTS OF CARLISLE
<TABLE>
<CAPTION>
Audited Financial Statements
<S> <C>
Independent Auditors' Report--Audited Financials................................. F-2
Consolidated Balance Sheet at December 31, 1994 and 1995......................... F-3
Consolidated Statements of Operations for the years ended December 31, 1993, 1994
and 1995....................................................................... F-4
Consolidated Statements of Stockholders Equity for the years ended December 31,
1993, 1994 and 1995............................................................ F-5
Consolidated Statements of Cash Flows for the years ended December 31, 1993, 1994
and 1995....................................................................... F-6
Notes to Audited Financial Statements............................................ F-7
Unaudited Financial Statements
Independent Accountants' Report--Unaudited Financials............................ F-17
Consolidated Balance Sheet at December 31, 1995 and March 31, 1996............... F-18
Consolidated Statements of Operations for the three months ended March 31, 1995
and 1996....................................................................... F-19
Consolidated Statements of Cash Flows for the three months ended March 31, 1995
and 1996....................................................................... F-20
Notes to Unaudited Financial Statements.......................................... F-21
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Carlisle Plastics, Inc.
We have audited the accompanying consolidated balance sheets of Carlisle
Plastics, Inc. and subsidiaries as of December 31, 1994 and 1995, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for each of the three years in the period ended December 31, 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on the financial statements based on our
audits.
We conducted our audits 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 audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Carlisle Plastics, Inc. and
subsidiaries as of December 31, 1994 and 1995, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1995 in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Phoenix, Arizona
February 16, 1996
F-2
<PAGE>
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1994 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents................................................. $ 4,488 $ 1,842
Receivables, net of allowance of $4,055 in 1994 and $3,311 in 1995... 55,789 49,171
Inventories.......................................................... 56,538 41,885
Deferred income taxes................................................ 2,074 6,054
Other current assets................................................. 5,534 5,782
-------- --------
Total current assets............................................... 124,423 104,734
Property, plant and equipment--net..................................... 139,327 124,443
Goodwill--net.......................................................... 66,117 59,517
Other assets--net...................................................... 11,125 5,745
-------- --------
TOTAL ASSETS........................................................... $340,992 $294,439
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS EQUITY
Current liabilities:
Current portion of long-term debt.................................... $ 9,563 $ 8,910
Accounts payable..................................................... 37,999 31,785
Other accrued liabilities............................................ 11,634 11,122
Restructuring accrual................................................ -- 8,086
-------- --------
Total current liabilities.......................................... 59,196 59,903
-------- --------
Long-term debt--net of current portion................................. 198,277 183,784
-------- --------
Deferred income taxes.................................................. 11,206 4,306
-------- --------
Other noncurrent liabilities........................................... 2,053 1,580
-------- --------
Commitments and contingencies (Notes 4, 7 and 9)
Stockholders' equity:
Preferred stock--par value $.01; 10,000,000 shares authorized, no
shares issued or outstanding.......................................
Class A common stock--par value $.01; 50,000,000 shares authorized,
8,193,733 and 8,353,973 issued and outstanding in 1994 and 1995,
respectively, one vote per share....................................... 82 84
Class B common stock--par value $.01; 20,000,000 shares authorized,
9,510,552 and 9,500,312 issued and outstanding in 1994 and 1995,
respectively, twenty votes per share................................... 95 95
Additional paid-in capital........................................... 68,359 69,107
Retained earnings (deficit).......................................... 1,724 (24,420)
-------- --------
Total stockholders' equity......................................... 70,260 44,866
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY............................. $340,992 $294,439
-------- --------
-------- --------
</TABLE>
See notes to consolidated financial statements.
F-3
<PAGE>
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------
1993 1994 1995
-------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C> <C>
Net sales................................................. $360,895 $387,664 $426,272
Cost of goods sold........................................ 261,987 290,586 342,775
-------- -------- --------
Gross profit.............................................. 98,908 97,078 83,497
Operating expenses........................................ 64,467 69,372 62,075
Goodwill and other amortization........................... 2,970 3,108 3,113
Pension termination expense............................... -- -- 951
Restructuring............................................. -- -- 33,935
-------- -------- --------
Operating income (loss)................................... 31,471 24,598 (16,577)
Interest expense.......................................... 22,549 19,419 23,038
Other income.............................................. (369) (168) (876)
-------- -------- --------
Income (loss) before provision for income taxes,
extraordinary item and cumulative effect of change in
accounting principle.................................... 9,291 5,347 (38,739)
Provision (benefit) for income taxes...................... 3,459 2,348 (12,646)
-------- -------- --------
Income (loss) before extraordinary item and cumulative
effect of change in accounting principle................ 5,832 2,999 (26,093)
Extraordinary item--early retirement of debt (net of
income tax benefit of $138 and $1,574 in 1993 and 1994,
respectively)............................................. (234) (2,462) --
Cumulative effect of change in accounting principle
relating to income taxes................................ 1,586 -- --
-------- -------- --------
Net income (loss)......................................... $ 7,184 $ 537 $(26,093)
-------- -------- --------
-------- -------- --------
Income (loss) per common share:
Before extraordinary item and change in accounting
principle................................................. $ .33 $ .17 $ (1.47)
Extraordinary item...................................... (.01) (.14) --
Change in accounting principle............................ .09 -- --
-------- -------- --------
Net income (loss)......................................... $ .41 $ .03 $ (1.47)
-------- -------- --------
-------- -------- --------
Average number of common and common equivalent shares
outstanding............................................... 17,737 17,695 17,731
-------- -------- --------
-------- -------- --------
</TABLE>
See notes to consolidated financial statements.
F-4
<PAGE>
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL RETAINED
------------------ PAID-IN EARNINGS
CLASS A CLASS B CAPITAL (DEFICIT) TOTAL
------- ------- ---------- -------- -------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1993...................... $76 $ 10 $ 67,861 $ (5,858) $62,179
Class B shares converted to Class A shares.... 4 (4) -- -- --
Exercise of stock options..................... -- -- 43 -- 43
Foreign currency translation adjustment....... -- -- -- (140) (140)
Net income.................................... -- -- 7,184 7,184
------- ------- ---------- -------- -------
Balance, December 31, 1993.................... 80 96 67,904 1,186 69,266
Class B shares converted to Class A shares.... 1 (1) -- -- --
Exercise of stock options..................... 1 -- 455 -- 456
Foreign currency translation adjustment....... -- -- -- 1 1
Net income.................................... -- -- -- 537 537
------- ------- ---------- -------- -------
Balance, December 31, 1994.................... 82 95 68,359 1,724 70,260
Exercise of stock options..................... 2 -- 748 -- 750
Foreign currency translation adjustment....... (51) (51)
Net loss...................................... -- -- -- (26,093) (26,093)
------- ------- ---------- -------- -------
Balance, December 31, 1995.................... $84 $ 95 $ 69,107 $(24,420) $44,866
------- ------- ---------- -------- -------
------- ------- ---------- -------- -------
</TABLE>
See notes to consolidated financial statements.
F-5
<PAGE>
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1993 1994 1995
-------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)............................................ $ 7,184 $ 537 $(26,093)
Adjustments to reconcile net income (loss) to net cash flows
from operating activities:
Depreciation and amortization.............................. 19,402 21,546 23,541
Restructuring charge....................................... -- -- 33,935
Deferred income taxes...................................... 1,263 788 (10,881)
Gain on sale of fixed assets............................... -- -- (876)
Bad debt expense........................................... 969 1,598 780
Write-off of deferred financing costs...................... 122 1,331 --
Change in accounting principle............................. (1,586) -- --
Other...................................................... (140) 1 (51)
Changes in assets and liabilities after effect of
restructuring:
Receivables.............................................. (664) (10,617) 2,173
Inventories.............................................. (1,932) (13,506) 10,003
Other current assets..................................... 1,513 (210) 357
Accounts payable......................................... 132 3,890 (6,214)
Other accrued liabilities................................ (5,064) (1,288) (2,637)
Other assets............................................. (1,705) (1,005) 717
-------- -------- --------
Net cash provided by operating activities.................... 19,494 3,065 24,754
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment................. (15,274) (19,095) (15,813)
Proceeds from sale of fixed assets........................... -- -- 3,104
Purchase of minority interest of subsidiary.................. -- (3,221) --
Sale of assets of trucking subsidiary........................ 1,500 -- --
-------- -------- --------
Net cash used for investing activities....................... (13,774) (22,316) (12,709)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of long-term debt................................... 467 59,918 --
Repayments of long-term debt................................. (6,241) (84,567) (14,568)
Borrowings under long-term working capital lines of credit... -- 136,343 108,082
Repayments under long-term working capital lines of credit... -- (98,180) (108,778)
Interest rate contracts settled.............................. 2,000 (7,805) --
Deferred financing costs..................................... (277) (2,171) (177)
Issuance of common stock..................................... 43 456 750
Other........................................................ 283 -- --
-------- -------- --------
Net cash (used for) provided by financing activities......... (3,725) 3,994 (14,691)
-------- -------- --------
CASH AND EQUIVALENTS:
Net (decrease) increase...................................... 1,995 (15,257) (2,646)
Balance, beginning of year................................... 17,750 19,745 4,488
-------- -------- --------
Balance, end of year......................................... $ 19,745 $ 4,488 $ 1,842
-------- -------- --------
-------- -------- --------
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid................................................ $ 21,946 $ 20,511 $ 19,538
Income taxes paid............................................ $ 2,382 $ 730 $ 1,123
</TABLE>
See notes to consolidated financial statements.
F-6
<PAGE>
1. BUSINESS ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
BUSINESS
Carlisle Plastics, Inc. (the "Company") is a leading producer of consumer
and industrial products made from plastics. The Company's products include trash
bags, packaging, garment hangers and sheeting used for home improvement,
construction and agriculture. The Company's trash bag products include
institutional lines, as well as the Company's own national consumer brands. In
the fourth quarter of 1995, the Company elected to exit its private label
grocery and plastic container businesses (Note 11). Sales are primarily in North
America.
BASIS OF CONSOLIDATION
The consolidated financial statements of the Company include the accounts of
American Western Corporation ("American Western"), Rhino-X Industries, Inc.
("Rhino-X"), Carlisle Plastics Funding Corporation ("CPFC"), A&E Products (Far
East) Ltd. ("Far East"), A&E - Korea, Ltd. ("Korea"), A&E Philippines, Inc.,
Carlisle Costa Rica S.A., Carlisle Plastics Europe S.A., Carlisle Recycling de
Mexico, S.A. de C.V., and Plasticos Bajacal, S.A. de C.V. ("Plasticos").
Significant intercompany transactions have been eliminated in consolidation.
Certain amounts in the prior years' financial statements have been
reclassified to conform to the current year's presentation.
CASH EQUIVALENTS
Cash equivalents include highly liquid investments with an original maturity
of three months or less. The recorded amount approximates fair market value.
INVENTORIES
Inventories are stated at the lower of cost or market. Cost is principally
determined using the first-in, first-out (FIFO) method.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost. Depreciation is computed
on a straight-line basis over the estimated lives of the assets. Amortization of
property acquired under capital leases and leasehold improvements is computed on
a straight-line basis over the estimated useful lives of the assets or the
remaining term of the lease. The estimated useful lives of the Company's
property, plant and equipment are as follows:
<TABLE>
<S> <C>
Land, buildings and improvements................................ 5 to 50
Fixtures, machinery and equipment............................... 2 to 25
Property under capital lease.................................... 15
</TABLE>
GOODWILL AND OTHER ASSETS
Goodwill arising from the excess purchase price over net assets of
businesses acquired is amortized using the straight-line method principally over
forty years. Accumulated amortization was $12,464 and $14,564 as of December 31,
1994 and 1995, respectively. On an ongoing basis, the Company evaluates the
carrying value of intangible assets versus the undiscounted cash benefits
expected to be realized from the performance of the underlying operations and
adjusts for any impairment in value based upon
F-7
<PAGE>
the excess of the assets carrying amount as compared to the assets fair value.
Upon disposal of significant long lived assets, an estimated ratable amount of
goodwill is also written off.
Included in other assets at December 31, 1994 and 1995 are $3,808 and $2,436
(net of accumulated amortization of $4,073 and $5,489), respectively, of
deferred financing costs which are being amortized using the interest method
over the term of the related debt.
REVENUE RECOGNITION
Revenues are generally recognized when products are shipped.
INCOME TAXES
The Company adopted Statement of Financial Accounting Standards ("SFAS") No.
109, "Accounting for Income Taxes," effective January 1, 1993. The cumulative
effect of adopting SFAS No. 109 was to increase 1993 net income by $1,586 ($.09
per share). Deferred tax assets and liabilities are determined based on the
differences between the financial statement and the tax bases of assets and
liabilities using enacted tax rates.
INCOME (LOSS) PER COMMON SHARE
Income (loss) per common share is computed on the basis of the weighted
average number of common and common equivalent shares, consisting of the
dilutive effect of stock options outstanding.
ACCOUNTING PRONOUNCEMENTS
During 1995 the Financial Accounting Standards Board issued SFAS No. 121
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of" and SFAS No. 123 "Accounting for Stock Based Compensation."
Management of the Company does not believe implementation of SFAS No. 121 will
have a significant impact on the financial statements. With regard to SFAS No.
123, the Company has determined that it will not change to the fair value method
and will continue to use Accounting Principles Board Opinion No. 25 for
measurement and recognition of employee stock based transactions.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles necessarily requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from these estimates.
2. INVENTORIES
Inventories consist of the following at December 31:
<TABLE>
<CAPTION>
1994 1995
------- -------
(IN THOUSANDS)
<S> <C> <C>
Raw materials........................................... $21,823 $12,553
Finished goods.......................................... 34,715 29,332
------- -------
Total................................................... $56,538 $41,885
------- -------
------- -------
</TABLE>
F-8
<PAGE>
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following at December 31:
<TABLE>
<CAPTION>
1994 1995
-------------- --------
(IN THOUSANDS)
<S> <C> <C>
Land, buildings and improvements.................... $ 40,586 $ 48,455
Fixtures, machinery and equipment................... 179,372 154,489
Property under capital leases....................... 3,046 2,844
-------------- --------
Total............................................... 223,004 205,788
Less accumulated depreciation and amortization...... (84,606) (85,268)
Construction-in-process............................. 929 3,923
-------------- --------
Property, plant and equipment - net................. $139,327 $124,443
-------------- --------
-------------- --------
</TABLE>
Accumulated depreciation and amortization includes $1,911 and $1,867 at
December 31, 1994 and 1995, respectively, relating to property under capital
leases.
4. LONG-TERM DEBT
Long-term debt consists of the following at December 31:
<TABLE>
<CAPTION>
1994 1995
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Senior notes, interest at 10.25%, due 1997............................. $ 90,000 $ 90,000
Equipment sale and leaseback, interest at LIBOR plus 2.65%, due in
installments through 1999.............................................. 40,356 27,088
Accounts receivable securitization, interest at the weighted average
rate of underlying issued commercial paper (5.9% at December 31,
1995) plus 1.25% to 2.0%, due 1999................................... 38,163 35,367
Senior variable rate notes, interest at LIBOR plus 4.0%, due 1997...... 19,100 19,100
Senior notes, interest at 10.25%, $15,000 principal due 1997, net of
unamortized discount................................................... 14,709 14,827
Capital expenditure loans, interest at fixed rates of 8.09% to 9.16%,
due in installments through 1998..................................... 3,021 2,370
Revolving credit agreement, interest at LIBOR plus 2.25% to 3.75%, due
1997................................................................... -- 2,100
Capital lease obligation at implicit interest rate of 15%, due in
installments through 1999............................................ 1,710 1,330
Other.................................................................. 781 512
-------- --------
Subtotal............................................................... 207,840 192,694
Less current portion................................................... 9,563 8,910
-------- --------
Total.................................................................. $198,277 $183,784
-------- --------
-------- --------
</TABLE>
LIBOR was 5.7% at December 31, 1995.
Borrowings under the accounts receivable securitization agreement are
limited to the lesser of $45,000 or 85% of eligible accounts receivable, as
defined by the agreement, which expires in April 1999. Interest is payable daily
based upon the weighted average rate of the commercial paper, which is issued on
the secured receivables under the terms of the agreement, plus 1.25% to 2.0%
based upon borrowings. Outstanding borrowings under this agreement equalled the
amount available at December 31, 1995 of $35,367.
Borrowings under the revolving credit facility are limited to the lesser of
$25,000 or 50% of eligible inventories, as defined in the agreement, which
expires in March 1997 and is collateralized by the Company's inventories.
Interest is payable monthly at incremental rates of LIBOR plus 2.25% to 3.75%
F-9
<PAGE>
based upon borrowings. Under this facility, the Company may also execute letters
of credit up to $9,000. The letters of credit accrue interest payable monthly at
incremental rates of 1.5% to 2.5%. Available and outstanding borrowings under
the terms of this facility at December 31, 1995 were $15,812 and $2,100
respectively. Issued and outstanding letters of credit were $2,065 at December
31, 1995.
The use of proceeds received by the Company under the revolving credit and
the accounts receivable securitization agreements are limited to funding working
capital requirements. In addition, an unused facility fee of .25% is charged on
any unused portion of the related agreements.
The sale and leaseback agreement requires monthly payments of variable
principal plus interest at LIBOR plus 2.65% and is collateralized by the
underlying equipment. The Company is also required to prepay principal
semi-annually in an amount equal to 40% of consolidated net income, limited to
$2,000 in each calendar year. The sale and leaseback agreement expires in April
1999. The net gain which was recorded in connection with the sale and leaseback
agreement of $2,369 has been deferred and is being amortized over the term of
the agreement.
The revolving credit, accounts receivable securitization and the sale and
leaseback agreements contain cross default covenants which require the Company
to meet certain financial tests. Such tests include the maintenance of minimum
net worth, operating cash flow, limitations on capital expenditures and the
payment of dividends. At December 31, 1995, the Company was in compliance with
the required covenants.
The Company has 10.25% Senior Notes with face amounts of $15,000 and $90,000
(together, the "10.25% Notes"). The 10.25% Notes require interest payments
semi-annually at a fixed rate of 10.25% and expire in June 1997. The 10.25%
Notes may be redeemed at the option of the Company, in whole or in part, at
102.56% of the face amount through June 14, 1996 and par thereafter.
The Senior Variable Rate Notes are due in 1997 (the "1997 Notes"), with
interest payable quarterly at LIBOR plus 4.0%. The 1997 Notes may be redeemed at
the option of the Company, in whole or in part, at par plus accrued interest.
During 1994, the Company used available cash and proceeds received under the
sale and leaseback agreement to retire $10,000 in variable rate notes, and $300
of 5.7% Industrial Revenue Bonds. The Company also retired $5,000 and $68,525 of
its 13.75% Notes in 1993 and 1994, respectively. As a result of the early
retirements of debt, the Company recorded extraordinary charges of $234 and
$2,462 (net of taxes of $138 and $1,574, respectively) in 1993 and 1994,
respectively.
As of December 31, 1995, the aggregate annual payments due on long-term debt
and the future minimum lease payments under capital lease obligations are as
follows:
<TABLE>
<CAPTION>
CAPITAL OTHER
LEASE LONG-TERM
OBLIGATIONS DEBT TOTAL
----------- --------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Year ending December 31:
1996...................................................... $ 494 $ 8,597 $ 9,091
1997...................................................... 519 135,958 136,477
1998...................................................... 545 8,786 9,331
1999...................................................... 139 38,023 38,162
----------- --------- --------
Total minimum payments...................................... 1,697 191,364 193,061
Less amount representing interest........................... 367 -- 367
----------- --------- --------
Total....................................................... $ 1,330 $ 191,364 $192,694
----------- --------- --------
----------- --------- --------
</TABLE>
F-10
<PAGE>
Based upon available market information and borrowing rates currently available
to the Company for bank loans with similar terms and average maturities, the
fair value of long-term debt was approximately $206,900 and $193,400 at December
31, 1994 and 1995, respectively.
5. EMPLOYEE BENEFIT PLANS
The Company maintained a noncontributory defined benefit pension plan which
covered certain employees. Benefits payable were determined based on percentages
of compensation for each year of service. During 1995, the Company elected to
terminate the defined benefit plan. Accordingly, accumulation of benefits under
the plan ceased effective March 31, 1995 and plan assets were subsequently
distributed.
Components of net pension expense for the years ended December 31 are as
follows:
<TABLE>
<CAPTION>
1995
1993 1994 -
---- ----
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost........................................... $355 $415 $ 84
Interest cost.......................................... 374 402 429
Actual loss (return) on plan assets.................... (543) 69 (368)
Deferred loss on plan assets........................... -- (538) (75)
Other net.............................................. 48 (60) (60)
---- ---- ----
Net pension expense.................................... $234 $288 $ 10
---- ---- ----
---- ---- ----
</TABLE>
In addition to the net periodic pension expense in 1995, the Company
recognized a gain on plan curtailment of $112 and a loss on settlement of
$1,063. Cash contributions to the pension plan for the years ended December 31,
1993, 1994 and 1995 were $122, $0 and $1,152, respectively.
The Company also maintains defined contribution plans (the "Plans"). Full
time employees of the Company who are not members of collective bargaining units
are eligible to participate in the Plans after six months of employment. Under
the Plans, a participant may elect to reduce annual compensation by 1% to 16%
and have that amount contributed to the Plan by the Company on a pre-tax basis
up to the maximum allowable deferral per the Internal Revenue Code. The Company
matches employee contributions, for one of the Plans, at a rate of 50% of the
employee's contribution up to 6% of the employee's salary. Employee
contributions vest immediately, whereas employer contributions vest over three
years. During the years ended December 31, 1993, 1994 and 1995, the Company's
aggregate matching contributions were $372, $366 and $424, respectively.
F-11
<PAGE>
6. INCOME TAXES
Significant components of the Company's net deferred tax asset (liability)
are comprised of the following as of December 31:
<TABLE>
<CAPTION>
1994 1995
---------------------- ----------------------
CURRENT NON-CURRENT CURRENT NON-CURRENT
------- ----------- ------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
DEFERRED TAX ASSETS:
Accruals not currently deductible................... $ 2,355 $ -- $ 6,224 $ --
Operating loss carryforwards........................ -- 7,067 11,024
Alternative minimum tax credit carryforwards........ -- 2,601 -- 2,051
Foreign tax credit carryforwards.................... -- -- -- 445
Differences between book and tax basis of
property............................................ -- 652 -- 507
Other............................................... -- 406 -- 335
------- ----------- ------- -----------
2,355 10,726 6,224 14,362
------- ----------- ------- -----------
DEFERRED TAX LIABILITIES:
Differences between book and tax basis of
property............................................ -- (19,302) -- (16,942)
Deferred net loss on interest rate contract
settlement.......................................... -- (2,588) -- (1,707)
Prepaid expenses.................................... (88) -- (45) --
Other............................................... (193) (42) (125) (19)
------- ----------- ------- -----------
(281) (21,932) (170) (18,668)
------- ----------- ------- -----------
Net deferred tax asset (liability).................. $ 2,074 $ (11,206) $ 6,054 $ (4,306)
------- ----------- ------- -----------
------- ----------- ------- -----------
</TABLE>
As of December 31, 1995, the Company had net operating loss carryforwards
from a purchased subsidiary which expire in the years 2006 through 2008 in the
amount of $9,862, which may be utilized to reduce consolidated taxable income to
the extent of taxable income generated by the purchased subsidiary. The Company
also had a consolidated net operating loss carryforward of $18,572 (of which
$11,286 expires in 2009 and $7,286 expires in 2010), alternative minimum tax
credits totaling $2,051, which have no expiration date, and foreign tax credit
carryforwards of $445 which expire through 1999.
The Company has not provided a valuation allowance against net deferred tax
assets because realization of the benefit is considered more likely than not.
The provision (benefit) for income taxes consists of the following for the
years ended December 31:
<TABLE>
<CAPTION>
1993 1994 1995
------ ------ --------
(IN THOUSANDS)
<S> <C> <C> <C>
Current:
Federal......................................... $1,723 $ (333) $ (2,107)
Foreign......................................... 122 219 292
State........................................... 351 100 50
------ ------ --------
Total current................................... 2,196 (14) (1,765)
------ ------ --------
Deferred:
Federal......................................... 903 2,233 (9,095)
State........................................... 360 129 (1,786)
------ ------ --------
Total deferred.................................. 1,263 2,362 (10,881)
------ ------ --------
Total........................................... $3,459 $2,348 $(12,646)
------ ------ --------
------ ------ --------
</TABLE>
F-12
<PAGE>
The provision (benefit) for income taxes differs from an amount computed at
the statutory tax rate as follows:
<TABLE>
<CAPTION>
1993 1994 1995
---- ---- -----
<S> <C> <C> <C>
Provision (benefit) using statutory tax rate......................... 35.0% 35.0% (35.0)%
Graduated tax rate................................................... (1.0) (1.0) 1.0
Goodwill amortization................................................ 7.8 13.4 1.8
Goodwill written off in restructuring................................ -- -- 4.0
State taxes, net of federal income tax benefit....................... 5.1 2.8 (3.0)
Reversal of valuation allowance...................................... (3.6) -- --
Settlement of certain tax audits..................................... -- -- (2.7)
Other-net............................................................ (6.1) (6.3) 1.3
---- ---- -----
Provision (benefit) for income taxes................................. 37.2% 43.9% (32.6)%
---- ---- -----
---- ---- -----
</TABLE>
7. RELATED PARTY TRANSACTIONS
NOTE RECEIVABLE
At December 31, 1995, the Company had a note receivable from an officer and
director of the Company, in the amount of $100, due August 1997. Interest is
payable annually at a rate of 6%, compounded monthly.
ACCOUNTS RECEIVABLE
At December 31, 1995 and 1994, the Company had accounts receivable of $582
and $697 from an affiliate.
MANAGEMENT FEES
In September 1995, the Company renewed a one year Management Agreement with
Carlisle Plastics Management Corporation ("CPMC"), an affiliate of the Company.
Under the terms of the agreement, CPMC receives an annual management fee of
$750. Management fees paid by the Company to CPMC under the agreement were
$1,500, $1,250 and $750 for the years ended December 31, 1993, 1994 and 1995,
respectively.
The indentures for the 10.25% Notes require that management fees not exceed
2.0% of sales per year and that each affiliate execute a management fee
subordination agreement.
8. STOCKHOLDERS' EQUITY
The Company's Class B common stock is one-for-one convertible to Class A
common stock and has restrictions on transfers. Each share of Class A common
stock is entitled to one vote, and each share of Class B common stock is
entitled to twenty votes.
The Company maintains an incentive stock option plan (the "Incentive Plan")
for key salaried employees and directors. The term of an incentive stock option
may not exceed ten years. As of December 31, 1995, 1,880,000 shares of Class A
Common Stock were reserved for issuance under the Incentive Plan.
F-13
<PAGE>
A summary of options granted under the Incentive Plan is as follows:
<TABLE>
<CAPTION>
NUMBER
OF OPTION PRICE
SHARES PER SHARE
------ -------------
(IN THOUSANDS, EXCEPT
PER SHARE AMOUNTS)
<S> <C> <C>
Outstanding at January 1, 1993...................... 474 $5.00 - $9.50
Granted........................................... 396 $5.31 - $6.00
Cancelled or expired.............................. (69 ) $5.00 - $9.50
Exercised......................................... (9 ) $5.00
------
Outstanding at December 31, 1993.................... 792 $5.00 - $9.50
Granted........................................... 983 $4.00 - $7.44
Cancelled or expired.............................. (461 ) $5.00 - $7.66
Exercised......................................... (85 ) $5.00 - $6.00
------
Outstanding at December 31, 1994.................... 1,229 $4.00 - $9.50
Granted........................................... 196 $4.38 - $5.53
Cancelled or expired.............................. (93 ) $5.00 - $7.00
Exercised......................................... (150 ) $5.00
------
Outstanding at December 31, 1995.................... 1,182 $4.00 - $9.50
------
------
Exercisable at December 31, 1995.................... 279 $4.00 - $7.44
------
------
</TABLE>
In 1992, a director and officer was granted non-qualified options, which are
not included in the above table, to purchase 400,000 shares of the Company's
Class A Common Stock at $4.00 per share (the fair market value of the shares at
the date of the agreement). At December 31, 1995, these options were fully
vested.
9. COMMITMENTS AND CONTINGENCIES
OPERATING LEASES
The Company leases various manufacturing facilities under noncancelable
operating leases with varying terms through 2002. The following is a schedule of
future minimum lease payments required under such operating leases:
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------
<S> <C>
1996.......................................................... $ 4,542
1997.......................................................... 3,967
1998.......................................................... 3,689
1999.......................................................... 1,890
2000.......................................................... 431
Thereafter.................................................... 431
--------------
Total................................................... $ 14,950
--------------
--------------
</TABLE>
Rent expense under operating leases totaled $4,476, $5,955 and $5,359, for 1993,
1994 and 1995, respectively.
LITIGATION
The Company is subject to legal proceedings and claims which arise in the
ordinary course of its business. In the opinion of management, the amount of
ultimate liability with respect to these actions will not materially affect the
financial position, results of operations or cash flows of the Company.
F-14
<PAGE>
10. CONCENTRATION OF CREDIT RISK
In September 1993, the Company received $2,000 from the termination of an
interest rate swap agreement which it had entered into in June 1993. This gain
has been deferred and is being amortized through June 1997, the original term of
the swap agreement.
In December 1994, the Company terminated an interest rate swap and corridor
for $6,300. The swap agreement and corridor matched the principal and due date
of the Company's 1992 10.25% Notes. The cost of the corridor ($1,500) and
termination of the related agreements has been deferred and is amortized as an
adjustment to interest expense over the remaining term of the 10.25% Notes.
For the years ended December 31, 1993, 1994 and 1995, the Company recorded
as an increase (reduction) to interest expense $(751), ($350) and $2,127
relating to the interest rate agreements.
The Company had accounts receivable from a single customer of $4,055 and
$5,912 at December 31, 1994 and 1995, respectively. Sales to this customer
represented 7%, 7% and 10% of total sales for the three years ended December 31,
1995. This customer has a history of timely payments to the Company, and the
Company believes it has no unusual exposure to credit risk at December 31, 1995.
11. RESTRUCTURING CHARGE
During the fourth quarter of 1995, the Company recorded a $33,935 charge for
restructuring relating to the exit of two unprofitable business units: private
label grocery and containers. The Company plans to close down its private label
grocery bags business and to sell its various container plants as separate
businesses. Principal items included in the charge are estimated losses on
assets affected by the dispositions ($18,549), write off of goodwill related to
the private label grocery business ($4,500), accrual of costs related to leased
facilities exited and losses on termination of contractual commitments ($8,395),
costs for workforce reductions ($1,115), and other costs ($1,376). The write
down of assets to estimated net realizable value is net of estimated proceeds
from the sale of approximately $6,000. The workforce reduction costs primarily
include severance costs related to involuntary terminations. The plan includes
total workforce reductions of approximately 70 for which 43 positions had been
eliminated by December 31, 1995 with total expenditures of $457 in the fourth
quarter of 1995.
Sales related to the private label grocery and containers businesses for the
year ended December 31, 1995 totaled $25,555 and $30,107, respectively, and
operating losses before restructuring charges totaled $1,942 and $920,
respectively. Management estimates that the cash generated from the sale of
assets will cover the estimated cash requirements related to the restructuring.
The balance of the restructuring liability as of December 31, 1995 was $8,086.
The majority of these liabilities will be paid or settled during 1996.
12. MINORITY INTEREST PURCHASE
On January 1, 1994, the Company purchased the remaining one-third minority
interest shares of its subsidiary Rhino-X at a purchase price of $3.2 million.
F-15
<PAGE>
13. UNAUDITED SELECTED QUARTERLY FINANCIAL DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
---------------------------------------------
QUARTERS
---------------------------------------------
FIRST SECOND THIRD FOURTH(A)
-------- -------- -------- ---------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Net Sales......................................... $103,160 $112,620 $112,417 $ 98,075
Gross Profit...................................... 23,374 22,077 20,586 17,460
Net (Loss) Income................................. 633 1,363 (1,079) (27,010)
Net (Loss) Income Per Share....................... $ .04 $ .08 $ (.06) $ (1.53)
</TABLE>
- ------------
<TABLE>
<C> <S>
(a) The fourth quarter included a $33,935 charge for restructuring and a $951 loss on
termination and settlement of the Company's defined benefit pension plan.
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1994
------------------------------------------
QUARTERS
------------------------------------------
FIRST SECOND THIRD FOURTH
------- ------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
Net Sales........................................... $86,092 $95,002 $104,258 $102,312
Gross Profit........................................ 21,453 23,775 24,485 27,365
Income Before Extraordinary Item.................... 16 1,154 122 1,707
Net (Loss) Income................................... (2,446) 1,154 122 1,707
Income Per Share:
Income Before Extraordinary Item.................... $ .00 $ .07 $ .01 $ .10
Net (Loss) Income................................... (.14) .07 .01 .10
</TABLE>
F-16
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
Carlisle Plastics, Inc.
We have reviewed the accompanying condensed consolidated balance sheet of
Carlisle Plastics, Inc. and subsidiaries (the Company) as of March 31, 1996 and
the related condensed consolidated statements of operations and cash flows for
the three month periods ended March 31, 1996 and 1995. These financial
statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and of making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to such condensed consolidated financial statements for them to
be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Carlisle Plastics, Inc. and
subsidiaries as of December 31, 1995, and the related consolidated statements
of operations, stockholders' equity, and cash flows for the year then ended (not
presented herein); and in our report dated February 16, 1996, we expressed an
unqualified opinion on those consolidated financial statements. In our opinion,
the information set forth in the accompanying condensed consolidated balance
sheet as of December 31, 1995 is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
DELOITTE & TOUCHE LLP
Phoenix, Arizona
April 18, 1996
(May 14, 1996 as to Note F)
F-17
<PAGE>
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996
------------ ---------
(IN THOUSANDS)
ASSETS
<S> <C> <C>
Current assets:
Cash and equivalents............................................... $ 1,842 $ 1,968
Receivables--net of allowances of $3,311 as of December 31, 1995
and $3,552 as of March 31, 1996.................................. 49,171 22,241
Inventories........................................................ 41,885 39,565
Net assets held for sale........................................... -- 1,124
Deferred income taxes.............................................. 6,054 5,233
Other current assets............................................... 5,782 5,954
------------ ---------
Total current assets........................................... 104,734 76,085
Property, plant and equipment--net of accumulated depreciation of
$85,268 as of December 31, 1995 and $77,531 as of March 31, 1996..... 124,443 122,116
Goodwill--net........................................................ 59,517 58,961
Other assets--net.................................................... 5,745 4,324
------------ ---------
TOTAL ASSETS......................................................... $294,439 $ 261,486
------------ ---------
------------ ---------
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Current portion of long-term debt.................................. $ 8,910 $ 28,049
Accounts payable................................................... 31,785 41,537
Accrued interest................................................... 863 3,499
Other accrued liabilities.......................................... 10,259 7,482
Restructuring accrual.............................................. 8,086 3,661
------------ ---------
Total current liabilities...................................... 59,903 84,228
------------ ---------
Long-term debt--net of current portion............................... 183,784 125,017
------------ ---------
Deferred income taxes................................................ 4,306 4,376
------------ ---------
Other noncurrent liabilities......................................... 1,580 1,464
------------ ---------
Commitments and contingencies
Stockholders' equity:
Preferred stock--par value $.01; 10,000,000 shares authorized, no
shares issued or outstanding.........................................
Class A common stock--par value $.01; 50,000,000 shares authorized,
8,353,973 issued and outstanding, one vote per share................. 84 84
Class B common stock--par value $.01; 20,000,000 shares authorized,
9,500,312 issued and outstanding, twenty votes per share............. 95 95
Additional paid-in capital......................................... 69,107 69,107
Retained deficit................................................... (24,420) (22,885)
------------ ---------
Total stockholders' equity..................................... 44,866 46,401
------------ ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY........................... $294,439 $ 261,486
------------ ---------
------------ ---------
</TABLE>
See notes to unaudited condensed consolidated financial statements and
independent accountants' report.
F-18
<PAGE>
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------
1995 1996
-------- -------
(IN THOUSANDS,
EXCEPT PER SHARE
AMOUNTS)
<S> <C> <C>
Net sales............................................................... $103,160 $94,618
Cost of goods sold...................................................... 79,786 72,141
-------- -------
Gross profit............................................................ 23,374 22,477
Operating expenses...................................................... 15,700 13,626
Goodwill and other amortization......................................... 777 648
-------- -------
Operating income........................................................ 6,897 8,203
Interest expense........................................................ 5,807 5,423
Interest and other income............................................... (12) (17)
-------- -------
Income before provision for income taxes................................ 1,102 2,797
Provision for income taxes.............................................. 469 1,259
-------- -------
Net income.............................................................. $ 633 $ 1,538
-------- -------
-------- -------
Net income per common share............................................. $ .04 $ .09
-------- -------
-------- -------
Weighted average number of common and common equivalent shares
outstanding............................................................. 17,721 17,877
-------- -------
-------- -------
</TABLE>
See notes to unaudited condensed consolidated financial statements and
independent accountants' report.
F-19
<PAGE>
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------
1995 1996
------- --------
(IN THOUSANDS)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.............................................................. $ 633 $ 1,538
Adjustments to reconcile net income to net cash flows from operating
activities
Depreciation and amortization......................................... 6,128 5,252
Deferred income taxes................................................. 146 891
Bad debt expense...................................................... 684 214
Changes in assets and liabilities:
Receivables......................................................... (3,538) (2,434)
Inventories......................................................... (8,959) 2,320
Other current assets................................................ (8) (41)
Accounts payable.................................................... 4,594 9,752
Other accrued liabilities........................................... 465 (1,976)
Other assets........................................................ (473) 209
------- --------
Net cash provided by (used for) operating activities.................... (328) 15,725
------- --------
CASH FLOWS USED FOR INVESTING ACTIVITIES:
Acquisition of property, plant and equipment............................ (2,198) (6,464)
Proceeds from sale of fixed assets...................................... -- 1,371
------- --------
Net cash used for investing activities.................................. (2,198) (5,093)
------- --------
CASH FLOWS USED FOR FINANCING ACTIVITIES:
Repayments of long-term debt............................................ (2,244) (4,289)
Borrowings under long-term working capital lines of credit.............. 39,556 17,842
Repayments under long-term working capital lines of credit.............. (35,784) (24,059)
Deferred financing costs................................................ (121) --
------- --------
Net cash (used for) provided by financing activities.................... 1,407 (10,506)
------- --------
CASH AND EQUIVALENTS:
Net increase (decrease)................................................. (1,119) 126
Beginning of period..................................................... 4,488 1,842
------- --------
End of period........................................................... $ 3,369 $ 1,968
------- --------
------- --------
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid........................................................... $ 2,266 $ 1,766
Income taxes paid....................................................... $ 187 $ 145
Sale of accounts receivable and reduction of working capital line of
credit.................................................................. -- $ 29,150
</TABLE>
See notes to unaudited condensed consolidated financial statements and
independent accountants' report.
F-20
<PAGE>
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
A. BASIS OF PRESENTATION
The condensed consolidated financial statements have been prepared by
Carlisle Plastics, Inc. (the "Company") pursuant to the rules and regulations of
the Securities and Exchange Commission. In the opinion of management, the
statements reflect the adjustments, which are of a normal recurring nature,
necessary to present fairly the Company's financial position as of December 31,
1995 and March 31, 1996 and the results of operations and cash flows for the
three months ended March 31, 1995 and 1996. While the interim financial
statements and accompanying notes are unaudited, they have been reviewed by
Deloitte & Touche LLP, the Company's independent certified public accountants.
Results of operations are not necessarily indicative of the results expected
for the full year. Certain amounts in prior periods' financial statements have
been reclassified to conform to the current period's presentation.
These condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes for the year
ended December 31, 1995 appearing elsewhere in this Proxy Statement/Prospectus.
B. INVENTORIES
Inventories consisted of the following at December 31, 1995 and March 31,
1996:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996
------------ -----------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
Raw materials....................................... $ 12,553 $12,567
Finished Goods...................................... 29,332 26,998
------------ -----------
Total............................................... $ 41,885 $39,565
------------ -----------
------------ -----------
</TABLE>
C. RELATED PARTY TRANSACTIONS
Management fees incurred with respect to services rendered by affiliates of
a major stockholder were $188 for the three months ended March 31, 1995 and
1996.
D. SALE OF ACCOUNTS RECEIVABLE
On March 26, 1996, the Company terminated its Receivables Funding and
Servicing agreement and entered into a Receivables Purchase and Servicing
Agreement. Under the Receivables Purchase and Servicing Agreement, the Company
sells its receivables into a defined pool of trade accounts receivable. A yield
discount rate is charged to the Company which is based on the average commercial
paper rate (5.4% at March 31, 1996) plus 1.25%. As collections reduce accounts
receivable included in the pool, the Company sells new receivables up to the
maximum permitted under the agreement of $45 million or 85% of eligible accounts
receivable or the Company's desired funding level, whichever is less. Under the
terms of the agreement the Company has retained substantially the same risk of
credit loss as if the receivables had not been sold. The Company, as servicing
agent for the purchaser, retains collection and administrative responsibilities.
The Company sold $29.2 million of accounts receivable at
F-21
<PAGE>
CARLISLE PLASTICS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(UNAUDITED)
March 31, 1996 and the proceeds from the sales were used to reduce borrowings
under its accounts receivable working capital line of credit.
E. RESTRUCTURING STATUS
During the first quarter of 1996, the Company continued to implement its
restructuring plan and successfully exited its remaining private label customer
relationships and disposed of its remaining private label inventory. In
addition, the Company has completed the sale of property and equipment for two
more of its container manufacturing facilities. Principal items charged against
the restructuring reserve for the three months ended March 31, 1996 were losses
related to the disposal of property and equipment, severance, and lease
termination costs.
F. SUBSEQUENT EVENT
On May 14, 1996, Carlisle entered into a definitive merger agreement with
Tyco International Ltd, pursuant to which Tyco will acquire 100% of the
outstanding common stock of Carlisle in a stock for stock transaction. The
transaction is subject to regulatory review, approval of Carlisle shareholders
and certain other matters. Following consummation of the Merger Carlisle will be
a wholly owned subsidiary of Tyco.
F-22
<PAGE>
ANNEX A
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
TYCO INTERNATIONAL LTD.,
T2 ACQUISITION CORP.
AND
CARLISLE PLASTICS, INC.
DATED AS OF MAY 14, 1996
<PAGE>
TABLE OF CONTENTS
ARTICLE I
THE MERGER
<TABLE>
<S> <C> <C>
SECTION 1.01. The Merger......................................................... A-2
SECTION 1.02. Effective Time..................................................... A-2
SECTION 1.03. Effect of the Merger............................................... A-2
SECTION 1.04. Certificate of Incorporation; By-Laws.............................. A-2
SECTION 1.05. Directors and Officers............................................. A-2
SECTION 1.06. Effect on Capital Stock............................................ A-3
SECTION 1.07. Exchange of Certificates........................................... A-4
SECTION 1.08. Stock Transfer Books............................................... A-5
SECTION 1.09. No Further Ownership Rights in Company Common Stock................ A-5
SECTION 1.10. Lost, Stolen or Destroyed Certificates............................. A-6
SECTION 1.11. Tax and Accounting Consequences.................................... A-6
SECTION 1.12. Taking of Necessary Action; Further Action......................... A-6
SECTION 1.13. Material Adverse Effect............................................ A-6
<CAPTION>
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
<S> <C> <C>
SECTION Organization and Qualification; Subsidiaries....................... A-7
2.01..........
SECTION 2.02. Certificate of Incorporation and By-Laws........................... A-7
SECTION 2.03. Capitalization..................................................... A-7
SECTION 2.04. Authority Relative to this Agreement............................... A-8
SECTION 2.05. No Conflict; Required Filings and Consents......................... A-8
SECTION 2.06. Compliance; Permits................................................ A-9
SECTION 2.07. SEC Filings; Financial Statements.................................. A-9
SECTION 2.08. Absence of Certain Changes or Events............................... A-10
SECTION 2.09. No Undisclosed Liabilities......................................... A-10
SECTION 2.10. Absence of Litigation.............................................. A-11
SECTION 2.11. Employee Benefit Plans; Employment Agreements...................... A-11
SECTION 2.12. Labor Matters...................................................... A-13
SECTION 2.13. Registration Statement; Proxy Statement/Prospectus................. A-13
SECTION 2.14. Restrictions on Business Activities................................ A-13
SECTION 2.15. Title to Property.................................................. A-14
SECTION 2.16. Taxes.............................................................. A-14
SECTION 2.17. Environmental Matters.............................................. A-15
SECTION 2.18. Brokers............................................................ A-15
SECTION 2.19. Full Disclosure.................................................... A-15
SECTION 2.20. Intellectual Property.............................................. A-15
SECTION 2.21. Interested Party Transactions...................................... A-16
SECTION 2.22. Insurance.......................................................... A-16
SECTION 2.23. Product Liability and Recalls...................................... A-16
SECTION 2.24 Inventory.......................................................... A-17
SECTION 2.25. Opinion of Financial Advisor....................................... A-17
SECTION 2.26. Pooling Matters.................................................... A-17
</TABLE>
A-i
<PAGE>
<TABLE>
<CAPTION>
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
<S> <C> <C>
SECTION Organization and Qualification; Subsidiaries....................... A-17
3.01..........
SECTION 3.02. Articles of Organization and By-Laws............................... A-18
SECTION 3.03. Capitalization..................................................... A-18
SECTION 3.04. Authority Relative to this Agreement............................... A-18
SECTION 3.05. No Conflict; Required Filings and Consents......................... A-19
SECTION 3.06. Compliance; Permits................................................ A-20
SECTION 3.07. SEC Filings; Financial Statements.................................. A-20
SECTION 3.08. Absence of Certain Changes or Events............................... A-20
SECTION 3.09. No Undisclosed Liabilities......................................... A-21
SECTION 3.10. Absence of Litigation.............................................. A-21
SECTION 3.11. Employee Benefit Plans; Employment Agreements...................... A-21
SECTION 3.12. Labor Matters...................................................... A-23
SECTION 3.13. Registration Statement; Proxy Statement/Prospectus................. A-23
SECTION 3.14. Restrictions on Business Activities................................ A-23
SECTION 3.15. Title to Property.................................................. A-23
SECTION 3.16. Taxes.............................................................. A-24
SECTION 3.17. Environmental Matters.............................................. A-24
SECTION 3.18. Brokers............................................................ A-25
SECTION 3.19. Full Disclosure.................................................... A-25
SECTION 3.20. Intellectual Property.............................................. A-25
SECTION 3.21. Interested Party Transactions...................................... A-25
SECTION 3.22. Insurance.......................................................... A-26
SECTION 3.23. Product Liability and Recalls...................................... A-26
SECTION 3.24. Inventory.......................................................... A-26
SECTION 3.25. Ownership of Merger Sub; No Prior Activities....................... A-26
SECTION 3.26. Pooling Matters.................................................... A-26
<CAPTION>
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
<S> <C> <C>
SECTION 4.01. Conduct of Business by the Company Pending the Merger.............. A-26
SECTION 4.02. No Solicitation.................................................... A-28
SECTION 4.03. Conduct of Business by Parent Pending the Merger................... A-29
<CAPTION>
ARTICLE V
ADDITIONAL AGREEMENTS
<S> <C> <C>
SECTION 5.01. Proxy Statement/Prospectus; Registration Statement................. A-30
SECTION 5.02. Company Stockholders Meeting....................................... A-30
SECTION 5.03. Access to Information; Confidentiality............................. A-30
SECTION 5.04. Consents; Approvals................................................ A-30
SECTION 5.05. Agreements with Respect to Affiliates.............................. A-31
SECTION 5.06. Indemnification and Insurance...................................... A-31
SECTION 5.07. Notification of Certain Matters.................................... A-32
SECTION 5.08. Further Action/Tax Treatment....................................... A-32
SECTION 5.09. Public Announcements............................................... A-32
SECTION 5.10. Listing of Parent Shares........................................... A-32
SECTION 5.11. Conveyance Taxes................................................... A-32
SECTION 5.12. Accountant's Letters............................................... A-33
SECTION 5.13. Pooling Accounting Treatment....................................... A-33
</TABLE>
A-ii
<PAGE>
<TABLE>
<CAPTION>
ARTICLE VI
CONDITIONS TO THE MERGER
<S> <C> <C>
SECTION 6.01. Conditions to Obligation of Each Party to Effect the Merger........ A-33
SECTION 6.02. Additional Conditions to Obligations of Parent and Merger Sub...... A-34
SECTION 6.03. Additional Conditions to Obligation of the Company................. A-34
<CAPTION>
ARTICLE VII
TERMINATION
<S> <C> <C>
SECTION 7.01. Termination........................................................ A-35
SECTION 7.02. Effect of Termination.............................................. A-37
SECTION 7.03. Fees and Expenses.................................................. A-37
<CAPTION>
ARTICLE VIII
GENERAL PROVISIONS
<S> <C> <C>
SECTION 8.01. Effectiveness of Representations, Warranties and
Agreements; Knowledge, Etc....................................... A-38
SECTION 8.02. Notices............................................................ A-38
SECTION 8.03. Certain Definitions................................................ A-39
SECTION 8.04. Amendment.......................................................... A-39
SECTION 8.05. Waiver............................................................. A-39
SECTION 8.06. Headings........................................................... A-40
SECTION 8.07. Severability....................................................... A-40
SECTION 8.08. Entire Agreement................................................... A-40
SECTION 8.09. Assignment; Merger Sub............................................. A-40
SECTION 8.10. Parties in Interest................................................ A-40
SECTION 8.11. Failure or Indulgence Not Waiver; Remedies Cumulative.............. A-40
SECTION 8.12. Governing Law; Jurisdiction........................................ A-40
SECTION 8.13. Counterparts....................................................... A-41
SECTION 8.14. WAIVER OF JURY TRIAL............................................... A-41
</TABLE>
A-iii
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 14, 1996 (this "Agreement"),
among TYCO INTERNATIONAL LTD., a Massachusetts corporation ("Parent"), T2
ACQUISITION CORP., a Delaware corporation and a direct, wholly-owned subsidiary
of Parent ("Merger Sub"), and CARLISLE PLASTICS, INC., a Delaware corporation
(the "Company").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Parent, Merger Sub and the Company have
each determined that it is advisable and in the best interests of their
respective stockholders for Parent to cause Merger Sub to merge with and into
the Company upon the terms and subject to the conditions set forth herein;
WHEREAS, in furtherance of such combination, the Boards of Directors of
Parent, Merger Sub and the Company have each approved the merger (the "Merger")
of Merger Sub with and into the Company in accordance with the applicable
provisions of the Delaware General Corporation Law (the "DGCL"), and upon the
terms and subject to the conditions set forth herein;
WHEREAS, Parent, Merger Sub and the Company intend, by approving resolutions
authorizing this Agreement, to adopt this Agreement as a plan of reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), and the regulations promulgated thereunder; and
WHEREAS, pursuant to the Merger, each outstanding share (a "Share") of the
Company's Class A Common Stock, par value $.01 per share (the "Class A Common
Stock"), and the Company's Class B Common Stock, $.01 par value per share (the
"Class B Common Stock" and, together with the Class A Common Stock, the "Company
Common Stock"), shall be converted into the right to receive the Merger
Consideration (as defined in Section 1.07(b)), upon the terms and subject to the
conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Parent, Merger Sub and the Company hereby agree as follows:
A-1
<PAGE>
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. (a) Effective Time. At the Effective Time (as
defined in Section 1.02 hereof), and subject to and upon the terms and
conditions of this Agreement and the DGCL, Merger Sub shall be merged with and
into the Company, the separate corporate existence of Merger Sub shall cease,
and the Company shall continue as the surviving corporation. The Company as the
surviving corporation after the Merger is hereinafter sometimes referred to as
the "Surviving Corporation."
(b) Closing. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
7.01 and subject to the satisfaction or waiver of the conditions set forth in
Article VI, the consummation of the Merger will take place as promptly as
practicable (and in any event within two business days) after satisfaction or
waiver of the conditions set forth in Article VI, at the offices of Kramer,
Levin, Naftalis & Frankel, 919 Third Avenue, New York, New York, unless another
date, time or place is agreed to in writing by the parties hereto.
SECTION 1.02. Effective Time. As promptly as practicable after the
satisfaction or waiver of the conditions set forth in Article VI, the parties
hereto shall cause the Merger to be consummated by filing a certificate of
merger as contemplated by the DGCL (the "Certificate of Merger"), together with
any required related certificates, with the Secretary of State of the State of
Delaware, in such form as required by, and executed in accordance with the
relevant provisions of, the DGCL (the time of such filing being the "Effective
Time").
SECTION 1.03. Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement, the Certificate of Merger and the
applicable provisions of the DGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time all the property, rights,
privileges, powers and franchises of the Company and Merger Sub shall vest in
the Surviving Corporation, and all debts, liabilities and duties of the Company
and Merger Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
SECTION 1.04. Certificate of Incorporation; By-Laws. (a) Certificate of
Incorporation. Unless otherwise determined by Parent prior to the Effective
Time, at the Effective Time the Certificate of Incorporation of the Company, as
in effect immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended as provided
by the DGCL and such Certificate of Incorporation; provided, however, that
ARTICLE FOURTH shall be amended and restated in its entirety to provide that the
capital stock of the Surviving Corporation shall consist of 100 shares of Common
Stock, par value $.01 per share.
(b) By-Laws. The By-Laws of the Company, as in effect immediately prior to
the Effective Time, shall be the By-Laws of the Surviving Corporation until
thereafter amended as provided by the DGCL, the Certificate of Incorporation of
the Surviving Corporation and such By-Laws.
SECTION 1.05. Directors and Officers. The directors of Merger Sub
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-Laws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified.
A-2
<PAGE>
SECTION 1.06. Effect on Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of the Parent, Merger Sub, the
Company or the holders of any of the following securities:
(a) Conversion of Securities. The Shares issued and outstanding immediately
prior to the Effective Time (excluding any Shares to be canceled pursuant to
Section 1.06(b)) shall be converted, subject to Section 1.06(f), into the right
to receive shares of validly issued, fully paid and nonassessable shares
("Parent Shares") of Parent Common Stock, $.50 par value ("Parent Common Stock")
in the ratio (the "Exchange Ratio") of 0.172185 of a share of Parent Common
Stock for each such issued and outstanding Share.
(b) Cancellation. Each Share held in the treasury of the Company and each
Share owned by Parent, Merger Sub or any direct or indirect wholly owned
subsidiary of the Company or Parent immediately prior to the Effective Time
shall, by virtue of the Merger and without any action on the part of the holder
thereof, cease to be outstanding, be canceled and retired without payment of any
consideration therefor and cease to exist.
(c) Assumption of Outstanding Stock Options. Each option outstanding at the
Effective Time to purchase shares of Class A Common Stock (a "Stock Option")
granted under (i) the Carlisle Plastics, Inc. 1991 Employee Incentive Plan (the
"Company Stock Option Plan"), or (ii) any other stock plan or agreement of the
Company, whether vested or unvested, shall be deemed assumed by Parent and
deemed to constitute a fully vested and exercisable option to acquire, on the
same terms and conditions (other than as to vesting) as were applicable under
such Stock Option prior to the Effective Time, the number of Parent Shares as
the holder of such Stock Option would have been entitled to receive pursuant to
the Merger had such holder exercised such option in full immediately prior to
the Effective Time (not taking into account whether or not such option was in
fact exercisable), at a price per share equal to (x) the aggregate exercise
price for Company Common Stock otherwise purchasable pursuant to such Stock
Option divided by (y) the number of Parent Shares deemed purchasable pursuant to
such Stock Option; provided, however, that the number of Parent Shares Common
Stock that may be purchased upon exercise of any such Stock Option shall not
include any fractional share and, upon exercise of the Stock Option, a cash
payment shall be made for any fractional share based upon the Closing Price (as
hereinafter defined) of a share of Parent Common Stock on the trading day
immediately preceding the date of exercise. "Closing Price" shall mean, on any
day, the last reported sale price of one share of parent Common Stock on the New
York Stock Exchange ("NYSE").
As soon as practicable after the Effective Time, Parent shall deliver to
each holder of an outstanding Stock Option an appropriate notice setting forth
such holder's rights pursuant thereto, and such Stock Option shall continue in
effect on the same terms and conditions, except as otherwise provided herein.
Parent shall take all corporate action necessary to reserve for issuance a
sufficient number of shares Parent Common Stock for delivery upon exercise of
Stock Options in accordance with this Section 1.06(c). As soon as practicable
after the Effective Time, Parent shall cause the Parent Common Stock subject to
the Stock Options to be registered under the Securities Act of 1933, as amended
and the SEC's rules thereunder (the "Securities Act") pursuant to a registration
statement on Form S-3 or Form S-8, as the case may be (or any successor or other
appropriate forms), or another appropriate form and shall use its best efforts
to maintain the effectiveness of such registration statement or registration
statements (and maintain the current status of the prospectus or prospectuses
contained therein) for so long as the Stock Options remain outstanding; except
that with respect to the Stock Options of the individual referred to in clause
(vi) of the second sentence of Section 2.03, Parent shall use its best efforts
to maintain the effectiveness of such registration statement (and maintain the
current status of the prospectus contained therein) for a period of two (2)
years from the Effective Time.
A-3
<PAGE>
(d) Capital Stock of Merger Sub. Each share of common stock, $.01 par value,
of Merger Sub issued and outstanding immediately prior to the Effective Time
shall be converted into and exchanged for one validly issued, fully paid and
nonassessable share of common stock, $0.01 par value, of the Surviving
Corporation.
(e) Adjustments to Exchange Ratio. The Exchange Ratio shall be adjusted to
reflect fully the effect of any stock split, reverse split, stock dividend
(including any dividend or distribution of securities convertible into Parent
Common Stock), reorganization, recapitalization or other like change with
respect to Parent Common Stock occurring after the date hereof and prior to the
Effective Time.
(f) Fractional Shares. No certificates or scrip representing less than one
Parent Share shall be issued upon the surrender for exchange of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding Shares (the "Certificates"). In lieu of any such fractional share,
each holder of Shares who would otherwise have been entitled to a fraction of a
Parent Share upon surrender of Certificates for exchange shall be paid upon such
surrender cash (without interest) in an amount equal to such holder's
proportionate interest in the net proceeds from the sale or sales in the open
market by the Exchange Agent (as defined in Section 1.07), on behalf of all such
holders, of the aggregate fractional Parent Shares issued pursuant to this
Section 1.06(f). As soon as practicable following the Effective Time, the
Exchange Agent shall determine the excess of (i) the number of full Parent
Shares delivered to the Exchange Agent by Parent over (ii) the aggregate number
of full Parent Shares to be distributed to holders of Company Common Stock (such
excess being herein called the "Excess Shares"), and the Exchange Agent, as
agent for the former holders of Company Common Stock, shall sell the Excess
Shares at the prevailing prices on the NYSE. The sale of the Excess Shares by
the Exchange Agent shall be executed on the NYSE through one or more member
firms of the NYSE and shall be executed in round lots to the extent practicable.
Parent shall pay all commissions, transfer taxes and other out-of-pocket
transaction costs, including the expenses and compensation of the Exchange
Agent, incurred in connection with such sale of Excess Shares. Until the net
proceeds of such sale have been distributed to the former stockholders of the
Company, the Exchange Agent will hold such proceeds in trust for such former
stockholders. As soon as practicable after the determination of the amount of
cash to be paid to former stockholders of the Company in lieu of any fractional
interests, the Exchange Agent shall make available in accordance with this
Agreement such amounts to such former stockholders.
SECTION 1.07. Exchange of Certificates. (a) Exchange Agent. Parent shall
supply, or shall cause to be supplied, to or for the account of the Bank of
Boston or such other bank or trust company as shall be mutually designated by
the Company and Parent (the "Exchange Agent"), in trust for the benefit of the
holders of Company Common Stock, for exchange in accordance with this Section
1.07, through the Exchange Agent, certificates evidencing the Parent Shares
issuable pursuant to Section 1.06 in exchange for outstanding Shares.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, Parent will instruct the Exchange Agent to mail to each holder
of record of Certificates (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon proper delivery of the Certificates to the Exchange Agent and
shall be in such form and have such other provisions as Parent may reasonably
specify), and (ii) instructions to effect the surrender of the Certificates in
exchange for the certificates evidencing Parent Shares. Upon surrender of a
Certificate for cancellation to the Exchange Agent together with such letter of
transmittal, duly executed, and such other customary documents as may be
required pursuant to such instructions, the holder of such Certificate shall be
entitled to receive in exchange therefor (A) certificates evidencing that number
of whole Parent Shares which such holder has the right to receive in accordance
with the Exchange Ratio in respect of the Shares formerly evidenced by such
Certificate, (B) any dividends or
A-4
<PAGE>
other distributions to which such holder is entitled pursuant to Section
1.07(c), and (C) cash in respect of fractional shares as provided in Section
1.06(f) (the Parent Shares and cash being, collectively, the "Merger
Consideration"), and the Certificate so surrendered shall forthwith be canceled.
In the event of a transfer of ownership of Shares which is not registered in the
transfer records of the Company as of the Effective Time, Parent Shares,
dividends, distributions, and cash in respect of fractional shares, may be
issued and paid in accordance with this Article I to a transferee if the
Certificate evidencing such Shares is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer
pursuant to this Section 1.07(b) and by evidence that any applicable stock
transfer taxes have been paid. Until so surrendered, each outstanding
Certificate that, prior to the Effective Time, represented Shares of the Company
Common Stock will be deemed from and after the Effective Time, for all corporate
purposes, other than the payment of dividends and subject to Section 1.06(f), to
evidence the ownership of the number of full Parent Shares, and cash in respect
of fractional shares, into which such shares of the Company Common Stock shall
have been so converted.
(c) Distributions With Respect to Unexchanged Parent Shares. No dividends or
other distributions declared or made after the Effective Time with respect to
Parent Shares with a record date after the Effective Time shall be paid to the
holder of any unsurrendered Certificate with respect to the Parent Shares they
are entitled to receive until the holder of such Certificate shall surrender
such Certificate. Subject to applicable law, following surrender of any such
Certificate, there shall be paid to the record holder of the certificates
representing whole Parent Shares issued in exchange therefor, without interest,
at the time of such surrender, the amount of dividends or other distributions
with a record date after the Effective Time theretofore paid with respect to
such whole Parent Shares.
(d) Transfers of Ownership. If any certificate for Parent Shares is to be
issued in a name other than that in which the Certificate surrendered in
exchange therefor is registered, it will be a condition of the issuance thereof
that the Certificate so surrendered will be properly endorsed and otherwise in
proper form for transfer and that the person requesting such exchange will have
paid to Parent or any agent designated by it any transfer or other taxes
required by reason of the issuance of a certificate for Parent Shares in any
name other than that of the registered holder of the certificate surrendered, or
established to the satisfaction of Parent or any agent designated by it that
such tax has been paid or is not payable.
(e) No Liability. Neither Parent, Merger Sub nor the Company shall be liable
to any holder of Company Common Stock for any Merger Consideration delivered to
a public official pursuant to any applicable abandoned property, escheat or
similar law.
(f) Withholding Rights. Parent or the Exchange Agent shall be entitled to
deduct and withhold from the Merger Consideration otherwise payable pursuant to
this Agreement to any holder of Company Common Stock such amounts as Parent or
the Exchange Agent is required to deduct and withhold with respect to the making
of such payment under the Code, or any provision of state, local or foreign tax
law. To the extent that amounts are so withheld by Parent or the Exchange Agent,
such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the holder of the Shares in respect of which such deduction
and withholding was made by Parent or the Exchange Agent.
SECTION 1.08. Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed, and there shall be no further
registration of transfers of the Company Common Stock thereafter on the records
of the Company.
SECTION 1.09. No Further Ownership Rights in Company Common Stock. The
Merger Consideration delivered upon the surrender for exchange of Shares in
accordance with the terms hereof
A-5
<PAGE>
shall be deemed to have been issued in full satisfaction of all rights
pertaining to such Shares, and there shall be no further registration of
transfers on the records of the Surviving Corporation of Shares which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be canceled and exchanged as provided in this Article I.
SECTION 1.10. Lost, Stolen or Destroyed Certificates. In the event any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, such Parent Shares as
may be required pursuant to Section 1.06; provided, however, that Parent may, in
its discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed Certificates to deliver a bond in such
sum as it may reasonably direct as indemnity against any claim that may be made
against Parent or the Exchange Agent with respect to the Certificates alleged to
have been lost, stolen or destroyed.
SECTION 1.11. Tax and Accounting Consequences. It is intended by the parties
hereto that the Merger shall (i) constitute a reorganization within the meaning
of Section 368 of the Code and (ii) at the option of Parent, subject to
applicable accounting standards, qualify for accounting treatment as a pooling
of interests; provided, however, that, without limiting any other provision of
this Agreement, it shall not be a condition to the obligations of any party
hereto to effect the Merger that the Merger so qualify. The parties hereto
hereby adopt this Agreement as a "plan of reorganization" within the meaning of
Sections 1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations.
SECTION 1.12. Taking of Necessary Action; Further Action. Each of Parent,
Merger Sub and the Company will take all such reasonable and lawful action as
may be necessary or appropriate in order to effectuate the Merger in accordance
with this Agreement as promptly as possible. If, at any time after the Effective
Time, any such further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of the Company and Merger Sub, the officers and directors of the
Company and Merger Sub immediately prior to the Effective Time are fully
authorized in the name of their respective corporations or otherwise to take,
and will take, all such lawful and necessary action.
SECTION 1.13. Material Adverse Effect. When used in connection with the
Company or any of its subsidiaries, or Parent or any of its subsidiaries, as the
case may be, the term "Material Adverse Effect" means any change, effect or
circumstance that, individually or when taken together with all other such
changes, effects or circumstances that have occurred prior to the date of
determination of the occurrence of the Material Adverse Effect, is or is
reasonably likely to be materially adverse to the business, assets (including
intangible assets), financial condition or results of operations of the Company
and its subsidiaries or Parent and its subsidiaries, as the case may be, in each
case taken as a whole. Parent acknowledges that changes in the Company's
financial condition or results of operations resulting or reasonably likely to
result from any increase in the price of resin disclosed by the Company to
Parent on or before the date of this Agreement shall not be deemed to constitute
a Material Adverse Effect with respect to the Company.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Sub that,
except as set forth in the written disclosure schedule previously delivered (or,
to the extent set forth below, to be delivered) by the Company to Parent (the
"Company Disclosure Schedule"):
SECTION 2.01. Organization and Qualification; Subsidiaries. Each of the
Company and each of its subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the requisite corporate power and authority and is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, consents, certificates, approvals and orders ("Approvals") necessary
to own, lease and operate the properties it purports to own, operate or lease
and to carry on its business as it is now being conducted, except where the
failure to be so organized, existing and in good standing or to have such power,
authority and Approvals could not reasonably be expected to have a Material
Adverse Effect. Each of the Company and its subsidiaries is duly qualified or
licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of its properties owned, leased or
operated by it or the nature of its activities makes such qualification or
licensing necessary, except for such failures to be so duly qualified or
licensed and in good standing that could not reasonably be expected to have a
Material Adverse Effect. A true and complete list of all of the Company's
subsidiaries, together with the jurisdiction of incorporation of each subsidiary
and the percentage of each subsidiary's outstanding capital stock owned by the
Company or another subsidiary, is set forth in Section 2.01 of the Company
Disclosure Schedule. Except as set forth in Section 2.01 of the Company
Disclosure Schedule or the Company SEC Reports (as defined below), the Company
does not directly or indirectly own any equity or similar interest in, or any
interest convertible into or exchangeable or exercisable for, any equity or
similar interest in, any corporation, partnership, joint venture or other
business association or entity, with respect to which interest the Company has
invested or is required to invest $100,000 or more, excluding securities in any
publicly traded company held for investment by the Company and comprising less
than five percent of the outstanding stock of such company.
SECTION 2.02. Certificate of Incorporation and By-Laws. The Company has
heretofore furnished to Parent a complete and correct copy of its Certificate of
Incorporation and By-Laws as most recently restated and subsequently amended to
date, and has furnished or made available to Parent the Certificate of
Incorporation and By-Laws (or equivalent organizational documents) of each of
its subsidiaries (the "Subsidiary Documents"). Such Certificate of
Incorporation, By-Laws and Subsidiary Documents are in full force and effect.
Neither the Company nor any of its subsidiaries is in violation of any of the
provisions of its Certificate of Incorporation or By-Laws or Subsidiary
Documents, except for immaterial violations of the Subsidiary Documents which
may exist.
SECTION 2.03. Capitalization. The authorized capital stock of the Company
consists of 70,000,000 shares of Company Common Stock and 10,000,000 shares of
Preferred Stock, par value $.01 (the "Company Preferred Stock"). As of April 30,
1996, (i) 8,468,788 shares of Class A Common Stock were issued and outstanding,
all of which are validly issued, fully paid and nonassessable, and no such
shares were held in treasury, (ii) 9,385,497 shares of Class B Common Stock were
issued and outstanding, all of which were validly issued, fully paid and
nonassessable, and no such shares were held in treasury, (iii) no shares of
Company Preferred Stock were outstanding or held in treasury, (iv) no shares of
Company Common Stock or Company Preferred Stock were held by subsidiaries of the
Company, (v) 1,266,700 shares of Company Common Stock were reserved for future
issuance pursuant to outstanding stock options granted under Company Stock
Option Plan and 613,300 shares were reserved for future grants under such plan,
and (vi) 400,000 shares were reserved for issuance upon exercise of options
granted to the individual named in Section 2.03 of the Company Disclosure
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Schedule. No material change in such capitalization has occurred between April
30, 1996 and the date hereof. Except as set forth in Section 2.01, this Section
2.03 or Section 2.11 or in Section 2.03 or Section 2.11 of the Company
Disclosure Schedule or the Company SEC Reports, there are no options, warrants
or other rights, agreements, arrangements or commitments of any character
relating to the issued or unissued capital stock of the Company or any of its
subsidiaries or obligating the Company or any of its subsidiaries to issue or
sell any shares of capital stock of, or other equity interests in, the Company
or any of its subsidiaries. All shares of Company Common Stock subject to
issuance as aforesaid, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, shall be duly authorized,
validly issued, fully paid and nonassessable. Except as disclosed in Section
2.03 of the Company Disclosure Schedule or the Company SEC Reports, there are no
obligations, contingent or otherwise, of the Company or any of its subsidiaries
to repurchase, redeem or otherwise acquire any shares of Company Common Stock or
the capital stock of any subsidiary or to provide funds to or make any
investment (in the form of a loan, capital contribution or otherwise) in any
such subsidiary or any other entity other than guarantees of bank obligations of
subsidiaries entered into in the ordinary course of business. Except as set
forth in Sections 2.01 and 2.03 of the Company Disclosure Schedule, all of the
outstanding shares of capital stock (other than directors' qualifying shares) of
each of the Company's subsidiaries is duly authorized, validly issued, fully
paid and nonassessable, and all such shares (other than directors' qualifying
shares and a de minimis number of shares owned by employees of such
subsidiaries) are owned by the Company or another subsidiary free and clear of
all security interests, liens, claims, pledges, agreements, limitations in the
Company's voting rights, charges or other encumbrances of any nature whatsoever.
SECTION 2.04. Authority Relative to this Agreement. The Company has all
necessary corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by the Company
and the consummation by the Company of the transactions contemplated hereby have
been duly and validly authorized by all necessary corporate action, and no other
corporate proceedings on the part of the Company are necessary to authorize this
Agreement or to consummate the transactions so contemplated (other than the
adoption of this Agreement by the holders of at least a majority of the
outstanding shares of Company Common Stock entitled to vote in accordance with
the DGCL and the Company's Certificate of Incorporation and By-Laws). The Board
of Directors of the Company has determined that it is advisable and in the best
interest of the Company's stockholders for the Company to enter into this
Agreement and to consummate upon the terms and subject to the conditions of this
Agreement. This Agreement has been duly and validly executed and delivered by
the Company and, assuming the due authorization, execution and delivery by
Parent and Merger Sub, as applicable, constitutes a legal, valid and binding
obligation of the Company.
SECTION 2.05. No Conflict; Required Filings and Consents. (a) Section
2.05(a) of the Company Disclosure Schedule includes a list of (i) all loan
agreements, indentures, mortgages, pledges, conditional sale or title retention
agreements, security agreements, equipment obligations, guaranties, standby
letters of credit, equipment leases or lease purchase agreements, each in an
amount equal to or exceeding $500,000, to which the Company or any of its
subsidiaries is a party or by which any of them is bound; (ii) all contracts,
agreements, commitments or other understandings or arrangements to which the
Company or any of its subsidiaries is a party or by which any of them or any of
their respective properties or assets are bound or affected, but excluding
contracts, agreements, commitments or other understandings or arrangements
(other than resin purchase contracts) entered into in the ordinary course of
business and involving, in each case, payments or receipts by the Company or any
of its subsidiaries of less than $250,000 in any single instance but not more
than $1,000,000 in the aggregate; (iii) all agreements which, as of the date
hereof, are required to be filed as "material contracts" with the Securities and
Exchange Commission ("SEC") pursuant to the requirements of the Securities
Exchange Act of 1934, as amended, and the SEC's rules thereunder (the "Exchange
Act"); and (iv) all agreements or arrangements to which the Company or any of
its subsidiaries is a party or by which any
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of them is bound for the manufacture of plastic hangers by other persons for, on
behalf of, or using molds supplied by, the Company.
(b) Except as set forth in Section 2.05(b) of the Company Disclosure
Schedule, the execution and delivery of this Agreement by the Company does not,
and the performance of this Agreement by the Company will not, (i) conflict with
or violate the Certificate of Incorporation or By-Laws of the Company, (ii)
conflict with or violate any law, rule, regulation, order, judgment or decree
applicable to the Company or any of its subsidiaries or by which its or any of
their respective properties is bound or affected, or (iii) result in any breach
of or constitute a default (or an event that with notice or lapse of time or
both would become a default), or impair the Company's or any of its
subsidiaries' rights or alter the rights or obligations of any third party
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any of
the properties or assets of the Company or any of its subsidiaries pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which the Company or any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries or its or any of their respective properties is bound or affected,
except in any such case for any such conflicts, violations, breaches, defaults
or other occurrences that could not reasonably be expected to have a Material
Adverse Effect.
(c) The execution and delivery of this Agreement by the Company does not,
and the performance of this Agreement by the Company will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority, domestic or foreign, except (i)
for applicable requirements, if any, of the Securities Act, the Exchange Act,
state securities laws ("Blue Sky Laws"), the pre-merger notification
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations thereunder (the "HSR Act"), filings and
consents as may be required under any environmental, health or safety law or
regulation pertaining to any notification, disclosure or required approval
triggered by the Merger or the transactions contemplated by this Agreement, and
the filing and recordation of appropriate merger or other documents as required
by the DGCL, and (ii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not
prevent or delay consummation of the Merger, or otherwise prevent or delay the
Company from performing its obligations under this Agreement, or would not
otherwise reasonably be expected to have a Material Adverse Effect.
SECTION 2.06. Compliance; Permits. (a) Except as disclosed in Section 2.06
of the Company Disclosure Schedule, neither the Company nor any of its
subsidiaries is in conflict with, or in default or violation of, (i) any law,
rule, regulation, order, judgment or decree applicable to the Company or any of
its subsidiaries or by which its or any of their respective properties is bound
or affected or (ii) any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or its or any of their respective properties is bound or
affected, except for any such conflicts, defaults or violations which could not
reasonably be expected to have a Material Adverse Effect.
(b) Except as disclosed in Section 2.06 of the Company Disclosure Schedule,
the Company and its subsidiaries hold all permits, licenses, easements,
variances, exemptions, consents, certificates, orders and approvals from
governmental authorities which are material to the operation of the business of
the Company and its subsidiaries taken as a whole as it is now being conducted
(collectively, the "Company Permits"). The Company and its subsidiaries are in
compliance with the terms of the Company Permits, except where the failure to so
comply could not reasonably be expected to have a Material Adverse Effect.
SECTION 2.07. SEC Filings; Financial Statements. (a) The Company has filed
all forms, reports and documents required to be filed with the SEC since
December 31, 1993 and has made
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available to Parent (i) its Annual Reports on Form 10-K for the fiscal years
ended December 31, 1993, December 31, 1994 and December 31, 1995, (ii) its
Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1996,
(iii) all proxy statements relating to the Company's meetings of stockholders
(whether annual or special) held since December 31, 1993, (iv) all other reports
or registration statements (other than Reports on Form 10-Q not referred to in
clause (ii) above) filed by the Company with the SEC since December 31, 1993,
and (v) all amendments and supplements to all such reports and registration
statements filed by the Company with the SEC (collectively, the "Company SEC
Reports"). Except as disclosed in Section 2.07 of the Company Disclosure
Schedule, the Company SEC Reports (i) were prepared in all material respects in
accordance with the requirements of the Securities Act or the Exchange Act, as
the case may be, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contain any 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 the light of the circumstances under which they were
made, not misleading. None of the Company's subsidiaries is required to file any
forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in each case,
any related notes thereto) contained in the Company SEC Reports and the
Company's 1995 Annual Report to Stockholders was prepared in accordance with
generally accepted accounting principles ("GAAP") applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes
thereto), and each fairly in all material respects presents the consolidated
financial position of the Company and its subsidiaries as at the respective
dates thereof and the consolidated results of its operations and cash flows for
the periods indicated, except that the unaudited interim financial statements
were or are subject to normal and recurring year-end adjustments which were not
or are not expected to be material in amount. The monthly consolidated income
statement for April 1996 furnished by the Company to Parent was prepared in a
manner consistent with the consolidated financial statements contained in the
Company SEC Reports, and fairly in all material respects presents the
consolidated results of its operations for the period indicated, except that
such statement is subject to normal and recurring quarterly and year-end
adjustments, which were not or are not expected to be material in amount.
SECTION 2.08. Absence of Certain Changes or Events. Except as set forth in
Section 2.08 of the Company Disclosure Schedule or the Company SEC Reports,
since December 31, 1995, the Company has conducted its business in the ordinary
course and there has not occurred: (i) any Material Adverse Effect; (ii) any
amendments or changes in the Certificate of Incorporation or By-laws of the
Company; (iii) any damage to, destruction or loss of any asset of the Company
(whether or not covered by insurance) that could reasonably be expected to have
a Material Adverse Effect; (iv) any material change by the Company in its
accounting methods, principles or practices; (v) any material revaluation by the
Company of any of its assets, including, without limitation, writing down the
value of inventory or writing off notes or accounts receivable other than in the
ordinary course of business; (vi) any other action or event that would have
required the consent of Parent pursuant to Section 4.01 had such action or event
occurred after the date of this Agreement; or (vii) any sale of a material
amount of property of the Company, except in the ordinary course of business.
SECTION 2.09. No Undisclosed Liabilities. Except as set forth in Section
2.09 of the Company Disclosure Schedule or the Company SEC Reports, neither the
Company nor any of its subsidiaries has any liabilities (absolute, accrued,
contingent or otherwise), except liabilities (a) in the aggregate adequately
provided for in the Company's audited balance sheet (including any related notes
thereto) for the fiscal year ended December 31, 1995 included in the Company's
1995 Annual Report to Stockholders (the "1995 Balance Sheet"), (b) incurred in
the ordinary course of business and not required under GAAP to be reflected on
the 1995 Balance Sheet, (c) incurred since December 31, 1995 in the ordinary
course of business consistent with past practice, (d) incurred in connection
with this Agreement, or (e) which could not reasonably be expected to have a
Material Adverse Effect.
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SECTION 2.10. Absence of Litigation. Except as set forth in Section 2.10 of
the Company Disclosure Schedule or the Company SEC Reports, there are no claims,
actions, suits, proceedings or investigations pending or, to the knowledge of
the Company, overtly threatened against the Company or any of its subsidiaries,
or any properties or rights of the Company or any of its subsidiaries, before
any court, arbitrator or administrative, governmental or regulatory authority or
body, domestic or foreign, that could reasonably be expected to have a Material
Adverse Effect.
SECTION 2.11. Employee Benefit Plans; Employment Agreements. (a) Section
2.11(a) of the Company Disclosure Schedule lists all employee pension plans (as
defined in Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")), all employee welfare plans (as defined in Section 3(1) of
ERISA, and all other bonus, stock option, stock purchase, incentive, deferred
compensation, supplemental retirement, severance and other similar fringe or
employee benefit plans, programs or arrangements, and any employment, executive
compensation or severance agreements, written or otherwise, as amended, modified
or supplemented, for the benefit of, or relating to, any former or current
employee, officer or consultant (or any of their beneficiaries) of the Company
or any other entity (whether or not incorporated) which is a member of a
controlled group including the Company or which is under common control with the
Company (an "ERISA Affiliate") within the meaning of Section 414 of the Code or
Section 4001 of ERISA, or any subsidiary of the Company, as well as each plan
with respect to which the Company or an ERISA Affiliate could incur liability
under Section 4069 (if such plan has been or were terminated) or Section 4212(c)
of ERISA or Section 412 of the Code (together, the "Employee Plans"). There have
been made available to Parent copies of (i) each such written Employee Plan and
all related trust agreements, insurance and other contracts (including
policies), summary plan descriptions, summaries of material modifications and
communications distributed to plan participants, (ii) the three most recent
annual reports on Form 5500 series, with accompanying schedules and attachments,
filed with respect to each Employee Plan required to make such a filing, (iii)
the most recent actuarial valuation for each Employee Plan subject to Title IV
of ERISA, (iv) the latest reports which have been filed with the Department of
Labor with respect to each Employee Plan required to make such filing and (v)
favorable determination letters issued for each Employee Plan and related trust
that are intended to satisfy the qualification requirements of Section 401(a)
and Section 501(a) of the Code (or, if pending, a copy of the application for
such determination). For purposes of this Section 2.11, the term "material,"
when used with respect to (i) any Employee Plan, shall mean that the Company or
an ERISA Affiliate has incurred or may incur obligations in an amount exceeding
$100,000 with respect to such Employee Plan, and (ii) any liability, obligation,
breach or non-compliance, shall mean that the Company or an ERISA Affiliate has
incurred or may incur obligations in an amount exceeding $50,000, with respect
to any one such or series of related liabilities, obligations, breaches,
defaults, violations or instances of non-compliance.
(b) Except as set forth in Section 2.11(b) of the Company Disclosure
Schedule, (i) none of the Employee Plans promises or provides retiree medical or
other retiree welfare benefits to any person, and none of the Employee Plans is
a "multiemployer plan" as such term is defined in Section 3(37) of ERISA; (ii)
no party in interest or disqualified person (as defined in Section 3(14) of
ERISA and Section 4975 of the Code) has at any time engaged in a transaction
with respect to any Employee Plan which could subject the Company or any ERISA
Affiliate, directly or indirectly, to a tax, penalty or other material liability
for prohibited transactions under ERISA or Section 4975 of the Code; (iii) no
fiduciary of any Employee Plan has breached any of the responsibilities or
obligations imposed upon fiduciaries under Title I of ERISA, which breach could
result in any material liability to the Company or any ERISA Affiliate; (iv) all
Employee Plans have been established and maintained substantially in accordance
with their terms and have operated in compliance in all material respects with
the requirements prescribed by any and all statutes (including ERISA and the
Code), orders, or governmental rules and regulations currently in effect with
respect thereto (including all applicable requirements for notification to
participants or the Department of Labor, Internal Revenue Service (the "IRS") or
Secretary of the Treasury), and may by their terms be amended and/or terminated
at any
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time subject to applicable law, and the Company and each of its subsidiaries
have performed all material obligations required to be performed by them under,
are not in any material respect in default under or violation of, and have no
knowledge of any default or violation by any other party to, any of the Employee
Plans; (v) each Employee Plan intended to qualify under Section 401(a) of the
Code and each trust intended to qualify under Section 501(a) of the Code is the
subject of a favorable determination letter from the IRS, and nothing has
occurred which may reasonably be expected to impair such determination; (vi) all
contributions required to be made with respect to any Employee Plan pursuant to
Section 412 of the Code, or the terms of the Employee Plan or any collective
bargaining agreement, have been made on or before their due dates; (vii) with
respect to each Employee Plan, no "reportable event" within the meaning of
Section 4043 of ERISA (excluding any such event for which the 30 day notice
requirement has been waived under the regulations to Section 4043 of ERISA) has
occurred for which there is any material outstanding liability to the Company
nor any ERISA Affiliate; and (viii) neither the Company nor any ERISA Affiliate
has incurred or reasonably expects to incur any liability under Title IV of
ERISA (other than liability for premium payments to the Pension Benefit Guaranty
Corporation (the PBGC") arising in the ordinary course).
(c) Section 2.11(c) of the Company Disclosure Schedule sets forth a true and
complete list of each current or former employee, officer or director of the
Company or any of its subsidiaries who holds (i) any option to purchase Company
Common Stock as of the date hereof, together with the number of shares of
Company Common Stock subject to such option, the option price of such option (to
the extent determined as of the date hereof), whether such option is intended to
qualify as an incentive stock option within the meaning of Section 422(b) of the
Code (an "ISO"), and the expiration date of such option; and (ii) any other
right, directly or indirectly, to acquire Company Common Stock, together with
the number of shares of Company Common Stock subject to such right. Section
2.11(c) of the Company Disclosure Schedule also sets forth the total number of
such ISOs and such nonqualified options.
(d) Section 2.11(d) of the Company Disclosure Schedule sets forth a true and
complete list of (i) all employment agreements with officers of the Company or
any of its subsidiaries; (ii) all agreements with consultants who are
individuals obligating the Company or any of its subsidiaries to make annual
cash payments in an amount exceeding $50,000; (iii) all officers of the Company
or any of its subsidiaries who have executed a non-competition agreement with
the Company or any of its subsidiaries; (iv) all severance agreements, programs
and policies of the Company or any of its subsidiaries with or relating to its
employees, in each case with outstanding commitments exceeding $100,000,
excluding programs and policies required to be maintained by law; and (v) all
Employee Plans which contain change in control provisions.
(e) Except as set forth in Section 2.11(e) of the Company Disclosure
Schedule, no employee of the Company or any of its subsidiaries has participated
in any employee pension benefit plans (as defined in Section 3(2) of ERISA)
maintained by or on behalf of the Company. The PBGC has not instituted
proceedings to terminate any defined benefit plan listed in Section 2.11(e) of
the Company Disclosure Schedule (each, a "Defined Benefit Plan"). The Defined
Benefit Plans have been terminated prior to January 1, 1996, in accordance with
ERISA Section 4041. Each Defined Benefit Plan has an IRS determination letter
stating that its termination does not adversely affect its qualification. Final
distribution of the assets of each Defined Benefit Plan has been made to
participants through the purchase of annuities from the Transamerica Insurance
Company or by lump distributions and there are no outstanding liabilities with
respect to such plans which would be material to the Company or its ERISA
Affiliates. All applicable premiums required to be paid to the PBGC with respect
to the Defined Benefit Plans have been paid. No facts exist with respect to the
Defined Benefit Plans which would give rise to a lien on the assets of the
Company under Section 4068 of ERISA. All the assets of the Defined Benefit Plans
are readily marketable securities or insurance contracts.
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(f) The Company has fiduciary liability insurance of at least $1,000,000 in
effect covering the fiduciaries of the Employee Plans (including the Company)
with respect to whom the Company may have liability.
SECTION 2.12. Labor Matters. Except as set forth in Section 2.12 of the
Company Disclosure Schedule or the Company SEC Reports, (i) there are no
controversies pending or, to the knowledge of the Company or any of its
subsidiaries, threatened, between the Company or any of its subsidiaries and any
of their respective employees, which controversies have had, or could reasonably
be expected to have, a Material Adverse Effect; (ii) neither the Company nor any
of its subsidiaries is a party to any material collective bargaining agreement
or other labor union contract applicable to persons employed by the Company or
its subsidiaries, nor does the Company or any of its subsidiaries know of any
activities or proceedings of any labor union to organize any such employees; and
(iii) neither the Company nor any of its subsidiaries has any knowledge of any
strikes, slowdowns, work stoppages, lockouts, or threats thereof, by or with
respect to any employees of the Company or any of its subsidiaries which could
reasonably be expected to have a Material Adverse Effect.
SECTION 2.13. Registration Statement; Proxy Statement/Prospectus. Subject to
the accuracy of the representations of Parent in Section 3.13, the information
supplied by the Company for inclusion in the Registration Statement (as defined
in Section 3.13) shall not at the time the Registration Statement is declared
effective by the SEC contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading. The information supplied by the Company for inclusion
in the proxy statement/prospectus to be sent to the stockholders of the Company
in connection with the meeting of the stockholders of the Company to consider
the Merger (the "Company Stockholders Meeting") (such proxy statement/prospectus
as amended or supplemented is referred to herein as the "Proxy
Statement/Prospectus") will not, on the date the Proxy Statement/Prospectus (or
any amendment thereof or supplement thereto) is first mailed to stockholders, at
the time of the Company Stockholders Meeting, or at the Effective Time, contain
any statement which, at such time and in light of the circumstances under which
it shall be made, is false or misleading with respect to any material fact, or
shall omit to state any material fact necessary in order to make the statements
made therein not false or misleading; or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Company Stockholders Meeting which has
become false or misleading. If at any time prior to the Effective Time any event
relating to the Company or any of its respective affiliates, officers or
directors should be discovered by the Company which should be set forth in an
amendment to the Registration Statement or a supplement to the Proxy
Statement/Prospectus, the Company shall promptly inform Parent and Merger Sub.
The Proxy Statement/Prospectus shall comply in all material respects with the
requirements of the Securities Act, the Exchange Act and the rules and
regulations thereunder. Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to any information supplied by Parent or
Merger Sub which is contained or incorporated by reference in, or furnished in
connection with the preparation of, the Registration Statement or the Proxy
Statement/Prospectus.
SECTION 2.14. Restrictions on Business Activities. Except for this Agreement
or as set forth in Section 2.14 of the Company Disclosure Schedule or the
Company SEC Reports, to the best of the Company's knowledge, there is no
agreement, judgement, injunction, order or decree binding upon the Company or
any of its subsidiaries which has or could reasonably be expected to have the
effect of prohibiting or impairing any business practice of the Company or any
of its subsidiaries, acquisition of property by the Company or any of its
subsidiaries or the conduct of business by the Company or any of its
subsidiaries as currently conducted or as proposed to be conducted by the
Company, except for any prohibition or impairment as could not reasonably be
expected to have a Material Adverse Effect.
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SECTION 2.15. Title to Property. Except as set forth in Section 2.15 of the
Company Disclosure Schedule, the Company and each of its subsidiaries have good
and defensible title to all of their properties and assets, free and clear of
all liens, charges and encumbrances, except liens for taxes not yet due and
payable and such liens or other imperfections of title, if any, as do not
materially detract from the value of or interfere with the present use of the
property affected thereby or which could not reasonably be expected to have a
Material Adverse Effect; and, to the knowledge of the Company, all leases
pursuant to which the Company or any of its subsidiaries lease from others
material amounts of real or personal property, are in good standing, valid and
effective in accordance with their respective terms, and there is not, to the
knowledge of the Company, under any of such leases, any existing material
default or event of default (or event which with notice or lapse of time, or
both, would constitute a material default), except where the lack of such good
standing, validity and effectiveness or the existence of such default or event
of default could not reasonably be expected to have a Material Adverse Effect.
SECTION 2.16. Taxes. (a) For purposes of this Agreement, "Tax" or "Taxes"
shall mean taxes, fees, levies, duties, tariffs, imposts, and governmental
impositions or charges of any kind in the nature of (or similar to) taxes,
payable to any federal, state, local or foreign taxing authority, including
(without limitation) (i) income, franchise, profits, gross receipts, ad valorem,
net worth, value added, sales, use, service, real or personal property, special
assessments, capital stock, license, payroll, withholding, employment, social
security, workers' compensation, unemployment compensation, utility, severance,
production, excise, stamp, occupation, premiums, windfall profits, transfer and
gains taxes, and (ii) interest, penalties, additional taxes and additions to tax
imposed with respect thereto; and "Tax Returns" shall mean returns, reports, and
information statements with respect to Taxes required to be filed with the IRS
or any other taxing authority, domestic or foreign, including, without
limitation, consolidated, combined and unitary tax returns (including returns
required in connection with any Employee Plan).
(b) Other than as disclosed in Section 2.16(b) of the Company Disclosure
Schedule or the Company SEC Reports: The Company and its subsidiaries have filed
all United States federal income Tax Returns and all other material Tax Returns
required to be filed by them, and the Company and its subsidiaries have paid and
discharged all Taxes due in connection with or with respect to the periods or
transactions covered by such Tax Returns and have paid all other Taxes as are
due, except such as are being contested in good faith by appropriate proceedings
(to the extent that any such proceedings are required), and there are no other
taxes that would be due if asserted by a taxing authority, except with respect
to which the Company is maintaining reserves to the extent currently required
unless the failure to do so could not reasonably be expected to have a Material
Adverse Effect. Except as does not involve or would not result in liability to
the Company or any of its subsidiaries that could reasonably be expected to have
a Material Adverse Effect, (i) there are no tax liens on any assets of the
Company or any subsidiary thereof; and (ii) neither the Company nor any of its
subsidiaries has granted any waiver of any statute of limitations with respect
to, or any extension of a period for the assessment of, any Tax. The accruals
and reserves for Taxes (including deferred taxes) reflected in the 1995 Balance
Sheet are in all material respects adequate to cover all Taxes accruable through
the date thereof (including interest and penalties, if any, thereon and Taxes
being contested) in accordance with GAAP.
(c) The Company on behalf of itself and all its subsidiaries hereby
represents that, other than as disclosed in Section 2.16(c) of the Company
Disclosure Schedule or the Company SEC Reports, and other than with respect to
items the inaccuracy of which could not reasonably be expected to have a
Material Adverse Effect: Neither the Company nor any of its subsidiaries is
obligated under any agreement with respect to industrial development bonds or
other obligations with respect to which the excludability from gross income of
the holder for federal or state income tax purposes could be affected by the
transactions contemplated hereunder. Neither the Company nor any of its
subsidiaries is, or has been, a United States real property holding corporation
(as defined in Section 897(c)(2) of the Code)
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during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
To the best knowledge of the Company, neither the Company nor any of its
subsidiaries owns any property of a character, the indirect transfer of which,
pursuant to this Agreement, would give rise to any material documentary, stamp
or other transfer tax.
SECTION 2.17. Environmental Matters. Except as set forth in Section 2.17 of
the Company Disclosure Schedule or the Company SEC Reports, and except in all
cases as, in the aggregate, have not had and could not reasonably be expected to
have a Material Adverse Effect, to the best of the Company's knowledge, the
Company and each of its subsidiaries (i) have obtained all applicable permits,
licenses and other authorization which are required to be obtained under all
applicable federal, state or local laws or any regulation, code, plan, order,
decree, judgment, notice or demand letter issued, entered, promulgated or
approved thereunder ("Environmental Laws") relating to pollution or protection
of the environment, including laws relating to emissions, discharges, releases
or threatened releases of pollutants, contaminants, or hazardous or toxic
materials or wastes into ambient air, surface water, ground water, or land or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of pollutants, contaminants or
hazardous or toxic materials or wastes by the Company or its subsidiaries (or
their respective agents); (ii) are in compliance with all terms and conditions
of such required permits, licenses and authorization, and also are in compliance
with all other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in applicable
Environmental Laws; (iii) as of the date hereof, are not aware of nor have
received notice of any past or present violations of Environmental Laws or any
event, condition, circumstance, activity, practice, incident, action or plan
which is reasonably likely to interfere with or prevent continued compliance
with or which would give rise to any common law or statutory liability, or
otherwise form the basis of any claim, action, suit or proceeding, against the
Company or any of its subsidiaries based on or resulting from the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling, or the emission, discharge or release into the environment, of any
pollutant, contaminant or hazardous or toxic material or waste; and (iv) have
taken all actions necessary under applicable Environmental Laws to register any
products or materials required to be registered by the Company or its
subsidiaries (or any of their respective agents) thereunder.
SECTION 2.18. Brokers. No broker, finder or investment banker (other than
Goldman, Sachs & Co., the fees and expenses of whom will be paid by the Company)
is entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Company. The Company has heretofore furnished to
Parent a complete and correct copy of all agreements between the Company and
Goldman, Sachs & Co. pursuant to which such firms would be entitled to any
payment relating to the transactions contemplated hereunder.
SECTION 2.19. Full Disclosure. No statement contained in any certificate or
schedule furnished or to be furnished by the Company or its subsidiaries to
Parent or Merger Sub in, or pursuant to the provisions of, this Agreement
contains or shall contain any untrue statement of a material fact or omits or
will omit to state any material fact necessary, in the light of the
circumstances under which it was made, in order to make statements herein or
therein not misleading.
SECTION 2.20. Intellectual Property. (a) The Company and/or each of its
subsidiaries owns, or is licensed or otherwise possesses legally enforceable
rights to use all patents, trademarks, trade names, service marks, copyrights,
and any applications therefor, technology, know-how, computer software programs
or applications, and tangible or intangible proprietary information or material
that are used in the business of the Company and its subsidiaries as currently
conducted, except as could not reasonably be expected to have a Material Adverse
Effect.
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(b) Except as disclosed in Section 2.20(b) of the Company Disclosure
Schedule or the Company SEC Reports or as could not reasonably be expected to
have a Material Adverse Effect: The Company is not, nor will it be as a result
of the execution and delivery of this Agreement or the performance of its
obligations hereunder, in violation of any licenses, sublicenses and other
agreements as to which the Company is a party and pursuant to which the Company
is authorized to use any third-party patents, trademarks, service marks and
copyrights ("Third-Party Intellectual Property Rights"). No claims with respect
to the patents, registered and material unregistered trademarks and service
marks, registered copyrights, trade names and any applications therefor owned by
the Company or any of its subsidiaries (the "Company Intellectual Property
Rights"), any trade secret material to the Company, or Third Party Intellectual
Property Rights to the extent arising out of any use, reproduction or
distribution of such Third Party Intellectual Property Rights by or through the
Company or any of its subsidiaries, are currently pending or, to the knowledge
of the Company, are overtly threatened by any person. The Company does not know
of any valid grounds for any bona fide claims (i) to the effect that the
manufacture, sale, licensing or use of any product as now used, sold or licensed
or proposed for use, sale or license by Company or any of its subsidiaries,
infringes on any copyright, patent, trademark, service mark or trade secret;
(ii) against the use by the Company or any of its subsidiaries, of any
trademarks, trade names, trade secrets, copyrights, patents, technology,
know-how or computer software programs and applications used in the business of
the Company or any of its subsidiaries as currently conducted or as proposed to
be conducted; (iii) challenging the ownership, validity or effectiveness of any
of the Company Intellectual Property Rights or other trade secret material to
the Company; or (iv) challenging the license or legally enforceable right to use
of the Third Party Intellectual Rights by the Company or any of its
subsidiaries.
(c) To the Company's knowledge, all material patents, registered trademarks,
service marks and copyrights held by the Company are valid and subsisting.
Except as set forth in Section 2.20(c) of the Company Disclosure Schedule or the
Company SEC Reports, to the Company's knowledge, there is no material
unauthorized use, infringement or misappropriation of any of the Company
Intellectual Property by any third party, including any employee or former
employee of the Company or any of its subsidiaries.
SECTION 2.21. Interested Party Transactions. Except as set forth in Section
2.21 of the Company Disclosure Schedule or the Company SEC Reports or for events
as to which the amounts involved do not, in the aggregate, exceed $100,000,
since the date of the Company's proxy statement dated March 15, 1996 (the "1996
Company Proxy Statement"), no event has occurred that would be required to be
reported as a Certain Relationship or Related Transaction, pursuant to Item 404
of Regulation S-K promulgated by the SEC.
SECTION 2.22. Insurance. All material fire and casualty, general liability,
business interruption, product liability and sprinkler and water damage
insurance policies maintained by the Company or any of its subsidiaries are with
reputable insurance carriers, provide full and adequate coverage for all normal
risks incident to the business of the Company and its subsidiaries and their
respective properties and assets and are in character and amount at least
equivalent to that carried by persons engaged in similar businesses and subject
to the same or similar perils or hazards, except as could not reasonably be
expected to have a Material Adverse Effect.
SECTION 2.23. Product Liability and Recalls. (a) Except as disclosed in
Section 2.23(a) of the Company Disclosure Schedule or the Company SEC Reports,
the Company is not aware of any claim, or the basis of any claim, against the
Company or any of its subsidiaries for injury to person or property of employees
or any third parties suffered as a result of the sale of any product or
performance of any service by the Company or any of its subsidiaries, including
claims arising out of the defective or unsafe nature of its products or
services, which could reasonably be expected to have a Material Adverse Effect.
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(b) Except as disclosed in Section 2.23(b) of the Company Disclosure
Schedule or the Company SEC Reports, there is no pending or, to the knowledge of
the Company, threatened recall or investigation of any product sold by the
Company, which recall or investigation could reasonably be expected to have a
Material Adverse Effect.
SECTION 2.24. Inventory. The inventories of the Company and its subsidiaries
as reflected in the most recent financial statements contained in the Company
SEC Reports, or acquired by the Company or any of its subsidiaries after the
date thereof, (i) are carried at an amount not in excess of the lower of cost or
net realizable value, and (ii) do not include any inventory which is obsolete,
surplus or not usable or saleable in the lawful and ordinary course of business
of the Company and its subsidiaries as heretofore conducted, in each case net of
reserves provided therefor.
SECTION 2.25. Opinion of Financial Advisor. The Company has been advised by
its financial advisor, Goldman, Sachs & Co., to the effect that in its opinion,
as of the date hereof, the Exchange Ratio is fair to the holders of Shares. It
is agreed and understood that such opinion is for the benefit of the Board of
Directors of the Company and may not be relied upon by Parent, Merger Sub or
their affiliates.
SECTION 2.26. Pooling Matters. To the Company's knowledge and based upon
consultation with its independent accountants, the Company has provided to
Parent and its independent accountants all information concerning actions taken
or agreed to be taken by the Company or any of its affiliates on or before the
date of this Agreement that could reasonably be expected to adversely affect the
ability of Parent to account for the business combination to be effected by the
Merger as a pooling of interests. For purposes of this Section 2.26, "to the
Company's knowledge" means to the actual knowledge of the Company's Chairman,
Chief Executive Officer or Chief Financial Officer.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby, jointly and severally, represent and warrant
to the Company that, except as set forth in the written disclosure schedule
previously delivered or, to the extent set forth below, to be delivered, by
Parent to the Company (the "Parent Disclosure Schedule"):
SECTION 3.01. Organization and Qualification; Subsidiaries. Each of Parent
and its subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
the requisite corporate power and authority and is in possession of all
Approvals necessary to own, lease and operate the properties it purports to own,
operate or lease and to carry on its business as it is now being conducted,
except where the failure to be so organized, existing and in good standing or to
have such power, authority and Approvals could not reasonably be expected to
have a Material Adverse Effect. Each of Parent and its subsidiaries is duly
qualified or licensed as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of its properties owned,
leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except for such failures to be so duly
qualified or licensed and in good standing that could not reasonably be expected
to have a Material Adverse Effect. A true and complete list of all of Parent's
subsidiaries, together with the jurisdiction of incorporation of each subsidiary
and the percentage of each subsidiary's outstanding capital stock owned by
Parent or another subsidiary, is set forth in Section 3.01. Except as set forth
in Section 3.01 of the Parent Disclosure Schedule or the Parent SEC Reports (as
defined below), Parent does not directly or indirectly own any equity or similar
interest in, or any interest convertible into or exchangeable or exercisable
for, any equity or similar interest in, any corporation, partnership, joint
venture or other business association or
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entity, with respect to which Parent has invested or is required to invest
$1,000,000 or more, excluding securities in any publicly traded company held for
investment by Parent and comprising less than five percent of the outstanding
capital stock of such company.
SECTION 3.02. Articles of Organization and By-Laws. Parent has heretofore
furnished to the Company a complete and correct copy of its Articles of
Organization and the By-Laws, as amended to date. Such Articles of Organization
and By-Laws are in full force and effect. Neither Parent nor Merger Sub is in
violation of any of the provisions of its Articles of Organization (or
Certificate of Incorporation) or By-Laws.
SECTION 3.03. Capitalization. (a) The authorized capital stock of Parent
consists of 180,000,000 shares of Parent Common Stock and 2,000,000 shares of
Preferred Stock, $1 par value ("Parent Preferred Stock"). As of April 30, 1996,
(i) 152,551,626 shares of Parent Common Stock were issued and outstanding, all
of which are validly issued, fully paid and non-assessable, and 16,048,763
shares were held in treasury, (ii) no shares of Parent Preferred Stock were
outstanding or held in treasury, (iii) no shares of Parent Common Stock or
Parent Preferred Stock were held by subsidiaries of the Parent, (iv) 1,395,434
shares of Parent Common Stock were reserved for future issuance under Parent's
1994 Restricted Stock Ownership Plan, (v) 242,729 shares of Parent Common Stock
were reserved for issuance upon exercise of Warrants issued by Kendall
International, Inc. and assumed by Parent, (vi) 8,248,897 shares of Parent
Common Stock were reserved for issuance upon exercise of stock options issued
under the Tyco International Ltd. 1995 Stock Option Plan, and (viii) 26,674
shares of Parent Common Stock were reserved for issuance upon exercise of stock
options issued under the stock incentive plans maintained by Kendall
International, Inc. No material change in such capitalization has occurred
between April 30, 1996 and the date hereof. Except as set forth in Section 3.03
of the Parent Disclosure Schedule or the Parent SEC Reports, there are no
options, warrants or other rights, agreements, arrangements or commitments of
any character relating to the issued or unissued capital stock of Parent or any
of its subsidiaries or obligating Parent or any of its subsidiaries to issue or
sell any shares of capital stock of, or other equity interests in, Parent or any
of its subsidiaries. Except as set forth in Section 3.03 of the Parent
Disclosure Schedule or the Parent SEC Reports, there are no obligations,
contingent or otherwise, of Parent or any of its subsidiaries to repurchase,
redeem or otherwise acquire any shares of Parent Common Stock or the capital
stock of any subsidiary or to provide funds to or make any investment (in the
form of a loan, capital contribution or otherwise) in any such subsidiary other
than guarantees of bank obligations of subsidiaries entered into in the ordinary
course of business. Except as set forth in Section 3.01 or 3.03(a) of the Parent
Disclosure Schedule, all of the outstanding shares of capital stock (other than
directors' qualifying shares) of each of Parent's subsidiaries is duly
authorized, validly issued, fully paid and nonassessable and all such shares
(other than directors' qualifying shares) are owned by Parent or another
subsidiary free and clear of all security interests, liens, claims, pledges,
agreements, limitations in Parent's voting rights, charges or other encumbrances
of any nature whatsoever.
(b) The shares of Parent Common Stock to be issued pursuant to the Merger
will be duly authorized, validly issued, fully paid and nonassessable and shall
be listed, upon official notice of issuance, for trading on the NYSE.
SECTION 3.04. Authority Relative to this Agreement. Each of Parent and
Merger Sub has all necessary corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Parent and Merger Sub and the consummation by Parent and
Merger Sub of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of Parent and Merger
Sub, and no other corporate proceedings on the part of Parent or Merger Sub are
necessary to authorize this Agreement or to consummate the transactions
contemplated thereby. The Board of Directors of Parent has determined that it is
advisable and in the
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best interest of Parent's stockholders for Parent to enter into this Agreement
and to consummate the Merger upon the terms and subject to the conditions of
this Agreement. This Agreement has been duly and validly executed and delivered
by Parent and Merger Sub and, assuming the due authorization, execution and
delivery by the Company, constitutes a legal, valid and binding obligation of
Parent and Merger Sub.
SECTION 3.05. No Conflict; Required Filings and Consents. (a) Section
3.05(a) of the Parent Disclosure Schedule includes a list of (i) all loan
agreements, indentures, mortgages, pledges, conditional sale or title retention
agreements, security agreements, equipment obligations, guaranties, standby
letters of credit, equipment leases or lease purchase agreements to which Parent
or any of its subsidiaries is a party or by which any of them is bound, each in
an amount equal to or exceeding $25,000,000, but excluding any such agreement
between Parent and its wholly-owned subsidiaries or between two or more
wholly-owned subsidiaries of Parent; (ii) all contracts, agreements, commitments
or other understandings or arrangements to which Parent or any of its
subsidiaries is a party or by which any of them or any of their respective
property or assets are bound or affected, but excluding contracts, agreements,
commitments or other understandings or arrangements entered into in the ordinary
course of business and involving, in each case, payments or receipts by Parent
or any of its subsidiaries of less than $5,000,000 in any single instance; and
(iii) all agreements which, as of the date hereof, are required to be filed with
the SEC pursuant to the requirements of the Exchange Act as "material
contracts."
(b) Except as set forth in Section 3.05(b) of the Parent Disclosure
Schedule, the execution and delivery of this Agreement by Parent and Merger Sub
do not, and the performance of this Agreement by Parent and Merger Sub will not,
(i) conflict with or violate the Articles of Organization (or Certificate of
Incorporation) or By-Laws of Parent or Merger Sub, (ii) conflict with or violate
any law, rule, regulation, order, judgment or decree applicable to Parent or any
of its subsidiaries or by which its or their respective properties are bound or
affected, or (iii) result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
impair Parent's or any of its subsidiaries' rights or alter the rights or
obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of Parent
or any of its subsidiaries pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which Parent or any of its subsidiaries is a party or by which
Parent or any of its subsidiaries or its or any of their respective properties
are bound or affected, except in any such case for any such conflicts,
violations, breaches, defaults or other occurrences that could not reasonably be
expected to have a Material Adverse Effect.
(c) The execution and delivery of this Agreement by Parent and Merger Sub
does not, and the performance of this Agreement by Parent and Merger Sub will
not, require any consent, approval, authorization or permit of, or filing with
or notification to, any governmental or regulatory authority, domestic or
foreign, except (i) for applicable requirements, if any, of the Securities Act,
the Exchange Act, the Blue Sky Laws, the pre-merger notification requirements of
the HSR Act, and the filing and recordation of appropriate merger or other
documents as required by the DGCL, and (ii) where the failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or delay consummation of the Merger, or
otherwise prevent Parent or Merger Sub from performing their respective
obligations under this Agreement, and would not otherwise be reasonably expected
to have a Material Adverse Effect.
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SECTION 3.06. Compliance; Permits. (a) Except as disclosed in Section 3.06
of the Parent Disclosure Schedule, neither Parent nor any of its subsidiaries is
in conflict with, or in default or violation of, (i) any law, rule, regulation,
order, judgment or decree applicable to Parent or any of its subsidiaries or by
which its or any of their respective properties is bound or affected or (ii) any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Parent or any of its
subsidiaries is a party or by which Parent or any of its subsidiaries or its or
any of their respective properties is bound or affected, except for any such
conflicts, defaults or violations which could not reasonably be expected to have
a Material Adverse Effect.
(b) Except as disclosed in Section 3.06 of the Parent Disclosure Schedule,
Parent and its subsidiaries hold all permits, licenses, easements, variances,
exemptions, consents, certificates, orders and approvals from governmental
authorities which are material to the operation of the business of the Parent
and its subsidiaries taken as a whole as it is now being conducted
(collectively, the "Parent Permits"). Parent and its subsidiaries are in
compliance with the terms of Parent Permits, except where the failure to so
comply could not reasonably be expected to have a Material Adverse Effect.
SECTION 3.07. SEC Filings; Financial Statements. (a) Parent has filed all
forms, reports and documents required to be filed with the SEC since June 30,
1993, and has heretofore delivered to the Company, in the form filed (or, in the
case of the Quarterly Report on Form 10-Q for the quarterly period ended March
31, 1996, to be filed) with the SEC, (i) its Annual Reports on Form 10-K for the
fiscal years ended June 30, 1993, 1994 and 1995, (ii) its Quarterly Reports on
Form 10-Q for the quarterly periods ending September 30, 1995, December 31, 1995
and March 31, 1996, (iii) all proxy statements relating to Parent's meetings of
stockholders (whether annual or special) held since June 30, 1993, (iv) all
other reports or registration statements (other than Reports on Form 10-Q not
referred to in clause (ii) above) filed by Parent with the SEC since June 30,
1992, and (v) all amendments and supplements to all such reports and
registration statements filed by Parent with the SEC (collectively, the "Parent
SEC Reports"). The Parent SEC Reports (i) were prepared in all material respects
in accordance with the requirements of the Securities Act or the Exchange Act,
as the case may be, and (ii) did not at the time they were filed (or if amended
or superseded by a filing prior to the date of this Agreement, then on the date
of such filing) contain any 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 the light of the circumstances under which they were
made, not misleading. None of Parent's subsidiaries is required to file any
forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in each case,
any related notes thereto) contained in the Parent SEC Reports has been prepared
in accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto) and each fairly
presents the consolidated financial position of Parent and its subsidiaries as
at the respective dates thereof and the consolidated results of its operations
and cash flows for the periods indicated, except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be material in amount.
SECTION 3.08. Absence of Certain Changes or Events. Except as set forth in
Section 3.08 of the Parent Disclosure Schedule or the Parent SEC Reports, since
June 30, 1995, Parent has conducted its business in the ordinary course and
there has not occurred: (i) any Material Adverse Effect; (ii) any amendments or
changes in the Articles of Organization or By-Laws of Parent; (iii) any damage
to, destruction or loss of any assets of the Parent (whether or not covered by
insurance) that could reasonably be expected to have a Material Adverse Effect;
(iv) any material change by Parent in its accounting methods; (v) any material
revaluation by Parent of any of its assets, including without limitation,
writing down the value of inventory or writing off notes or accounts receivable
other than in the ordinary course of business; (vi) any other action or event
that would have required the consent of the Company pursuant to Section 4.03 had
such action or event occurred after the date of this
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Agreement; or (vii) any sale of a material amount of assets of Parent, except in
the ordinary course of business.
SECTION 3.09. No Undisclosed Liabilities. Except as is disclosed in Section
3.09 of the Parent Disclosure Schedule and the Parent SEC Reports, neither the
Parent nor any of its subsidiaries has any liabilities (absolute, accrued,
contingent or otherwise), except liabilities (a) adequately provided for in the
Parent's balance sheet (including any related notes thereto) as of June 30, 1995
included in Parent's Annual Report on Form 10-K for the fiscal year ended June
30, 1995 (the "June 1995 Balance Sheet"), (b) incurred in the ordinary course of
business and not required under GAAP to be reflected on the June 1995 Balance
Sheet, (c) incurred since June 30, 1995 in the ordinary course of business and
consistent with past practice, (d) incurred in connection with this Agreement,
or (e) which could not reasonably be expected to have a Material Adverse Effect
.
SECTION 3.10. Absence of Litigation. Except as set forth in Section 3.10 of
the Parent Disclosure Schedule, there are no claims, actions, suits, proceedings
or investigations pending or, to the knowledge of the Parent, threatened against
the Parent or any of its subsidiaries, or any properties or rights of the Parent
or any of its subsidiaries, before any court, arbitrator or administrative,
governmental or regulatory authority or body, domestic or foreign, that could
reasonably be expected to have a Material Adverse Effect.
SECTION 3.11. Employee Benefit Plans; Employment Agreements. (a) Section
3.11(a) of the Parent Disclosure Schedule lists all employee pension plans (as
defined in Section 3(2) of ERISA), all employee welfare plans (as defined in
Section 3(1) of ERISA) and all other bonus, stock option, stock purchase,
incentive, deferred compensation, supplemental retirement, severance and other
similar fringe or employee benefit plans, programs or arrangements, and any
employment, executive compensation or severance agreements, written or
otherwise, as amended, modified or supplemented, for the benefit of, or relating
to, former or current employee, officer or consultant (or any of their
beneficiaries) of Parent or any other entity (whether or not incorporated) which
is a member of a controlled group including Parent or which is under common
control with Parent (an "ERISA Affiliate") within the meaning of Section 414 of
the Code or Section 4001 of ERISA, or any subsidiary of Parent, as well as each
plan with respect to which Parent or an ERISA Affiliate could incur liability
under Section 4069 (if such plan has been or were terminated) or Section 4212(c)
of ERISA or Section 412 of the Code (together, the "Employee Plans"). There have
been made available to the Company copies of (i) each such written Employee Plan
and all related trust agreements, insurance and other contracts (including
policies), summary plan descriptions, summaries of material modifications and
communications distributed to plan participants, (ii) the most recent three
annual reports on form 5500 series, with accompanying schedules and attachments,
filed with respect to each Employee Plan required to make such a filing, and
(iii) the most recent actuarial valuation for each Employee Plan subject to
Title IV of ERISA. For purposes of this Section 3.11(a) the term material, when
used with respect to (i) any Employee Plan, shall mean that Parent or an ERISA
Affiliate has incurred or may incur obligations in an amount exceeding
$5,000,000 with respect to such Employee Plan, and (ii) any liability,
obligation, breach or non-compliance, shall mean that the Company or an ERISA
Affiliate has incurred or may incur obligations in an amount exceeding
$1,000,000 with respect to any one such or series of related liabilities,
obligations, breaches, defaults, violations or instances of non-compliance.
(b) (i) Except as set forth in Section 3.11(b) of the Parent Disclosure
Schedule, none of the Employee Plans promises or provides retiree medical or
other retiree welfare benefits to any person, and none of the Employee Plans is
a "multiemployer plan" as such term is defined in Section 3(37) of ERISA; (ii)
no party in interest or disqualified person (as defined in Section 3(14) of
ERISA and Section 4975 of the Code) has at any time engaged in a transaction
with respect to any Employee Plan which could subject Parent or any ERISA
Affiliate, directly or indirectly, to a tax, penalty or other material liability
for prohibited transactions under ERISA or Section 4975 of the Code; (iii) no
fiduciary of any Employee Plan has breached any of the responsibilities or
obligations imposed upon
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fiduciaries under Title I of ERISA, which breach could result in any material
liability to Parent or any ERISA Affiliate; (iv) all Employee Plans have been
established and maintained substantially in accordance with their terms and have
operated in compliance in all material respects with the requirements prescribed
by any and all statutes (including ERISA and the Code), orders, or governmental
rules and regulations currently in effect with respect thereto (including all
applicable requirements for notification to participants or the Department of
Labor, IRS or Secretary of the Treasury), and Parent and each of its
subsidiaries have performed all material obligations required to be performed by
them under, are not in any material respect in default under or violation of,
and have no knowledge of any default or violation by any other party to, any of
the Employee Plans; (iv) each Employee Plan intended to qualify under Section
401(a) of the Code and each trust intended to qualify under Section 501(a) of
the Code is the subject of a favorable determination letter from the IRS, and
nothing has occurred which may reasonably be expected to impair such
determination; (v) all contributions required to be made with respect to any
Employee Plan pursuant to Section 412 of the Code, or the terms of the Employee
Plan or any collective bargaining agreement, have been made on or before their
due dates; (vi) with respect to each Employee Plan, no "reportable event" within
the meaning of Section 4043 of ERISA (excluding any such event for which the 30
day notice requirement has been waived under the regulations to Section 4043 of
ERISA) nor any event described in Section 4062, 4063 or 4041 of ERISA has
occurred; and (vii) neither Parent nor any ERISA Affiliate has incurred, nor
reasonably expects to incur, any liability under Title IV of ERISA (other than
liability for premium payments to the Pension Benefit Guaranty Corporation
arising in the ordinary course).
(c) Section 3.11(c) of the Parent Disclosure Schedule sets forth a true and
complete list of each current or former employee, officer or director of Parent
or any of its subsidiaries who holds (i) any option to purchase Parent Common
Stock as of the date hereof, together with the number of shares of Parent Common
Stock subject to such option, the option price of such option (to the extent
determined as of the date hereof), whether such option is intended to qualify as
an incentive stock option within the meaning of Section 422(b) of the Code (an
"ISO"), and the expiration date of such option; and (ii) any other right,
directly or indirectly, to acquire Parent Common Stock, together with the number
of shares of Parent Common Stock subject to such right. Section 3.11(c) of the
Parent Disclosure Schedule also sets forth the total number of such ISOs, such
nonqualified options and such other rights.
(d) Section 3.11(d) of the Parent Disclosure Schedule sets forth a true and
complete list of (i) all employment agreements with officers of Parent or any of
its subsidiaries; (ii) all agreements with consultants who are individuals
obligating Parent or any of its subsidiaries to make annual cash payments in an
amount exceeding $1,000,000; (iii) all officers of Parent or any of its
subsidiaries who have executed a non-competition agreement with Parent; (iv) all
severance agreements, programs and policies of Parent or any of its subsidiaries
with or relating to its employees in each case with outstanding commitments
exceeding $1,000,000, except programs and policies required to be maintained by
law; and (v) all plans, programs, agreements and other arrangements of Parent or
any of its subsidiaries with or relating to its employees which contain change
in control provisions.
(e) Except as set forth in Section 3.11(a) of the Parent Disclosure
Schedule, no employee of Parent or any of its subsidiaries has participated in
any employee pension benefit plans (as defined in Section 3(2) of ERISA)
maintained by or on behalf of Parent. The PBGC has not instituted proceedings to
terminate any defined benefit plan listed in Section 3.11(a) of the Parent
Disclosure Schedule (each, a "Defined Benefit Plan"). The Defined Benefit Plans
have no accumulated or waived funding deficiencies within the meaning of Section
412 of the Code nor have any extensions of any amortization period within the
meaning of Section 412 of the Code or 302 of ERISA been applied for with respect
thereto. The present value of the benefit liabilities (within the meaning of
Section 4041 of ERISA) of the Defined Benefit Plans, determined on a termination
basis using actuarial assumptions that would be used by the PBGC does not exceed
by more than $1,000,000 the value of the Plans' assets. All applicable premiums
required to be paid to the PBGC with respect to the Defined Benefit Plans have
been paid. No facts or circumstances exist with respect to the Defined Benefit
Plans which would give
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rise to a lien on the assets of Parent under Section 4068 of ERISA. All the
assets of the Defined Benefit Plans are readily marketable securities or
insurance contracts.
(f) Parent has fiduciary liability insurance of at least $15,000,000 in
effect covering the fiduciaries of the Employee Plans (including Parent) with
respect to whom Parent may have liability.
SECTION 3.12. Labor Matters. Except as set forth in Section 3.12 of the
Parent Disclosure Schedule or the Parent SEC Reports, (i) there are no
controversies pending or, to the knowledge of Parent or any of its subsidiaries,
threatened, between Parent or any of its subsidiaries and any of their
respective employees, which controversies have or could reasonably be expected
to have a Material Adverse Effect; (ii) neither Parent nor any of its
subsidiaries is a party to any material collective bargaining agreement or other
labor union contract applicable to persons employed by Parent or its
subsidiaries, nor does Parent or any of its subsidiaries know of any activities
or proceedings of any labor union to organize any such employees; and (iii)
neither Parent nor any of its subsidiaries has any knowledge of any strikes,
slowdowns, work stoppages, lockouts, or threats thereof, by or with respect to
any employees of Parent or any of its subsidiaries which could reasonably be
expected to have a Material Adverse Effect.
SECTION 3.13. Registration Statement; Proxy Statement/Prospectus. Subject to
the accuracy of the representations of the Company in Section 2.13, the
registration statement (the "Registration Statement") pursuant to which the
Parent Common Stock to be issued in the Merger will be registered with the SEC
shall not, at the time the Registration Statement (including any amendments or
supplements thereto) is declared effective by the SEC, contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements included therein, in light of the circumstances
under which they were made, not misleading. The information supplied by Parent
for inclusion in the Proxy Statement/Prospectus will not, on the date the Proxy
Statement/Prospectus is first mailed to stockholders, at the time of the Company
Stockholders Meeting and at the Effective Time, contain any statement which, at
such time and in light of the circumstances under which it shall be made, is
false or misleading with respect to any material fact, or will omit to state any
material fact necessary in order to make the statements therein not false or
misleading; or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Company Stockholders Meeting which has become false or
misleading. If at any time prior to the Effective Time any event relating to
Parent, Merger Sub or any of their respective affiliates, officers or directors
should be discovered by Parent or Merger Sub which should be set forth in an
amendment to the Registration Statement or a supplement to the Proxy
Statement/Prospectus, Parent or Merger Sub will promptly inform the Company. The
Registration Statement and Proxy Statement/Prospectus shall comply in all
material respects with the requirements of the Securities Act, the Exchange Act
and the rules and regulations thereunder. Notwithstanding the foregoing, Parent
and Merger Sub make no representation or warranty with respect to any
information supplied by the Company which is contained or incorporated by
reference in, or furnished in connection with the preparation of, the
Registration Statement or the Proxy Statement/Prospectus.
SECTION 3.14. Restrictions on Business Activities. Except for this
Agreement, to the best of Parent's knowledge, there is no agreement, judgment,
injunction, order or decree binding upon Parent or any of its subsidiaries which
has or could reasonably be expected to have the effect of prohibiting or
materially impairing any business practice of Parent or any of its subsidiaries,
any acquisition of property by Parent or any of its subsidiaries or the conduct
of business by Parent or any of its subsidiaries as currently conducted or as
proposed to be conducted by Parent, except for any prohibition or impairment as
could not reasonably be expected to have a Material Adverse Effect.
SECTION 3.15. Title to Property. Parent and each of its subsidiaries have
good and defensible title to all of their properties and assets, free and clear
of all liens, charges and encumbrances, except liens for taxes not yet due and
payable and such liens or other imperfections of title, if any, as do not
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materially detract from the value of or interfere with the present use of the
property affected thereby or which could not reasonably be expected to have a
Material Adverse Effect; and, to Parent's knowledge, all leases pursuant to
which Parent or any of its subsidiaries lease from other material amounts of
real or personal property are in good standing, valid and effective in
accordance with their respective terms, and there is not, to the knowledge of
Parent, under any of such leases, any existing material default or event of
default (or event which with notice or lapse of time, or both, would constitute
a material default) except where the lack of such good standing, validity and
effectiveness, or the existence of such default or event of default could not
reasonably be expected to have a Material Adverse Effect.
SECTION 3.16. Taxes. (a) Parent on behalf of itself and all its subsidiaries
hereby represents that, other than as disclosed in Section 3.16(a) of the Parent
Disclosure Schedule or the Parent SEC Reports: Parent and its subsidiaries have
filed all United States federal income Tax Returns and all other material Tax
Returns required to be filed by them, and Parent and its subsidiaries have paid
and discharged all Taxes due in connection with or with respect to the periods
or transactions covered by such Tax Returns and have paid all other Taxes as are
due, except such as are being contested in good faith by appropriate proceedings
(to the extent that any such proceedings are required) and there are no other
taxes that would be due if asserted by a taxing authority, except with respect
to which Parent is maintaining reserves to the extent currently required unless
the failure to do so could not reasonably be expected to have a Material Adverse
Effect. Except as does not involve or would not result in liability to Parent
that could reasonably be expected to have a Material Adverse Effect, (i) there
are no tax liens on any assets of Parent or any subsidiary thereof; and (ii)
neither Parent nor any of its subsidiaries has granted any waiver of any statute
of limitations with respect to, or any extension of a period for the assessment
of, any Tax. The accruals and reserves for taxes (including deferred taxes)
reflected in the June 1995 Balance Sheet are in all material respects adequate
to cover all Taxes accruable through the date thereof (including interest and
penalties, if any, thereon and Taxes being contested) in accordance with GAAP.
(b) Parent on behalf of itself and all its subsidiaries hereby represents
that, other than as disclosed on Section 3.16(b) of the Parent Disclosure
Schedule or the Parent SEC Reports, and other than with respect to items the
inaccuracy of which could not reasonably be expected to have a Material Adverse
Effect: Neither Parent nor any of its subsidiaries is obligated under any
agreement with respect to industrial development bonds or other obligations with
respect to which the excludability from gross income of the holder for federal
or state income tax purposes could be affected by the transactions contemplated
hereunder.
SECTION 3.17. Environmental Matters. Except as set forth in Section 3.17 of
the Parent Disclosure Schedule, and except in all cases as, in the aggregate,
have not had and could not reasonably be expected to have a Material Adverse
Effect, Parent and each of its subsidiaries to the best of Parent's knowledge
(i) have obtained all applicable permits, licenses and other authorization which
are required to be obtained under all applicable Environmental Laws by Parent or
its subsidiaries (or their respective agents); (ii) are in compliance with all
terms and conditions of such required permits, licenses and authorization, and
also are in compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in applicable Environmental Laws; (iii) as of the date hereof, are not
aware of nor have received notice of any past or present violations of
Environmental Laws, or any event, condition, circumstance, activity, practice,
incident, action or plan which is reasonably likely to interfere with or prevent
continued compliance with or which would give rise to any common law or
statutory liability, or otherwise form the basis of any claim, action, suit or
proceeding, against Parent or any of its subsidiaries based on or resulting from
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling, or the emission, discharge or release into the
environment, of any pollutant, contaminant or hazardous or toxic material or
waste; and (iv) have taken all actions necessary under applicable Environmental
Laws to
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register any products or materials required to be registered by Parent or its
subsidiaries (or any of their respective agents) thereunder.
SECTION 3.18. Brokers. No broker, finder or investment banker (other than
Merrill Lynch, Pierce, Fenner & Smith Incorporated, the fees and expenses of
which will be paid by Parent) is entitled to any brokerage, finder's or other
fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Parent or Merger Sub.
SECTION 3.19. Full Disclosure. No statement contained in any certificate or
schedule furnished or to be furnished by Parent or Merger Sub to the Company in,
or pursuant to the provisions of, this Agreement contains or will contain any
untrue statement of a material fact or omits or shall omit to state any material
fact necessary, in the light of the circumstances under which it was made, in
order to make the statements herein or therein not misleading.
SECTION 3.20. Intellectual Property. (a) Parent and/or each of its
subsidiaries owns, or is licensed or otherwise possesses legally enforceable
rights to use all patents, trademarks, trade names, service marks, copyrights,
and any applications therefor, technology, know-how, computer software programs
or applications, and tangible or intangible proprietary information or material
that are used in the business of Parent and its subsidiaries as currently
conducted, except as could not reasonably be expected to have a Material Adverse
Effect.
(b) Except as disclosed in Section 3.20(b) of the Parent Disclosure Schedule
or the Parent SEC Reports or as could not reasonably be expected to have a
Material Adverse Effect: Parent is not, nor will it be as a result of the
execution and delivery of this Agreement or the performance of its obligations
hereunder, in violation of any licenses, sublicenses and other agreements as to
which Parent is a party and pursuant to which Parent is authorized to use any
third-party patents, trademarks, service marks and copyrights ("Third-Party
Intellectual Property Rights"). No claims with respect to the patents,
registered and material unregistered trademarks and service marks, registered
copyrights, trade names and any applications therefor owned by Parent or any of
its subsidiaries (the "Parent Intellectual Property Rights"), any trade secret
material to the Parent, or Third Party Intellectual Property Rights to the
extent arising out of any use, reproduction or distribution of such Third Party
Intellectual Property Rights by or through Parent or any of its subsidiaries,
are currently pending or, to the knowledge of Parent, are overtly threatened by
any person. Parent does not know of any valid grounds for any bona fide claims
(i) to the effect that the manufacture, sale, licensing or use of any product as
now used, sold or licensed or proposed for use, sale or license by Parent or any
of its subsidiaries infringes on any copyright, patent, trademark, service mark
or trade secret; (ii) against the use by Parent or any of its subsidiaries of
any trademarks, trade names, trade secrets, copyrights, patents, technology,
know-how or computer software programs and applications used in the business of
Parent or any of its subsidiaries as currently conducted or as proposed to be
conducted; (iii) challenging the ownership, validity or effectiveness of any
part of the Parent Intellectual Property Rights or other trade secret material
to Parent; or (iv) challenging the license or legally enforceable right to use
of the Third Party Intellectual Rights by Parent or any of its subsidiaries.
(c) To Parent's knowledge, all patents, registered trademarks and copyrights
held by Parent are valid and subsisting. Except as set forth in Section 3.20(c)
of the Parent Disclosure Schedule on the Parent SEC Reports, to the Parent's
knowledge, there is no material unauthorized use, infringement or
misappropriation of any of the Parent Intellectual Property by any third party,
including any employee or former employee of Parent or any of its subsidiaries.
SECTION 3.21. Interested Party Transactions. Except as set forth in Section
3.21 of the Parent Disclosure Schedule or the Parent SEC Reports, since the date
of Parent's proxy statement dated September 29, 1995, no event has occurred that
would be required to be reported as a Certain Relationship or Related
Transaction, pursuant to Item 404 of Regulation S-K promulgated by the SEC.
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SECTION 3.22. Insurance. All material fire and casualty, general liability,
business interruption, product liability and sprinkler and water damage
insurance policies maintained by Parent or any of its subsidiaries are with
reputable insurance carriers, provide full and adequate coverage for all normal
risks incident to the business of Parent and its subsidiaries and their
respective properties and assets and are in character and amount at least
equivalent to that carried by entities engaged in similar businesses and subject
to the same or similar perils or hazards, except as could not reasonably be
expected to have a Material Adverse Effect.
SECTION 3.23. Product Liability and Recalls. (a) Except as disclosed in
Section 3.23 of the Parent Disclosure Schedule or the Parent SEC Reports, Parent
is not aware of any claim, or the basis of any claim, against Parent or any of
its subsidiaries for injury to person or property of employees or any third
parties suffered as a result of the sale of any product or performance of any
service by Parent or any of its subsidiaries, including claims arising out of
the defective or unsafe nature of its products or services, which could
reasonably be expected to have a Material Adverse Effect.
(b) Except as disclosed in Section 3.23(b) of the Parent Disclosure Schedule
or the Parent SEC Reports, there is no pending or, to the knowledge of Parent,
threatened, recall or investigation of any product sold by Parent, which recall
or investigation could reasonably be expected to have a Material Adverse Effect.
SECTION 3.24. Inventory. The inventories of Parent and its subsidiaries as
reflected in the most recent financial statements contained in the Parent SEC
Reports, or acquired by Parent or any of its subsidiaries after the date
thereof, (i) are carried at an amount not in excess of the lower of cost or net
realizable value, and (ii) do not include any inventory which is obsolete,
surplus or not usable or saleable in the lawful and ordinary course of business
of Parent and its subsidiaries as heretofore conducted, in each case net of
reserves provided therefor.
SECTION 3.25. Ownership of Merger Sub; No Prior Activities. (a) Merger Sub
is a direct, wholly-owned subsidiary of Parent and was formed solely for the
purpose of engaging in the transactions contemplated by this Agreement.
(b) As of the date hereof and the Effective Time, except for obligations or
liabilities incurred in connection with its incorporation or organization and
the transactions contemplated by this Agreement and except for this Agreement
and any other agreements or arrangements contemplated by this Agreement, Merger
Sub has not and will not have incurred, directly or indirectly, through any
subsidiary or affiliate, any obligations or liabilities or engaged in any
business activities of any type or kind whatsoever or entered into any
agreements or arrangements with any person.
SECTION 3.26. Pooling Matters. To the Parent's knowledge and based upon
consultation with its independent accountants, the Parent has provided to the
Company and its independent accountants all information concerning actions taken
or agreed to be taken by Parent or any of its affiliates on or before the date
of this Agreement that could reasonably be expected to adversely affect the
ability of Parent to account for the business combination to be effected by the
Merger as a pooling of interests. For purposes of this Section 3.26, "to the
Parent's knowledge" means to the actual knowledge of Parent's Chief Executive
Officer or Chief Financial Officer.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 4.01. Conduct of Business by the Company Pending the Merger. During
the period from the date of this Agreement and continuing until the earlier of
the termination of this Agreement or
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the Effective Time, the Company covenants and agrees that, unless Parent shall
otherwise agree in writing, and except as set forth in Section 4.01 of the
Company Disclosure Schedule, the Company shall conduct its business and shall
cause the businesses of its subsidiaries to be conducted only in, and the
Company and its subsidiaries shall not take any action except in, the ordinary
course of business and in a manner consistent with past practice; and the
Company shall use reasonable commercial efforts to preserve substantially intact
the business organization of the Company and its subsidiaries, to keep available
the services of the present officers, employees and consultants of the Company
and its subsidiaries and to preserve the present relationships of the Company
and its subsidiaries with customers, suppliers and other persons with which the
Company or any of its subsidiaries has significant business relations. By way of
amplification and not limitation, except as contemplated by this Agreement,
neither the Company nor any of its subsidiaries shall, during the period from
the date of this Agreement and continuing until the earlier of the termination
of this Agreement or the Effective Time, and except as set forth in Section 4.01
of the Company Disclosure Schedule, directly or indirectly do, or propose to do,
any of the following without the prior written consent of Parent:
(a) amend or otherwise change the Company's Certificate of Incorporation
or By-Laws;
(b) issue, sell, pledge, dispose of or encumber, or authorize the
issuance, sale, pledge, disposition or encumbrance of, any shares of capital
stock of any class, or any options, warrants, convertible securities or
other rights of any kind to acquire any shares of capital stock, or any
other ownership interest (including, without limitation, any phantom
interest) in the Company, any of its subsidiaries or affiliates (except for
the issuance of shares of Company Common Stock issuable pursuant to Stock
Options under either the Company Stock Option Plan or under the terms of the
stock option agreement between the Company and the individual named in
Section 2.03 of the Company Disclosure Schedule, which options are
outstanding on the date hereof);
(c) sell, pledge, dispose of or encumber any assets of the Company or
any of its subsidiaries (except for (i) sales of assets in the ordinary
course of business and in a manner consistent with past practice, (ii)
dispositions of obsolete or worthless assets, and (iii) sales of immaterial
assets not in excess of $500,000);
(d) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof)
in respect of any of its capital stock, except that a wholly owned
subsidiary of the Company may declare and pay a dividend to its parent, (ii)
split, combine or reclassify any of its capital stock or issue or authorize
or propose the issuance of any other securities in respect of, in lieu of or
in substitution for shares of its capital stock, or (iii) amend the terms or
change the period of exercisability of, purchase, repurchase, redeem or
otherwise acquire, or permit any subsidiary to purchase, repurchase, redeem
or otherwise acquire, any of its securities or any securities of its
subsidiaries, including, without limitation, shares of Company Common Stock
or any option, warrant or right, directly or indirectly, to acquire shares
of Company Common Stock, or propose to do any of the foregoing;
(e) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or
division thereof other than those listed on Section 4.01(e) of the Company
Disclosure Schedule; (ii) incur any indebtedness for borrowed money or issue
any debt securities or assume, guarantee (other than guarantees of bank debt
of the Company's subsidiaries entered into in the ordinary course of
business) or endorse or otherwise as an accommodation become responsible
for, the obligations of any person, or make any loans or advances, except in
the ordinary course of business consistent with past practice; (iii) enter
into or amend any resin purchase contract that would be in effect after the
Effective Time if the non-cancelable incremental commitment is in excess of
20% of its 1996 resin requirements or enter into or amend any other material
contract or agreement other than in the ordinary course of business; (iv)
authorize any capital expenditures or purchase of fixed assets which are, in
the aggregate, in
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excess of the amount set forth in Section 4.01 of the Company Disclosure
Schedule for the Company and its subsidiaries taken as a whole; or (v) enter
into or amend any contract, agreement, commitment or arrangement to effect
any of the matters prohibited by this Section 4.01(e);
(f) increase the compensation payable or to become payable to its
officers or employees, except for increases in salary or wages of employees
of the Company or its subsidiaries in accordance with past practices, or
grant any severance or termination pay to, or enter into any employment or
severance agreement with any director, officer or other employee of the
Company or any of its subsidiaries, or establish, adopt, enter into or amend
any collective bargaining, bonus, profit sharing, thrift, compensation,
stock option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund,
policy or arrangement for the benefit of any current or former directors,
officers or employees, except, in each case, as may be required by law;
(g) take any action to change accounting policies or procedures
(including, without limitation, procedures with respect to revenue
recognition, payments of accounts payable and collection of accounts
receivable);
(h) make any material tax election inconsistent with past practice or
settle or compromise any material federal, state, local or foreign tax
liability or agree to an extension of a statute of limitations, except to
the extent the amount of any such settlement has been reserved for in the
financial statements contained in the Company SEC Reports filed prior to the
date of this Agreement;
(i) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction in the ordinary course of
business and consistent with past practice of liabilities reflected or
reserved against in the financial statements contained in the Company SEC
Reports filed prior to the date of this Agreement or incurred in the
ordinary course of business and consistent with past practice; or
(j) take, or agree in writing or otherwise to take, any of the actions
described in Sections 4.01(a) through (i) above, or any action which would
make any of the representations or warranties of the Company contained in
this Agreement untrue or incorrect or prevent the Company from performing or
cause the Company not to perform its covenants hereunder.
SECTION 4.02. No Solicitation. (a) The Company shall not, directly or
indirectly, through any officer, director, employee, representative or agent of
the Company or any of its subsidiaries, solicit or encourage the initiation of
any inquiries or proposals regarding any merger, sale of substantial assets,
sale of shares of capital stock (including without limitation by way of a tender
offer) or similar transactions involving the Company or any subsidiaries of the
Company (any of the foregoing inquiries or proposals being referred to herein as
an "Acquisition Proposal"). Nothing contained in this Section 4.02(a) shall
prevent the Board of Directors of the Company from (i) considering, negotiating,
approving and recommending to the stockholders of the Company a bona fide
Acquisition Proposal not solicited in violation of this Agreement, (ii) taking
and disclosing to its stockholders a position contemplated by Exchange Act Rule
14e-2 or (iii) making any disclosure to its stockholders; provided that, as to
each of clauses (i), (ii) and (iii), the Board of Directors of the Company
determines in good faith (upon advice of independent counsel) that it is
required to do so in order to discharge properly its fiduciary duties.
(b) The Company shall immediately notify Parent after receipt of any
Acquisition Proposal, or any modification of or amendment to any Acquisition
Proposal, or any request for nonpublic information relating to the Company or
any of its subsidiaries in connection with an Acquisition Proposal or for access
to the properties, books or records of the Company or any subsidiary by any
person or entity that informs the Board of Directors of the Company or such
subsidiary that it is considering making, or has
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made, an Acquisition Proposal. Such notice to Parent shall be made orally and in
writing, and shall indicate whether the Company is providing or intends to
provide the person making the Acquisition Proposal with access to information
concerning the Company as provided in Section 4.02(c).
(c) If the Board of Directors of the Company receives a request for material
nonpublic information by a person who makes a bona fide Acquisition Proposal,
and the Board of Directors determines in good faith and upon the advice of
independent counsel that it is required to cause the Company to act as provided
in this Section 4.02(c) in order to discharge properly the directors' fiduciary
duties, then, provided the person making the Acquisition Proposal has executed a
confidentiality agreement substantially similar to the one then in effect
between the Company and Parent, the Company may provide such person with access
to information regarding the Company and may request such person to make a
proposal concerning a transaction between or involving such person and the
Company or its securityholders.
(d) The Company shall immediately cease and cause to be terminated any
existing discussions or negotiations with any persons (other than Parent and
Merger Sub) conducted heretofore with respect to any of the foregoing. The
Company agrees not to release any third party from the confidentiality
provisions of any confidentiality agreement to which the Company is a party.
(e) The Company shall ensure that the officers, directors and employees of
the Company and its subsidiaries and any investment banker or other advisor or
representative retained by the Company are aware of the restrictions described
in this Section 4.02.
SECTION 4.03. Conduct of Business by Parent Pending the Merger. During the
period from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Effective Time, Parent covenants and agrees
that, except as set forth in Section 4.03 of Parent's Disclosure Schedule or
unless the Company shall otherwise agree in writing, Parent shall conduct its
business, and cause the businesses of its subsidiaries to be conducted, in the
ordinary course of business and consistent with past practice, other than
actions taken by Parent or its subsidiaries in contemplation of the Merger, and
shall not directly or indirectly do, or propose to do, any of the following
without the prior written consent of the Company:
(a) amend or otherwise change Parent's Articles of Organization or
By-Laws;
(b) acquire or agree to acquire, by merging or consolidating with, by
purchasing an equity interest in or a portion of the assets of, or by any
other manner, any business or any corporation, partnership, association or
other business organization or division thereof, or otherwise acquire or
agree to acquire any assets of any other person, which, in any such case,
would materially delay or prevent the consummation of the transactions
contemplated by this Agreement;
(c) declare, set aside, make or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect
of any of its capital stock, except that a wholly owned subsidiary of Parent
may declare and pay a dividend to its parent, and except that Parent may
declare and pay cash dividends of $0.10 per quarter consistent with past
practice; or
(d) take or agree in writing or otherwise to take any action which would
make any of the representations or warranties of Parent contained in this
Agreement untrue or incorrect or prevent Parent from performing or cause
Parent not to perform its covenants hereunder.
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ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Proxy Statement/Prospectus; Registration Statement. As
promptly as practicable after the execution of this Agreement, the Company and
Parent shall prepare and file with the SEC preliminary proxy materials which
shall constitute the Proxy Statement/Prospectus and the Registration Statement
of the Parent with respect to the Parent Common Stock to be issued in connection
with the Merger. As promptly as practicable after comments are received from the
SEC thereon and after the furnishing by the Company and Parent of all
information required to be contained therein, the Company and Parent shall file
with the SEC a combined proxy and Registration Statement on Form S-4 (or on such
other form as shall be appropriate) relating to the adoption of this Agreement
and approval of the transactions contemplated hereby by the stockholders of the
Company pursuant to this Agreement, and shall use all reasonable efforts to
cause the Registration Statement to become effective as soon thereafter as
practicable. The Proxy Statement/Prospectus shall include the recommendation of
the Board of Directors of the Company in favor of the Merger, subject to the
last sentence of Section 5.02.
SECTION 5.02. Company Stockholders Meeting. The Company shall call the
Company Stockholders Meeting as promptly as practicable for the purpose of
voting upon the approval of the Merger, and the Company shall use its reasonable
best efforts to hold the Company Stockholders Meeting as soon as practicable
after the date on which the Registration Statement becomes effective. Unless
otherwise required under the applicable fiduciary duties of the directors of the
Company, as determined by such directors in good faith after consultation with
and based upon the advice of independent legal counsel, the Company shall
solicit from its stockholders proxies in favor of adoption of this Agreement and
approval of the transactions contemplated thereby, and shall take all other
action necessary or advisable to secure the vote or consent of stockholders to
obtain such approvals.
SECTION 5.03. Access to Information; Confidentiality. Upon reasonable notice
and subject to restrictions contained in confidentiality agreements to which
such party is subject (from which such party shall use reasonable efforts to be
released), the Company and Parent shall each (and shall cause each of their
subsidiaries to) afford to the officers, employees, accountants, counsel and
other representatives of the other, reasonable access, during the period prior
to the Effective Time, to all its properties, books, contracts, commitments and
records and, during such period, the Company and Parent each shall (and shall
cause each of their subsidiaries to) furnish promptly to the other all
information concerning its business, properties and personnel as such other
party may reasonably request, and each shall make available to the other the
appropriate individuals (including attorneys, accountants and other
professionals) for discussion of the other's business, properties and personnel
as either Parent or the Company may reasonably request. Each party shall keep
such information confidential in accordance with the terms of the
confidentiality letter, dated July 13, 1995 (the "Confidentiality Letter"),
between Parent and the Company.
SECTION 5.04. Consents; Approvals. The Company and Parent shall each use
their best efforts to obtain all consents, waivers, approvals, authorizations or
orders (including, without limitation, all United States and foreign
governmental and regulatory rulings and approvals), and the Company and Parent
shall make all filings (including, without limitation, all filings with United
States and foreign governmental or regulatory agencies) required in connection
with the authorization, execution and delivery of this Agreement by the Company
and Parent and the consummation by them of the transactions contemplated hereby.
The Company and Parent shall furnish all information required to be included in
the Proxy Statement/Prospectus and the Registration Statement, or for any
application or other filing to be made pursuant to the rules and regulations of
any United States or foreign governmental body in connection with the
transactions contemplated by this Agreement.
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SECTION 5.05. Agreements with Respect to Affiliates. The Company shall
deliver to Parent, prior to the date the Registration Statement becomes
effective under the Securities Act, a letter (the "Affiliate Letter")
identifying all persons who are, at the time of the Company Stockholders
Meeting, "affiliates" of the Company for purposes of Rule 145 under the
Securities Act ("Rule 145"). The Company shall use its best efforts to cause
each person who is identified as an "affiliate" in the Affiliate Letter to
deliver to Parent, prior to the Effective Time, a written agreement (an
"Affiliate Agreement") in connection with restrictions on affiliates under Rule
145 and, unless Parent has notified the Company in writing that it has elected
not to treat the Merger as a pooling of interests for accounting purposes,
pooling of interests accounting treatment, in form mutually agreeable to the
Company and Parent.
SECTION 5.06. Indemnification and Insurance. (a) The By-Laws of the
Surviving Corporation shall contain the provisions with respect to
indemnification set forth in the By-Laws of the Company, which provisions shall
not be amended, repealed or otherwise modified for a period of six years from
the Effective Time in any manner that would adversely affect the rights
thereunder of individuals who at the Effective Time were directors, officers,
employees or agents of the Company, unless such modification is required by law.
(b) The Company shall, to the fullest extent permitted under applicable law
or under the Company's Certificate of Incorporation or By-Laws and regardless of
whether the Merger becomes effective, indemnify and hold harmless, and, after
the Effective Time, the Surviving Corporation shall, to the fullest extent
permitted under applicable law or under the Surviving Corporation's Certificate
of Incorporation or By-Laws, indemnify and hold harmless, each present and
former director, officer or employee of the Company or any of its subsidiaries
(collectively, the "Indemnified Parties") against any costs or expenses
(including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative or
investigative, (x) arising out of or pertaining to the transactions contemplated
by this Agreement or (y) otherwise with respect to any acts or omissions
occurring at or prior to the Effective Time, to the same extent as provided in
the Company's Certificate of Incorporation or By-Laws or any applicable contract
or agreement as in effect on the date hereof, in each case for a period of six
years after the date hereof. In the event of any such claim, action, suit,
proceeding or investigation (whether arising before or after the Effective
Time), (i) any counsel retained by the Indemnified Parties for any period after
the Effective Time shall be reasonably satisfactory to the Surviving
Corporation, (ii) after the Effective Time, the Surviving Corporation shall pay
the reasonable fees and expenses of such counsel, promptly after statements
therefor are received, and (iii) the Surviving Corporation will cooperate in the
defense of any such matter; provided, however, that the Surviving Corporation
shall not be liable for any settlement effected without its written consent
(which consent shall not be unreasonably withheld); and provided, further, that,
in the event that any claim or claims for indemnification are asserted or made
within such six-year period, all rights to indemnification in respect of any
such claim or claims shall continue until the disposition of any and all such
claims. The Indemnified Parties as a group may retain only one law firm to
represent them with respect to any single action unless there is, under
applicable standards of professional conduct, a conflict on any significant
issue between the positions of any two or more Indemnified Parties, in which
case each Indemnified Person with respect to whom such a conflict exists (or
group of such Indemnified Persons who among them have no such conflict) may
retain one separate law firm.
(c) The Surviving Corporation shall honor and fulfill in all respects the
obligations of the Company pursuant to indemnification agreements and employment
agreements (the employee parties under such agreements being referred to as the
"Officer Employees") with the Company's directors and officers existing at or
before the Effective Time.
(d) For a period of three years after the Effective Time, Parent shall cause
the Surviving Corporation to maintain in effect, if available, directors' and
officers' liability insurance covering those persons who are currently covered
by the Company's directors' and officers' liability insurance policy (a
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copy of which has been made available to Parent) on terms comparable to those
now applicable to directors and officers of the Company; provided, however, that
in no event shall Parent or the Surviving Corporation be required to expend in
excess of 200% of the annual premium currently paid by the Company for such
coverage; and provided further, that if the premium for such coverage exceeds
such amount, Parent or the Surviving Corporation shall purchase a policy with
the greatest coverage available for such 200% of the annual premium.
(e) From and after the Effective Time, Parent shall guarantee the
obligations of the Surviving Corporation under this Section.
(f) This Section shall survive the consummation of the Merger at the
Effective Time, is intended to benefit the Company, the Surviving Corporation
and the Indemnified Parties, shall be binding on all successors and assigns of
the Surviving Corporation and shall be enforceable by the Indemnified Parties.
SECTION 5.7. Notification of Certain Matters. The Company shall give prompt
notice to Parent, and Parent shall give prompt notice to the Company, of (i) the
occurrence or nonoccurrence of any event the occurrence or nonoccurrence of
which would be likely to cause any representation or warranty contained in this
Agreement to be materially untrue or inaccurate, or (ii) any failure of the
Company, Parent or Merger Sub, as the case may be, materially to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder; provided, however, that the delivery of any notice pursuant to
this Section shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice; and provided further that failure
to give such notice shall not be treated as a breach of covenant for the
purposes of Sections 6.02(a) or 6.03(a) unless the failure to give such notice
results in material prejudice to the other party.
SECTION 5.08. Further Action/Tax Treatment. Upon the terms and subject to
the conditions hereof, each of the parties hereto shall use all reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all other things necessary, proper or advisable to consummate and make
effective as promptly as practicable the transactions contemplated by this
Agreement, to obtain in a timely manner all necessary waivers, consents and
approvals and to effect all necessary registrations and filings, and otherwise
to satisfy or cause to be satisfied all conditions precedent to its obligations
under this Agreement. The foregoing covenant shall not include any obligation by
Parent to agree to divest, abandon, license or take similar action with respect
to any assets (tangible or intangible) of Parent or the Company. Each of Parent,
Merger Sub and the Company shall use its best efforts to cause the Merger to
qualify, and will not (both before and after consummation of the Merger) take
any actions which to its knowledge could reasonably be expected to prevent the
Merger from qualifying as a reorganization under the provisions of Section 368
of the Code.
SECTION 5.09. Public Announcements. Parent and the Company shall consult
with each other before issuing any press release with respect to the Merger or
this Agreement and shall not issue any such press release or make any such
public statement without the prior consent of the other party, which shall not
be unreasonably withheld; provided, however, that a party may, without the prior
consent of the other party, issue such press release or make such public
statement as may upon the advice of counsel be required by law or the rules and
regulations of the NYSE, if it has used all reasonable efforts to consult with
the other party.
SECTION 5.10. Listing of Parent Shares. Parent shall use its best efforts to
cause the Parent Shares to be issued in the Merger to be listed, upon official
notice of issuance, on the NYSE prior to the Effective Time.
SECTION 5.11. Conveyance Taxes. Parent and the Company shall cooperate in
the preparation, execution and filing of all returns, questionnaires,
applications, or other documents regarding any real property transfer or gains,
sales, use, transfer, value added, stock transfer and stamp taxes, any transfer,
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recording, registration and other fees, and any similar taxes which become
payable in connection with the transactions contemplated hereby that are
required or permitted to be filed on or before the Effective Time and the
Surviving Corporation shall be responsible for the payment of all such taxes and
fees.
SECTION 5.12. Accountant's Letters. Upon reasonable notice from the other,
the Company shall use its best efforts to cause Deloitte & Touche LLP to deliver
to Parent, and Parent shall use its best efforts to cause Coopers & Lybrand to
deliver to the Company, a letter covering such matters as are requested by
Parent or the Company, as the case may be, and as are customarily addressed in
accountant's "comfort" letters.
SECTION 5.13. Pooling Accounting Treatment. The Company agrees not to take
any action that to its knowledge could reasonably be expected to adversely
affect the ability of Parent to account for the business combination to be
effected by the Merger as a pooling of interests, and the Company agrees to use
its reasonable best efforts to take such action within the Company's control as
may be reasonably requested by Parent to negate the impact of any past actions
by the Company or its affiliates which could reasonably be expected to adversely
affect the ability of Parent to treat the Merger as a pooling of interests. For
purposes of this Section 5.13, "to the Company's knowledge" means the actual
knowledge of the Company's Chairman, Chief Executive Officer or Chief Financial
Officer. In the event that Parent elects not to treat the Merger as a "pooling
of interests" for accounting purposes, Parent shall promptly so inform the
Company in writing, and, in such case, the provisions of this Section 5.13 shall
terminate.
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.01. Conditions to Obligation of Each Party to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) Effectiveness of the Registration Statement. The Registration
Statement shall have been declared effective by the SEC under the Securities
Act. No stop order suspending the effectiveness of the Registration
Statement shall have been issued by the SEC and no proceedings for that
purpose and no similar proceeding in respect of the Proxy
Statement/Prospectus shall have been initiated or threatened by the SEC;
(b) Stockholder Approval. This Agreement and the Merger shall have been
approved and adopted by the requisite vote of the stockholders of the
Company;
(c) Listing. The shares of Parent Common Stock issuable in the Merger
shall have been authorized for listing on the NYSE upon official notice of
issuance;
(d) HSR Act. All waiting periods applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated;
(e) Governmental Actions. There shall not have been instituted, pending
or threatened any action or proceeding (or any investigation or other
inquiry that might result in such an action or proceeding) by any
governmental authority or administrative agency before any governmental
authority, administrative agency or court of competent jurisdiction,
domestic or foreign, nor shall there be in effect any judgment, decree or
order of any governmental authority, administrative agency or court of
competent jurisdiction, or any other legal restraint (i) preventing or
seeking to
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prevent consummation of the Merger, (ii) prohibiting or seeking to prohibit
or limiting or seeking to limit, Parent from exercising all material rights
and privileges pertaining to its ownership of the Surviving Corporation or
the ownership or operation by Parent or any of its subsidiaries of all or a
material portion of the business or assets of Parent or any of its
subsidiaries, or (iii) compelling or seeking to compel Parent or any of its
subsidiaries to dispose of or hold separate all or any material portion of
the business or assets of Parent or any of its subsidiaries (including the
Surviving Corporation and its subsidiaries), as a result of the Merger or
the transactions contemplated by this Agreement;
(f) Illegality. No statute, rule, regulation or order shall be enacted,
entered, enforced or deemed applicable to the Merger which makes the
consummation of the Merger illegal; and
(g) Tax Opinions. The Company shall have received a written opinion of
Weil, Gotshal & Manges LLP, and Parent shall have received a written opinion
of Kramer, Levin, Naftalis & Frankel, in form and substance reasonably
satisfactory to each of them to the effect that the Merger will constitute a
reorganization within the meaning of Section 368 of the Code. Each party
agrees to make reasonable and necessary representations and covenants in
connection with the rendering of such opinions.
SECTION 6.02. Additional Conditions to Obligations of Parent and Merger
Sub. The obligations of Parent and Merger Sub to effect the Merger are also
subject to the following conditions:
(a) Representations and Warranties. The representations and warranties
of the Company contained in this Agreement shall be true and correct in all
respects on and as of the Effective Time, except for (i) changes
contemplated by this Agreement, (ii) those representations and warranties
which address matters only as of a particular date (which shall have been
true and correct as of such date, subject to clause (iii)), and (iii) where
the failure to be true and correct could not reasonably be expected to have
a Material Adverse Effect, with the same force and effect as if made on and
as of the Effective Time, and Parent and Merger Sub shall have received a
certificate to such effect signed by the President and the Chief Financial
Officer of the Company;
(b) Agreements and Covenants. The Company shall have performed or
complied in all material respects with all agreements and covenants required
by this Agreement to be performed or complied with by it on or prior to the
Effective Time, and Parent and Merger Sub shall have received a certificate
to such effect signed by the Chairman, the President and the Chief Financial
Officer of the Company;
(c) Consents Obtained. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required
to be made, by the Company for the authorization, execution and delivery of
this Agreement and the consummation by it of the transactions contemplated
hereby shall have been obtained and made by the Company, except where the
failure to receive such consents, etc. could not reasonably be expected to
have a Material Adverse Effect on the Company or Parent; and
(d) Affiliate Agreements. Parent shall have received from each person
who is identified in the Affiliate Letter as an "affiliate" of the Company,
an Affiliate Agreement, and such Affiliate Agreement shall be in full force
and effect.
SECTION 6.03. Additional Conditions to Obligation of the Company. The
obligation of the Company to effect the Merger is also subject to the following
conditions:
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(a) Representations and Warranties. The representations and warranties
of Parent and Merger Sub contained in this Agreement shall be true and
correct in all respects on and as of the Effective Time, except for (i)
changes contemplated by this Agreement, (ii) those representations and
warranties which address matters only as of a particular date (which shall
have been true and correct as of such date, subject to clause (iii)), and
(iii) where the failure to be true and correct could not reasonably be
expected to have a Material Adverse Effect, with the same force and effect
as if made on and as of the Effective Time, and the Company shall have
received a certificate to such effect signed by the President and the Chief
Financial Officer of Parent;
(b) Agreements and Covenants. Parent and Merger Sub shall have performed
or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by them on or
prior to the Effective Time, and the Company shall have received a
certificate to such effect signed by the President and the Chief Financial
Officer of Parent;
(c) Consents Obtained. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required
to be made, by Parent and Merger Sub for the authorization, execution and
delivery of this Agreement and the consummation by them of the transactions
contemplated hereby shall have been obtained and made by Parent and Merger
Sub, except where the failure to receive such consents, etc. could not
reasonably be expected to have a Material Adverse Effect on the Company or
Parent;
ARTICLE VII
TERMINATION
SECTION 7.01. Termination. This Agreement may be terminated at any time
prior to the Effective Time, notwithstanding approval thereof by the
stockholders of the Company or Parent:
(a) by mutual written consent duly authorized by the Boards of Directors
of Parent and the Company; or
(b) by either Parent or the Company if the Merger shall not have been
consummated by October 31, 1996 (provided that the right to terminate this
Agreement under this Section 7.01(b) shall not be available to any party
whose failure to fulfill any obligation under this Agreement has been the
cause of or resulted in the failure of the Merger to occur on or before such
date); or
(c) by either Parent or the Company if a court of competent jurisdiction
or governmental, regulatory or administrative agency or commission shall
have issued a nonappealable final order, decree or ruling or taken any other
action having the effect of permanently restraining, enjoining or otherwise
prohibiting the Merger (provided that the right to terminate this Agreement
under this Section 7.01(c) shall not be available to any party who has not
complied with its obligations under Section 5.08 and such noncompliance
materially contributed to the issuance of any such order, decree or ruling
or the taking of such action); or
(d) by Parent, if the requisite vote of the stockholders of the Company
shall not have been obtained by October 31, 1996; or
(e) by Parent, if (i) the Board of Directors of the Company shall
withdraw, modify or change its approval or recommendation of this Agreement
or the Merger in a manner adverse to Parent or shall have resolved to do so;
(ii) the Board of Directors of the Company shall have recommended to the
stockholders of the Company an Alternative Transaction (as hereinafter
defined); or (iii) a tender offer or exchange offer for 25% or more of the
outstanding shares of Company Common
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Stock is commenced (other than by Parent or an affiliate of Parent) and the
Board of Directors of the Company recommends that the stockholders of the
Company tender their shares in such tender or exchange offer; or
(f) by the Company, if the Board of Directors of the Company shall
withdraw, modify or change its approval of this Agreement or the Merger in a
manner adverse to Parent or Merger Sub or shall have resolved to do so; or
(g) by Parent or the Company, if any representation or warranty of the
Company or Parent, respectively, set forth in this Agreement shall be untrue
when made, such that the conditions set forth in Sections 6.02(a) or
6.03(a), as the case may be, would not be satisfied (a "Terminating
Misrepresentation"); provided, that, if such Terminating Misrepresentation
is curable prior to October 31, 1996 by the Company or Parent, as the case
may be, through the exercise of its reasonable best efforts and for so long
as the Company or Parent, as the case may be, continues to exercise such
reasonable best efforts, neither Parent nor the Company, respectively, may
terminate this Agreement under this Section 7.01(g); or
(h) by Parent, if any representation or warranty of the Company shall
have become untrue such that the condition set forth in Section 6.02(a)
would not be satisfied, or by the Company, if any representation or warranty
of Parent shall have become untrue such that the condition set forth in
Section 6.03(a) would not be satisfied, in either case other than by reason
of a Terminating Breach (as hereinafter defined); provided that if any such
Terminating Misrepresentation is curable prior to October 31, 1996 by the
Company or Parent, as the case may be, through the exercise of its
reasonable best efforts, and for so long as the Company or Parent, as the
case may be, continues to exercise such reasonable best efforts, neither
Parent nor the Company, respectively, may terminate this Agreement under
this Section 7.01(h); or
(i) by Parent or the Company, upon a breach of any covenant or agreement
on the part of the Company or Parent, respectively, set forth in this
Agreement, such that the conditions set forth in Sections 6.02(b) or
6.03(b), as the case may be, would not be satisfied (a "Terminating
Breach"); provided, that, if such Terminating Breach is curable prior to
October 31, 1996 by the Company or Parent, as the case may be, through the
exercise of its reasonable best efforts and for so long as the Company or
Parent, as the case may be, continues to exercise such reasonable best
efforts, neither Parent nor the Company, respectively, may terminate this
Agreement under this Section 7.01(i).
As used herein, "Alternative Transaction" means any of (i) a transaction
pursuant to which any person (or group of persons) other than Parent or its
affiliates (a "Third Party") acquires or would acquire more than 25% of the
outstanding shares of any class of equity securities of the Company, or, in the
case of any person (or group of persons other than Parent and its affiliates)
identified in the 1996 Company Proxy Statement as the beneficial owner of more
than 25% of the outstanding shares of Class A Common Stock or Class B Common
Stock, would acquire an additional 5% or more of such securities, whether from
the Company or pursuant to a tender offer or exchange offer or otherwise, (ii) a
merger or other business combination involving the Company pursuant to which any
Third Party acquires more than 25% of the outstanding equity securities of the
Company or the entity surviving such merger or business combination, or (iii)
any other transaction pursuant to which any Third Party acquires or would
acquire control of assets (including for this purpose the outstanding equity
securities of subsidiaries of the Company, and the entity surviving any merger
or business combination including any of them) of the Company, or any of its
subsidiaries having a fair market value (as determined by the Board of Directors
of the Company in good faith) equal to more than 25% of the fair market value of
all the assets of the Company and its subsidiaries, taken as a whole,
immediately prior to such transaction; provided, however, that the term
Alternative Transaction shall not include any acquisition of securities by a
broker dealer in connection with a bona fide public offering of such securities.
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SECTION 7.02. Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 7.01, this Agreement shall forthwith become void
and there shall be no liability on the part of any party hereto or any of its
affiliates, directors, officers or stockholders except (i) as set forth in
Section 7.03 and Section 8.01 hereof, and (ii) nothing herein shall relieve any
party from liability for any breach hereof.
SECTION 7.03. Fees and Expenses. (a) Except as set forth in this Section
7.03, all fees and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expenses, whether or not the Merger is consummated; provided, however, that
Parent and the Company shall share equally all SEC filing fees and printing
expenses incurred in connection with the printing and filing of the Proxy
Statement/Prospectus (including any preliminary materials related thereto) and
the Registration Statement (including financial statements and exhibits) and any
amendments or supplements thereto.
(b) The Company shall pay Parent a fee of $4 million (the "Fee"), plus
Parent's actual, documented and reasonable out-of-pocket expenses relating to
the transactions contemplated by this Agreement (including but not limited to,
fees and expenses of counsel and accountants and out-of-pocket expenses (but not
fees) of financial advisors) ("Expenses"), but in no event more than $500,000,
incurred from and after April 29, 1996, upon the first to occur of any of the
following events:
(i) the termination of this Agreement by Parent pursuant to Section
7.01(d) as a result of the failure to receive the requisite vote for
approval and adoption of this Agreement by the stockholders of the Company
by October 31, 1996; or
(ii) the termination of this Agreement by Parent pursuant to Section
7.01(e); or
(iii) the termination of this Agreement by the Company pursuant to
Section 7.01(f); or
(iv) the termination of this Agreement by Parent pursuant to Section
7.01(i).
(c) Upon a termination of this Agreement by Parent pursuant to Section
7.01(g), the Company shall pay to Parent the Expenses of Parent relating to the
transactions contemplated by this Agreement, but in no event more than $500,000,
incurred from and after April 29, 1996. Upon termination of this Agreement by
Company pursuant to Section 7.01(g), Parent shall pay to the Company the
Expenses of the Company relating to the transactions contemplated by this
Agreement, but in no event more than $500,000, incurred from and after April 29,
1996.
(d) The Fee and/or Expenses payable pursuant to Section 7.03(b) or Section
7.03(c) shall be paid within one business day after the first to occur of any of
the events described in Section 7.03(b) or Section 7.03(c); provided that, in no
event shall the Company or Parent, as the case may be, be required to pay such
Fee and/or Expenses to the other party, if, immediately prior to the termination
of this Agreement, the party entitled to receive such Fee and/or Expenses was in
material breach of its obligations under this Agreement.
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ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. Effectiveness of Representations, Warranties and Agreements;
Knowledge, Etc. (a) Except as otherwise provided in this Section 8.01, the
representations, warranties and agreements of each party hereto shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any other party hereto, any person controlling any such party or
any of their officers or directors, whether prior to or after the execution of
this Agreement. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 7.01, as the case may be, except that the agreements set
forth in Article I and Section 5.06 shall survive the Effective Time
indefinitely and those set forth in Section 7.03 shall survive termination
indefinitely. The Confidentiality Letter shall survive termination of this
Agreement as provided therein.
(b) Any disclosure made with reference to one or more Sections of the
Company Disclosure Schedule or the Parent Disclosure Schedule shall be deemed
disclosed with respect to each other section therein as to which such disclosure
is relevant provided that such relevance is reasonably apparent.
SECTION 8.02. Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made if and when delivered personally or by overnight courier to the parties
at the following addresses or sent by electronic transmission, with confirmation
received, to the telecopy numbers specified below (or at such other address or
telecopy number for a party as shall be specified by like notice):
(a) If to Parent or Merger Sub:
Tyco International Ltd.
One Tyco Park
Exeter, NH 03833
Telecopier No.: (603) 778-7330
Telephone No.: (603) 778-9700
Attention: Chairman
With a copy to:
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, NY 10022
Telecopier No.: (212) 715-8000
Telephone No.: (212) 715-9100
Attention: Joshua M. Berman, Esq.
(b) If to the Company:
Carlisle Plastics, Inc.
1314 North Third Street
Phoenix, AZ 85004
Telecopier No.:
Telephone No.: (602) 407-2100
Attention: Chairman
A-38
<PAGE>
With a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Telecopier No.: (212 ) 310-8007
Telephone No.: (212 ) 310-8000
Attention: Stephen E. Jacobs, Esq.
SECTION 8.03. Certain Definitions. For purposes of this Agreement, the term:
(a) "affiliates" means a person that directly or indirectly, through one
or more intermediaries, controls, is controlled by, or is under common
control with, the first mentioned person; including, without limitation, any
partnership or joint venture in which the Company (either alone, or through
or together with any other subsidiary) has, directly or indirectly, an
interest of 5% or more;
(b) "beneficial owner" with respect to any shares of Company Common
Stock means a person who shall be deemed to be the beneficial owner of such
shares (i) which such person or any of its affiliates or associates (as such
term is defined in Rule 12b-2 of the Exchange Act) beneficially owns,
directly or indirectly, (ii) which such person or any of its affiliates or
associates has, directly or indirectly, (A) the right to acquire (whether
such right is exercisable immediately or subject only to the passage of
time), pursuant to any agreement, arrangement or understanding or upon the
exercise of consideration rights, exchange rights, warrants or options, or
otherwise, or (B) the right to vote pursuant to any agreement, arrangement
or understanding, or (iii) which are beneficially owned, directly or
indirectly, by any other persons with whom such person or any of its
affiliates or associates has any agreement, arrangement or understanding for
the purpose of acquiring, holding, voting or disposing of any shares;
(c) "business day" means any day other than a day on which banks in New
York are required or authorized to be closed;
(d) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management or
policies of a person, whether through the ownership of stock, as trustee or
executor, by contract or credit arrangement or otherwise;
(e) "person" means an individual, corporation, partnership, association,
trust, unincorporated organization, other entity or group (as defined in
Section 13(d)(3) of the Exchange Act); and
(f) "subsidiary" or "subsidiaries" of the Company, the Surviving
Corporation, Parent or any other person means any corporation, partnership,
joint venture or other legal entity of which the Company, the Surviving
Corporation, Parent or such other person, as the case may be (either alone
or through or together with any other subsidiary), owns, directly or
indirectly, more than 50% of the stock or other equity interests the holders
of which are generally entitled to vote for the election of the board of
directors or other governing body of such corporation or other legal entity.
SECTION 8.04. Amendment. This Agreement may be amended by the parties hereto
by action taken by or on behalf of their respective Boards of Directors at any
time prior to the Effective Time; provided, however, that, after approval of the
Merger by the stockholders of the Company, no amendment may be made which by law
requires further approval by such stockholders without such further approval.
This Agreement may not be amended except by an instrument in writing signed by
the parties hereto.
SECTION 8.05. Waiver. At any time prior to the Effective Time, any party
hereto may with respect to any other party hereto (a) extend the time for the
performance of any of the obligations or
A-39
<PAGE>
other acts, (b) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto, or (c) waive
compliance with any of the agreements or conditions contained herein. Any such
extension or waiver shall be valid if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
SECTION 8.06. Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 8.07. Severability. (a) If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
(b) The Company and Parent agree that the Fee provided in Section 7.03(b) is
fair and reasonable in the circumstances, considering not only the Merger
Consideration but also the outstanding funded indebtedness (including capital
leases) of the Company and its subsidiaries. If a court of competent
jurisdiction shall nonetheless, by a final, non-appealable judgment, determine
that the amount of the Fee exceeds the maximum amount permitted by law, then the
amount of the Fee shall be reduced to the maximum amount permitted by law in the
circumstances, as determined by such court of competent jurisdiction.
SECTION 8.08. Entire Agreement. This Agreement constitutes the entire
agreement and supersedes all prior agreements and undertakings (other than the
Confidentiality Letters), both written and oral, among the parties, or any of
them, with respect to the subject matter hereof and, except as otherwise
expressly provided herein.
SECTION 8.09. Assignment; Merger Sub. This Agreement shall not be assigned
by operation of law or otherwise, except that all or any of the rights of Merger
Sub hereunder may be assigned to any direct, wholly-owned subsidiary of Parent
provided that no such assignment shall relieve the assigning party of its
obligations hereunder. Parent guarantees the full and punctual performance by
Merger Sub of all the obligations hereunder of Merger Sub or any such assignees.
SECTION 8.10. Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement, including, without limitation, by way of subrogation, other than
Section 5.06 (which is intended to be for the benefit of the Indemnified Parties
and Officer Employees and may be enforced by such Indemnified Parties and
Officer Employees).
SECTION 8.11. Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
SECTION 8.12. Governing Law; Jurisdiction. (a) This Agreement shall be
governed by, and construed in accordance with, the internal laws of the State of
New York applicable to contracts executed and fully performed within the State
of New York.
A-40
<PAGE>
(b) Each of the parties hereto submits to the non-exclusive jurisdiction of
the federal courts of the United States and the courts of the State of New York
located in the City of New York, Borough of Manhattan with respect to any claim
or cause of action arising out of this Agreement or the transactions
contemplated hereby.
SECTION 8.13. Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 8.14. WAIVER OF JURY TRIAL. EACH OF PARENT, MERGER SUB AND THE
COMPANY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ALL
RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM (WHETHER
BASED UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.
[This space intentionally left blank.]
A-41
<PAGE>
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
TYCO INTERNATIONAL LTD.
By /s/ Barbara S. Miller
...................................
Name: Barbara S. Miller
Title: Treasurer
T2 ACQUISITION CORP.
By /s/ Barbara S. Miller
...................................
Name: Barbara S. Miller
Title: Vice President
CARLISLE PLASTICS, INC.
By /s/ William H. Binnie
...................................
Name: William H. Binnie
Title: Chairman
A-42
<PAGE>
LETTERHEAD OF GOLDMAN, SACHS & CO.
PERSONAL AND CONFIDENTIAL
- ------------------------
August 5, 1996
Board of Directors
Carlisle Plastics, Inc.
1314 North Third Street
Phoenix, AZ 85004-1751
Gentlemen:
You have requested our opinion as to the fairness to the holders of the
outstanding shares of Class A Common Stock, par value $0.01 per share (the
"Carlisle A Stock"), and Class B Common Stock, par value $0.01 per share (the
"Carlisle B Stock"), of Carlisle Plastics, Inc. ("Carlisle") of the exchange
ratio of 0.172185 shares of Common Stock, par value $0.50 per share (the "Tyco
Common Stock"), of Tyco International Ltd. ("Tyco") to be exchanged for each
share of Carlisle A Stock and each share of Carlisle B Stock (the "Exchange
Ratio") pursuant to the Agreement and Plan of Merger, dated as of May 14, 1996,
among Tyco, T2 Acquisition Corp., a wholly-owned subsidiary of Tyco, and
Carlisle (the "Merger Agreement").
Goldman, Sachs & Co. ("Goldman Sachs"), as part of its investment banking
business, is continually engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements and valuations for estate, corporate and
other purposes. We are familiar with Carlisle, having acted as its financial
advisor in connection with, and having participated in certain of the
negotiations leading to, the Merger Agreement. We also have provided certain
investment banking services from time to time to Tyco, having acted as
co-managing underwriter in the public offering of $394 million aggregate
principal amount of Tyco Common Stock in February 1995. Goldman Sachs may
provide investment banking services to Tyco and its subsidiaries in the future.
In connection with this opinion, we have reviewed, among other things, the
Merger Agreement; the Registration Statement of Tyco on Form S-4 filed on the
date hereof, including the Proxy Statement/Prospectus relating to the Special
Meeting of Stockholders of Carlisle to be held in connection with the Merger
Agreement; the Registration Statement on Form S-4, including the Joint Proxy
Statement/Prospectus dated September 21, 1994 of Tyco and Kendall International,
Inc.; Annual Reports to Stockholders and Annual Reports on Form 10-K of Carlisle
for the five years ended December 31, 1995; Annual Reports to Stockholders and
Annual Reports on Form 10-K of Tyco for the five fiscal years ended June 30,
1995; certain interim reports to stockholders and quarterly reports on Form
10-Q of Carlisle and Tyco; certain other communications from Carlisle and
Tyco to their respective stockholders; and certain internal financial
analyses and forecasts for Carlisle and Tyco prepared by their respective
managements. We also have held discussions with members of the senior management
of Carlisle and Tyco regarding the past and current business operations,
financial condition and future prospects of their respective companies. In
addition, we have reviewed the reported price and trading activity for
Carlisle A Stock and Tyco Common Stock, compared certain financial and stock
market information for Carlisle and Tyco with similar information for certain
other companies the securities of which are publicly traded, reviewed the
financial terms of certain recent business combinations in the plastic
B-1
<PAGE>
consumer goods and plastics packaging industries specifically and in other
industries generally and performed such other studies and analyses as we
considered appropriate.
We have relied without independent verification upon the accuracy and
completeness of all of the financial and other information reviewed by us for
purposes of this opinion. In addition, we have not made an independent
evaluation or appraisal of the assets and liabilities of Carlisle or Tyco or any
of their respective subsidiaries and we have not been furnished with any such
evaluation or appraisal.
Based upon the foregoing and such other matters as we consider relevant, it
is our opinion that as of the date hereof the Exchange Ratio pursuant to the
Merger Agreement is fair to the holders of Carlisle A Stock and Carlisle B
Stock.
Very truly yours,
GOLDMAN, SACHS & CO.
B-2
<PAGE>
This Proxy is solicited on behalf of the Board of Directors
of Carlisle Plastics, Inc.
The undersigned hereby appoints WILLIAM H. BINNIE and PATRICK J. O'LEARY,
and each of them, proxies with power of substitution to vote for an on behalf of
the undersigned at the Special Meeting of Stockholders of Carlisle Plastics,
Inc. (the "Company") to be held on September [ ], 1996 at 10:00 a.m. Mountain
Standard Time at the Company's corporate headquarters at 1314 North Third
Street, Phoenix, Arizona 85004, and at any adjournment thereof, all shares of
stock of the Company of record in the name of the undersigned, hereby granting
full power and authority to act on behalf of the undersigned at the said
meeting, and any adjournment thereof.
THE SHARES REPRESENTED HEREBY SHALL BE VOTED AS SPECIFIED. IF NO
SPECIFICATION IS MADE, SUCH SHARES SHALL BE VOTED "FOR" THE APPROVAL AND
ADOPTION OF THE MERGER AGREEMENT, AS SET FORTH IN THE ACCOMPANYING PROXY
STATEMENT/PROSPECTUS.
(Continued on reverse side)
<PAGE>
(1) Approval and adoption of the Agreement and Plan of Merger, attached as Annex
A to the accompanying Proxy Statement/Prospectus, among Tyco International
Ltd. ("Tyco"), T2 Acquisition Corp., a wholly-owned subsidiary of Tyco, and
the Company.
FOR / / AGAINST / / ABSTAIN / /
(2) Upon such other matters which may properly come before the meeting or any
adjournment thereof.
Please sign exactly as your name appears
on this card. If shares are registered in
the names of two or more persons, each
should sign. Executors, administrators,
guardians, attorneys, and corporate
officers should add their titles.
The undersigned hereby revokes any proxy
previously given and acknowledges receipt
of written notice of, and the proxy
statement for, the Special Meeting of
Stockholders.
Dated: _________, 1996
_________________________________________
Signature
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Restated Articles of Organization of the Registrant provide that the
Registrant 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 Registrant, in certain positions of any other corporation in which the
Registrant 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 Registrant. 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
Registrant, no indemnification shall be provided to him with respect to such
matter if the Registrant 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 Registrant. The Restated
Articles of Organization of the Registrant 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 Registrant 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 Registrant 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 Registrant
pursuant to Section 16(b) of the Exchange Act and deliberate dishonesty.
II-1
<PAGE>
ITEM 21. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------- ------------------------------------------------------------------------------------
<C> <S>
2 --Agreement and Plan of Merger, dated as of May 14, 1996, by and among Tyco
International Ltd., T2 Acquisition Corp. and Carlisle Plastics, Inc. (included as
Annex A to the Proxy Statement/Prospectus which forms a part of this Registration
Statement)
4(a) --Indenture, dated as of April 30, 1992, between Registrant and BankAmerica National
Trust Company [as successor by merger to Security Pacific National Trust Company
New York], as Trustee (incorporated by reference to Exhibit (4)(a) to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 1992
(the "March 31, 1992 Form 10-Q"))
4(b) --First Supplemental Indenture, dated as of April 30, 1992, between Registrant and
BankAmerica National Trust Company [as successor by merger to Security Pacific
National Trust Company New York], as Trustee (incorporated by reference to
Exhibit (4)(b) to the March 31, 1992 Form 10-Q)
4(c) --Second Supplemental Indenture, dated as of March 8, 1993, between the Registrant
and BankAmerica National Trust Company, as Trustee (incorporated by reference to
Exhibit 4(c) to the Registrant's Current Report on Form 8-K filed on March 12,
1993)
4(d) --Stockholder Agreement, dated as of May 14, 1996, between William H. Binnie and the
Registrant
4(e) --Stockholder Agreement, dated as of May 14, 1996, between Christos I. Grigoriou and
the Grigoriou Family Limited Partnership and the Registrant
4(f) --Stockholder Agreement, dated as of May 14, 1996, between Grant M. Wilson and the
Registrant
4(g) --Form of Common Stock certificate (incorporated by reference to Exhibit 7 of the
Registrant's Registration Statement on Form 8-A filed on December 10, 1973)
5 --Opinion of M. Brian Moroze, Esq.
8(a) --Tax Opinion of Kramer, Levin, Naftalis & Frankel
8(b) --Tax Opinion of Weil, Gotshal & Manges, LLP
15 --Letter from Deloitte & Touche LLP re Unaudited Interim Financial Information of
Carlisle
23(a) --Consent of Price Waterhouse LLP
23(b) --Consent of Coopers & Lybrand L.L.P.
23(c) --Consent of Ernst & Young LLP
23(d) --Consent of Deloitte & Touche LLP
23(e) --Consent of Kramer, Levin, Naftalis & Frankel (contained in 8(a))
23(f) --Consent of Weil, Gotshal & Manges LLP (contained in 8(b))
23(g) --Consent of Goldman, Sachs & Co.
24 --Power of Attorney (contained on signature page)
</TABLE>
ITEM 22. UNDERTAKINGS
The undersigned 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.
Prior to any public reoffering of the securities registered hereunder
through use of a prospectus which is a part of this Registration Statement, by
any person or party who is deemed to be an underwriter within the meaning of
Rule 145(c), the issuer undertakes that such reoffering prospectus
II-2
<PAGE>
will contain the information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters, in addition to
the information called for by the other items of the applicable form.
The Registrant undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement: (i) To include any
prospectus required by section 10(a)(3) of the Securities Act of 1933; (ii) To
reflect in the prospectus any facts or events arising after the effective date
of the Registration Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the Registration Statement; and (iii) To include
any material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration Statement; Provided, however, that paragraphs
(1)(i) and (1)(ii) do not apply if the registration statement is on Form S-3 or
Form S-8 and the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by the
Registrant pursuant to section 13 or section 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment 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.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The Registrant undertakes that every prospectus: (i) that is filed pursuant
to the paragraph immediately preceding, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the 1993 Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the Registration Statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment 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.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 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 Securities and Exchange 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 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: (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; and (2) for the purpose of determining any liability under
the Securities Act of 1933, each post-effective amendment that contains
II-3
<PAGE>
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.
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the Registration Statement through the date
of responding to the request.
The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-4
<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-4 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 2nd day of
August, 1996.
TYCO INTERNATIONAL LTD.
By: /s/ MARK H. SWARTZ
..................................
Mark H. Swartz
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 MARK H. SWARTZ, 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 August 2,
1996 in the capacities indicated below.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- ---------------------------------------------
<S> <C>
/s/ L. DENNIS KOZLOWSKI Chairman of the Board, Chief Executive
............................................. Officer and Director (Principal Executive
L. Dennis Kozlowski Officer)
/s/ JOSHUA M. BERMAN Director
.............................................
Joshua M. Berman
/s/ RICHARD S. BODMAN Director
.............................................
Richard S. Bodman
/s/ JOHN F. FORT Director
.............................................
John F. Fort
/s/ STEPHEN W. FOSS Director
.............................................
Stephen W. Foss
/s/ RICHARD A. GILLELAND Director
.............................................
Richard A. Gilleland
/s/ PHILIP M. HAMPTON Director
.............................................
Philip M. Hampton
/s/ MARK H. SWARTZ Vice President-Chief Financial Officer
............................................. (Principal Financial and Accounting
Mark H. Swartz Officer)
/s/ FRANK E. WALSH. JR Director
.............................................
Frank E. Walsh. Jr
</TABLE>
II-5
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBIT PAGE
- ------- ----------------------------------------------------------------------- ------------
<S> <C> <C>
2 --Agreement and Plan of Merger, dated as of May 14, 1996, by and among
Tyco International Ltd., T2 Acquisition Corp. and Carlisle Plastics,
Inc. (included as Annex A to the Proxy Statement/Prospectus which
forms a part of this Registration Statement)
4(a ) --Indenture, dated as of April 30, 1992, between Registrant and
BankAmerica National Trust Company [as successor by merger to
Security Pacific National Trust Company New York], as Trustee
(incorporated by reference to Exhibit (4)(a) to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1992
(the "March 31, 1992 Form 10-Q"))
4(b ) --First Supplemental Indenture, dated as of April 30, 1992, between
Registrant and BankAmerica National Trust Company [as successor by
merger to Security Pacific National Trust Company New York], as
Trustee (incorporated by reference to Exhibit (4)(b) to the March 31,
1992 Form 10-Q)
4(c ) --Second Supplemental Indenture, dated as of March 8, 1993, between the
Registrant and BankAmerica National Trust Company, as Trustee
(incorporated by reference to Exhibit 4(c) to the Registrant's
Current Report on Form 8-K filed on March 12, 1993)
4(d ) --Stockholder Agreement, dated as of May 14, 1996, between William H.
Binnie and the Registrant
4(e ) --Stockholder Agreement, dated as of May 14, 1996, between Christos I.
Grigoriou and the Grigoriou Family Limited Partnership and the
Registrant
4(f ) --Stockholder Agreement, dated as of May 14, 1996, between Grant M.
Wilson and the Registrant
4(g ) --Form of Common Stock certificate (incorporated by reference to
Exhibit 7 of the Registrant's Registration Statement on Form 8-A
filed on December 10, 1973)
5 --Opinion of M. Brian Moroze, Esq.
8(a ) --Tax Opinion of Kramer, Levin, Naftalis & Frankel
8(b ) --Tax Opinion of Weil, Gotshal & Manges, LLP
15 --Letter from Deloitte & Touche LLP re Unaudited Interim Financial
Information of Carlisle
23(a ) --Consent of Price Waterhouse LLP
23(b ) --Consent of Coopers & Lybrand L.L.P.
23(c ) --Consent of Ernst & Young LLP
23(d ) --Consent of Deloitte & Touche LLP
23(e ) --Consent of Kramer, Levin, Naftalis & Frankel (contained in 8(a))
23(f ) --Consent of Weil, Gotshal & Manges LLP (contained in 8(b))
23(g ) --Consent of Goldman, Sachs & Co.
24 --Power of Attorney (contained on signature page)
</TABLE>
Exhibit 4(d)
STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT, dated as of May 14, 1996 (the
"Agreement"), between the undersigned holder (the "Holder") of shares of
the common stock, $0.01 par value (the "Company Common Stock"), of Carlisle
Plastics, Inc., a Delaware corporation (the "Company"), and Tyco
International Ltd., a Massachusetts corporation ("Parent").
RECITALS
The Company, Parent and T2 Acquisition Corp., a Delaware
corporation and a direct, wholly-owned subsidiary of Parent ("Merger Sub"),
propose to enter into an Agreement and Plan of Merger dated the date hereof
(the "Merger Agreement"; capitalized terms not otherwise defined herein
being used herein as therein defined), pursuant to which Merger Sub would
be merged (the "Merger") with and into the Company, and the outstanding
shares of the Company's Class A Common Stock and Class B Common Stock (the
"Shares") would be converted into the right to receive shares ("Parent
Shares") of the common stock, $0.50 par value, of Parent; and
The Holder is the beneficial owner of the number of shares of
Class A Common Stock and/or Class B Common Stock (together with any shares
of Class A Common Stock and Class B Common Stock hereafter acquired by the
Holder, and any options, warrants or other rights to acquire shares of
Class A Common Stock and Class B Common Stock now owned or hereafter
acquired by the Holder, the "Subject Shares") set forth on the signature
page to this Agreement; and
As a condition of its entering into the Merger Agreement, Parent
has requested the Holder to agree, and the Holder has agreed, to enter into
this Agreement.
AGREEMENT
NOW, THEREFORE, the parties hereto agree as follows:
1. Agreement to Vote Shares. At every meeting of the
------------------------
stockholders of the Company called with respect to any of the following,
and at every adjournment thereof, and on every action or approval by
written consent of the stockholders of the Company with respect to any of
the following, the Holder shall vote all the Subject Shares that it
beneficially owns at the time of any such vote: (i) in favor of approval
of the Merger Agreement and the Merger and any matter necessary to
facilitate the Merger and (ii) against (x) approval of any Acquisition
Proposal made in opposition to or in competition with the Merger, (y) any
merger (including, without limitation, an Alternative Transaction),
consolidation, sale of assets requiring stockholder approval,
reorganization or recapitalization of the Company, with any other person
other than Parent or its affiliates, and (z) any liquidation or winding up
of the Company (each of the foregoing in this clause (ii) is hereinafter
referred to as an "Opposing Proposal").
<PAGE>
2. Agreement Not to Solicit. Prior to the earlier to occur of
------------------------
the Effective Time of the Merger or the Termination Date (as hereinafter
defined), the Holder will not, and will not permit any entity under its
control to: (1) solicit proxies or become a "participant" in a
"solicitation" (as such terms are defined in Regulation 14A under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) with
respect to an Opposing Proposal or otherwise encourage or assist any person
in taking or planning any action that would constitute an Opposing
Proposal; or (2) initiate a stockholders' vote or action by written consent
of the Company's stockholders with respect to an Opposing Proposal.
3. Agreement Not to Transfer Shares. (a) From and after the
--------------------------------
date hereof until the earlier to occur of 30 days prior to the Effective
Time of the Merger and the Termination Date, the Holder will not effect a
sale, exchange, pledge, disposition or other transfer or encumbrance (a
"Sale") of any of the Subject Shares to or in favor of any person, unless,
prior to any such Sale, such person shall have agreed in a writing, in form
and substance reasonably acceptable to Parent, for the benefit of and
delivered to Parent, to be bound by all provisions of this Agreement
applicable to the Holder; and provided that in no event shall the Holder
effect a Sale of any Class B Common Stock to a person who is not a
Permitted Transferee (as that term is defined in Article FOURTH of the
Company's Restated Certificate of Incorporation).
(b) From and after 30 days prior to the Effective Time of the
Merger, unless the Termination Date shall occur, the Holder shall not (i)
transfer, sell or otherwise dispose of any Shares prior to the Effective
Time or (ii) sell or otherwise reduce the Holder's risk (within the meaning
of the Securities and Exchange Commission's Financial Reporting Release No.
1, "Codification of Financial Reporting Policies," Section 201.01 [47 F.R.
21028] (April 15, 1982)) with respect to any Parent Shares until after such
time (the "Publication Time") as consolidated financial statements which
reflect at least 30 days of post-merger combined operations of Parent and
the Company have been published by Parent, except as permitted by Staff
Accounting Bulletin No. 76 issued by the Securities and Exchange
Commission. The Holder understands that the certificates representing the
Parent Shares received by the Holder in the Merger will be placed on the
"stop-transfer list" maintained by Parent's transfer agent and will remain
so listed until the Publication Time, and that there will be placed on the
certificate(s) representing such stock, or any certificate(s) delivered in
substitution therefor, a legend stating in substance:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN
COMPLIANCE WITH THE CONDITIONS SPECIFIED IN THE STOCKHOLDER AGREEMENT,
DATED AS OF MAY 14, 1996, RELATING THERETO, A COPY OF WHICH IS ON FILE WITH
THE CLERK OF TYCO INTERNATIONAL LTD."
(c) In the event that Parent elects not to treat the Merger as a
"pooling of interests" for accounting purposes, Parent shall promptly so
inform the Holder in writing, and, in such case, the provisions of
subsection (b) above shall terminate upon the giving of such notice;
provided, however, that, in such case, the provisions of subsection (a)
- -------- -------
above
-2-
<PAGE>
shall continue in effect until the earlier to occur of the Effective Time
and the Termination Date.
4. Agreement Not to Convert Shares. Prior to the earlier to
-------------------------------
occur of the Effective Time of the Merger or the Termination Date, the
Holder will not convert or request that the Company convert any of the
Subject Shares that are Class B Common Stock to Class A Common Stock.
5. Covenants under Rule 145
------------------------
(a) The Holder has been advised that the issuance of the Parent
Shares to the undersigned pursuant to the Merger will be registered under
the Securities Act of 1933, as amended (the "Securities Act"), pursuant to
a registration statement on Form S-4. The undersigned has also been
advised that the undersigned will or may be deemed an "affiliate" of the
Company at the time the Merger is submitted to a vote of the stockholders
of the Company, subject to Rule 145 under the Securities Act. Accordingly,
the Holder may not sell or otherwise dispose of any Parent Shares except in
accordance with Rule 145(d) or pursuant to an effective registration
statement under the Securities Act or an exemption from the registration
requirements of the Securities Act.
(b) The Holder understands and agrees that:
i. Parent is under no obligation to register the sale, transfer
or other disposition of the Parent Shares to be received by the Holder in
the Merger except as set forth in written agreements, if any, with the
undersigned entered into by Parent.
ii. Stop transfer instructions will be given to the transfer
agent of Parent with respect to the Parent Shares to be received by the
Holder in the Merger, and there will be placed on the certificate(s)
representing such stock, or any certificate(s) delivered in substitution
therefor, a legend stating in substance:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 UNDER THE SECURITIES ACT OF 1933 (THE "ACT")
APPLIES. THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED
ONLY IN ACCORDANCE WITH RULE 145(D) OR PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT OR EXEMPTION FROM REGISTRATION UNDER THE ACT."
iii. Unless the transfer by the Holder of the Parent Shares
is a sale made in conformity with the provisions of Rule 145(d), or is made
pursuant to a registration statement under the Securities Act, Parent
reserves the right to put an appropriate Securities Act legend on the
certificate issued to a transferee.
(c) Parent represents and agrees as follows:
-3-
<PAGE>
i. For so long as and to the extent necessary to permit the
Holder (or any transferee of Parent Shares not in violation of this
Agreement (a "Permissible Transferee")) to sell the Parent Shares pursuant
to Rule 145 and, to the extent applicable, Rule 144 under the Securities
Act, Parent shall use reasonable best efforts to file, on a timely basis,
all reports required to be filed with the SEC by it pursuant to Section 13
of the Exchange Act, so long as it is subject to such requirement, shall
furnish to the Holder or any Permissible Transferee upon request a written
statement as to whether Parent has complied with such reporting require-
ments during the 12 months preceding any proposed sale under Rule 145 and
shall otherwise use its reasonable best efforts to permit such sales
pursuant to Rule 145 and Rule 144. Parent has filed, on a timely basis,
all reports required to be filed with the SEC pursuant to Section 13 of the
Exchange Act during the preceding 12 months.
ii. Parent agrees that the stop transfer instructions and
legends referred to above shall be promptly terminated or removed if the
Holder or any Permissible Transferee shall have delivered to Parent a copy
of a letter from the staff of the SEC or an opinion of counsel with
recognized expertise in securities law matters, in form and substance
reasonably satisfactory to Parent, to the effect that such instructions and
legends are not required for the purposes of the Securities Act.
6. Hart-Scott-Rodino, etc. The Holder and Parent shall use all
-----------------------
reasonable efforts promptly to make all filings and applications with any
governmental or regulatory agencies required to be made in connection with
the acquisition by the Holder of Parent Shares in the Merger, including,
without limitation, under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, and to furnish all information required to be furnished in or in
connection with any such filing or application.
7. Binding Agreement. This Agreement shall be binding upon,
-----------------
and shall inure to the benefit of, the Holder, and his heirs, estate,
personal representatives and permitted assigns and Parent and its
successors and permitted assigns.
8. Notices. All notices and other communications given or made
-------
pursuant hereto shall be in writing and shall be deemed to have been duly
given or made if and when delivered personally or by overnight courier or
sent by electronic transmission, with confirmation received, to the
telecopy numbers specified below:
If to the Holder, at the address appearing on the signature page
beneath the Holder's name, with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Telecopier No.: (212 ) 310-8007
Telephone No.: (212 ) 310-8000
Attention: Stephen E. Jacobs, Esq.
-4-
<PAGE>
If to Parent or Merger Sub:
Tyco International Ltd.
One Tyco Park
Exeter, New Hampshire 03833
Telecopier No.: (603) 778-7330
Telephone No.: (603) 778-9700
Attention: Chairman
With a copy to:
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, New York 10022
Telecopier No.: (212) 715-8000
Telephone No.: (212) 715-9100
Attention: Joshua M. Berman, Esq.
or to such other address or telecopy number as any party may have furnished
to the other parties in writing in accordance herewith.
9. Specific Performance. The parties hereto agree that
--------------------
irreparable harm would occur in the event that any of the provisions of
this Agreement were not performed in accordance with its specific terms or
were otherwise breached. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof 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.
10. Amendment. (a) This Agreement may not be amended or
---------
modified, except by an instrument in writing signed on behalf of each of
the parties hereto.
(b) This Agreement may not be waived by either party hereto,
except by an instrument in writing signed on behalf of the party granting
such waiver.
11. Governing Law/Consent of Jurisdiction. This Agreement shall
-------------------------------------
be governed by and construed in accordance with the laws of the State of
New York, except to the extent mandatorily governed by the laws of the
State of Delaware or Massachusetts. Each party hereto 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 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. Each party hereto 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 such party at its address specified in Section 8 or
by any other method permitted by law.
-5-
<PAGE>
12. Counterparts. This Agreement may be executed in
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
13. Termination. (a) This Agreement shall terminate if and when
-----------
the Merger Agreement is terminated according to its terms. The date and
time at which this Agreement is terminated in accordance with this Section
13 is referred to herein as the "Termination Date."
(b) Upon any termination of this Agreement as provided in
Section 13, this Agreement shall thereupon become void and of no further
force and effect, and there shall be no liability in respect of this
Agreement or of any transactions contemplated hereby or by the Merger
Agreement on the part of any party hereto or any of its directors,
officers, partners, stockholders, employees, agents, advisors,
representatives or affiliates; provided, however, that nothing herein shall
-------- -------
relieve any party from any liability for such party's wilful breach of this
Agreement; and provided further that nothing herein shall limit, restrict,
-------- -------
impair, amend or otherwise modify the rights, remedies, obligations or
liabilities of any person under any other contract or agreement, including,
without limitation, the Merger Agreement.
[This space intentionally left blank]
-6-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by or on
behalf of each of the parties hereto, all as of the date first above
written.
TYCO INTERNATIONAL LTD.
By: /s/ Barbara S. Miller
------------------------------------
Name: Barbara S. Miller
Title: Vice President/Treasurer
THE HOLDER:
/s/ William H. Binnie
----------------------------------------
Name: William H. Binnie
Address:
-----------------------------
----------------------------------------
--------------------------------------
Number of Shares:
Class A Common Stock: 28,282
Class B Common Stock: 5,940,313
-7-
Exhibit 4(e)
STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT, dated as of May 14, 1996 (the
"Agreement"), between the undersigned holder (the "Holder") of shares of
the common stock, $0.01 par value (the "Company Common Stock"), of Carlisle
Plastics, Inc., a Delaware corporation (the "Company"), and Tyco
International Ltd., a Massachusetts corporation ("Parent").
RECITALS
The Company, Parent and T2 Acquisition Corp., a Delaware
corporation and a direct, wholly-owned subsidiary of Parent ("Merger Sub"),
propose to enter into an Agreement and Plan of Merger dated the date hereof
(the "Merger Agreement"; capitalized terms not otherwise defined herein
being used herein as therein defined), pursuant to which Merger Sub would
be merged (the "Merger") with and into the Company, and the outstanding
shares of the Company's Class A Common Stock and Class B Common Stock (the
"Shares") would be converted into the right to receive shares ("Parent
Shares") of the common stock, $0.50 par value, of Parent; and
The Holder is the beneficial owner of the number of shares of
Class A Common Stock and/or Class B Common Stock (together with any shares
of Class A Common Stock and Class B Common Stock hereafter acquired by the
Holder, and any options, warrants or other rights to acquire shares of
Class A Common Stock and Class B Common Stock now owned or hereafter
acquired by the Holder, the "Subject Shares") set forth on the signature
page to this Agreement; and
As a condition of its entering into the Merger Agreement, Parent
has requested the Holder to agree, and the Holder has agreed, to enter into
this Agreement.
AGREEMENT
NOW, THEREFORE, the parties hereto agree as follows:
1. Agreement to Vote Shares. At every meeting of the
------------------------
stockholders of the Company called with respect to any of the following,
and at every adjournment thereof, and on every action or approval by
written consent of the stockholders of the Company with respect to any of
the following, the Holder shall vote all the Subject Shares that it
beneficially owns at the time of any such vote: (i) in favor of approval
of the Merger Agreement and the Merger and any matter necessary to
facilitate the Merger and (ii) against (x) approval of any Acquisition
Proposal made in opposition to or in competition with the Merger, (y) any
merger (including, without limitation, an Alternative Transaction),
consolidation, sale of assets requiring stockholder approval,
reorganization or recapitalization of the Company, with any other person
other than Parent or its affiliates, and (z) any liquidation or winding up
of the Company (each of the foregoing in this clause (ii) is hereinafter
referred to as an "Opposing Proposal").
<PAGE>
2. Agreement Not to Solicit. Prior to the earlier to occur of
------------------------
the Effective Time of the Merger or the Termination Date (as hereinafter
defined), the Holder will not, and will not permit any entity under its
control to: (1) solicit proxies or become a "participant" in a
"solicitation" (as such terms are defined in Regulation 14A under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) with
respect to an Opposing Proposal or otherwise encourage or assist any person
in taking or planning any action that would constitute an Opposing
Proposal; or (2) initiate a stockholders' vote or action by written consent
of the Company's stockholders with respect to an Opposing Proposal.
3. Agreement Not to Transfer Shares. (a) From and after the
--------------------------------
date hereof until the earlier to occur of 30 days prior to the Effective
Time of the Merger and the Termination Date, the Holder will not effect a
sale, exchange, pledge, disposition or other transfer or encumbrance (a
"Sale") of any of the Subject Shares to or in favor of any person, unless,
prior to any such Sale, such person shall have agreed in a writing, in form
and substance reasonably acceptable to Parent, for the benefit of and
delivered to Parent, to be bound by all provisions of this Agreement
applicable to the Holder; and provided that in no event shall the Holder
effect a Sale of any Class B Common Stock to a person who is not a
Permitted Transferee (as that term is defined in Article FOURTH of the
Company's Restated Certificate of Incorporation).
(b) From and after 30 days prior to the Effective Time of the
Merger, unless the Termination Date shall occur, the Holder shall not (i)
transfer, sell or otherwise dispose of any Shares prior to the Effective
Time or (ii) sell or otherwise reduce the Holder's risk (within the meaning
of the Securities and Exchange Commission's Financial Reporting Release No.
1, "Codification of Financial Reporting Policies," Section 201.01 [47 F.R.
21028] (April 15, 1982)) with respect to any Parent Shares until after such
time (the "Publication Time") as consolidated financial statements which
reflect at least 30 days of post-merger combined operations of Parent and
the Company have been published by Parent, except as permitted by Staff
Accounting Bulletin No. 76 issued by the Securities and Exchange
Commission. The Holder understands that the certificates representing the
Parent Shares received by the Holder in the Merger will be placed on the
"stop-transfer list" maintained by Parent's transfer agent and will remain
so listed until the Publication Time, and that there will be placed on the
certificate(s) representing such stock, or any certificate(s) delivered in
substitution therefor, a legend stating in substance:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN
COMPLIANCE WITH THE CONDITIONS SPECIFIED IN THE STOCKHOLDER AGREEMENT,
DATED AS OF MAY 14, 1996, RELATING THERETO, A COPY OF WHICH IS ON FILE WITH
THE CLERK OF TYCO INTERNATIONAL LTD."
(c) In the event that Parent elects not to treat the Merger as a
"pooling of interests" for accounting purposes, Parent shall promptly so
inform the Holder in writing, and, in such case, the provisions of
subsection (b) above shall terminate upon the giving of such notice;
provided, however, that, in such case, the provisions of subsection (a)
- -------- -------
above
-2-
<PAGE>
shall continue in effect until the earlier to occur of the Effective Time
and the Termination Date.
4. Agreement Not to Convert Shares. Prior to the earlier to
-------------------------------
occur of the Effective Time of the Merger or the Termination Date, the
Holder will not convert or request that the Company convert any of the
Subject Shares that are Class B Common Stock to Class A Common Stock.
5. Covenants under Rule 145
------------------------
(a) The Holder has been advised that the issuance of the Parent
Shares to the undersigned pursuant to the Merger will be registered under
the Securities Act of 1933, as amended (the "Securities Act"), pursuant to
a registration statement on Form S-4. The undersigned has also been
advised that the undersigned will or may be deemed an "affiliate" of the
Company at the time the Merger is submitted to a vote of the stockholders
of the Company, subject to Rule 145 under the Securities Act. Accordingly,
the Holder may not sell or otherwise dispose of any Parent Shares except in
accordance with Rule 145(d) or pursuant to an effective registration
statement under the Securities Act or an exemption from the registration
requirements of the Securities Act.
(b) The Holder understands and agrees that:
i. Parent is under no obligation to register the sale, transfer
or other disposition of the Parent Shares to be received by the Holder in
the Merger except as set forth in written agreements, if any, with the
undersigned entered into by Parent.
ii. Stop transfer instructions will be given to the transfer
agent of Parent with respect to the Parent Shares to be received by the
Holder in the Merger, and there will be placed on the certificate(s)
representing such stock, or any certificate(s) delivered in substitution
therefor, a legend stating in substance:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 UNDER THE SECURITIES ACT OF 1933 (THE "ACT")
APPLIES. THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED
ONLY IN ACCORDANCE WITH RULE 145(D) OR PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT OR EXEMPTION FROM REGISTRATION UNDER THE ACT."
iii. Unless the transfer by the Holder of the Parent Shares
is a sale made in conformity with the provisions of Rule 145(d), or is made
pursuant to a registration statement under the Securities Act, Parent
reserves the right to put an appropriate Securities Act legend on the
certificate issued to a transferee.
(c) Parent represents and agrees as follows:
-3-
<PAGE>
i. For so long as and to the extent necessary to permit
the Holder (or any transferee of Parent Shares not in violation of
this Agreement (a "Permissible Transferee")) to sell the Parent Shares
pursuant to Rule 145 and, to the extent applicable, Rule 144 under the
Securities Act, Parent shall use reasonable best efforts to file, on a
timely basis, all reports required to be filed with the SEC by it pursuant
to Section 13 of the Exchange Act, so long as it is subject to such
requirement, shall furnish to the Holder or any Permissible Transferee upon
request a written statement as to whether Parent has complied with such
reporting requirements during the 12 months preceding any proposed sale
under Rule 145 and shall otherwise use its reasonable best efforts to
permit such sales pursuant to Rule 145 and Rule 144. Parent has filed, on
a timely basis, all reports required to be filed with the SEC pursuant to
Section 13 of the Exchange Act during the preceding 12 months.
ii. Parent agrees that the stop transfer instructions and
legends referred to above shall be promptly terminated or removed if the
Holder or any Permissible Transferee shall have delivered to Parent a copy
of a letter from the staff of the SEC or an opinion of counsel with
recognized expertise in securities law matters, in form and substance
reasonably satisfactory to Parent, to the effect that such instructions and
legends are not required for the purposes of the Securities Act.
6. Hart-Scott-Rodino, etc. The Holder and Parent shall use all
-----------------------
reasonable efforts promptly to make all filings and applications with any
governmental or regulatory agencies required to be made in connection with
the acquisition by the Holder of Parent Shares in the Merger, including,
without limitation, under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, and to furnish all information required to be furnished in or in
connection with any such filing or application.
7. Binding Agreement. This Agreement shall be binding upon,
-----------------
and shall inure to the benefit of, the Holder, and his heirs, estate,
personal representatives and permitted assigns and Parent and its
successors and permitted assigns.
8. Notices. All notices and other communications given or made
-------
pursuant hereto shall be in writing and shall be deemed to have been duly
given or made if and when delivered personally or by overnight courier or
sent by electronic transmission, with confirmation received, to the
telecopy numbers specified below:
If to the Holder, at the address appearing on the signature page
beneath the Holder's name, with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Telecopier No.: (212 ) 310-8007
Telephone No.: (212 ) 310-8000
Attention: Stephen E. Jacobs, Esq.
-4-
<PAGE>
If to Parent or Merger Sub:
Tyco International Ltd.
One Tyco Park
Exeter, New Hampshire 03833
Telecopier No.: (603) 778-7330
Telephone No.: (603) 778-9700
Attention: Chairman
With a copy to:
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, New York 10022
Telecopier No.: (212) 715-8000
Telephone No.: (212) 715-9100
Attention: Joshua M. Berman, Esq.
or to such other address or telecopy number as any party may have furnished
to the other parties in writing in accordance herewith.
9. Specific Performance. The parties hereto agree that
--------------------
irreparable harm would occur in the event that any of the provisions of
this Agreement were not performed in accordance with its specific terms or
were otherwise breached. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof 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.
10. Amendment. (a) This Agreement may not be amended or
---------
modified, except by an instrument in writing signed on behalf of each of
the parties hereto.
(b) This Agreement may not be waived by either party hereto,
except by an instrument in writing signed on behalf of the party granting
such waiver.
11. Governing Law/Consent of Jurisdiction. This Agreement shall
-------------------------------------
be governed by and construed in accordance with the laws of the State of
New York, except to the extent mandatorily governed by the laws of the
State of Delaware or Massachusetts. Each party hereto 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 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. Each party hereto 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 such party at its address specified in Section 8 or
by any other method permitted by law.
-5-
<PAGE>
12. Counterparts. This Agreement may be executed in
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
13. Termination. (a) This Agreement shall terminate if and when
-----------
the Merger Agreement is terminated according to its terms. The date and
time at which this Agreement is terminated in accordance with this Section
13 is referred to herein as the "Termination Date."
(b) Upon any termination of this Agreement as provided in
Section 13, this Agreement shall thereupon become void and of no further
force and effect, and there shall be no liability in respect of this
Agreement or of any transactions contemplated hereby or by the Merger
Agreement on the part of any party hereto or any of its directors,
officers, partners, stockholders, employees, agents, advisors,
representatives or affiliates; provided, however, that nothing herein shall
-------- -------
relieve any party from any liability for such party's wilful breach of this
Agreement; and provided further that nothing herein shall limit, restrict,
-------- -------
impair, amend or otherwise modify the rights, remedies, obligations or
liabilities of any person under any other contract or agreement, including,
without limitation, the Merger Agreement.
[This space intentionally left blank]
-6-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by or on
behalf of each of the parties hereto, all as of the date first above
written.
TYCO INTERNATIONAL LTD.
By: /s/ Barbara S. Miller
-----------------------------------
Name: Barbars S. Miller
Title: Vice President/Treasurer
THE HOLDER:
Grigoriou Family Limited Partnership
By: Christos I. Grigoriou Revocable Trust,
its general partner
/s/ Christos I. Grigoriou
----------------------------------------
Name: Christos I. Grigoriou
Title: Trustee
Address:
-----------------------------
----------------------------------------
----------------------------------------
Number of Shares:
Class A Common Stock: 300,000
Class B Common Stock: 1,707,448
Number of Shares: /s/ Christos I. Grigoriou
---------------------------------
Christos I. Grigoriou
Class A Common Stock: 38,700
Class B Common Stock: - 0 -
-7-
Exhibit 4(f)
STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT, dated as of May 14, 1996 (the
"Agreement"), between the undersigned holder (the "Holder") of shares of
the common stock, $0.01 par value (the "Company Common Stock"), of Carlisle
Plastics, Inc., a Delaware corporation (the "Company"), and Tyco
International Ltd., a Massachusetts corporation ("Parent").
RECITALS
The Company, Parent and T2 Acquisition Corp., a Delaware
corporation and a direct, wholly-owned subsidiary of Parent ("Merger Sub"),
propose to enter into an Agreement and Plan of Merger dated the date hereof
(the "Merger Agreement"; capitalized terms not otherwise defined herein
being used herein as therein defined), pursuant to which Merger Sub would
be merged (the "Merger") with and into the Company, and the outstanding
shares of the Company's Class A Common Stock and Class B Common Stock (the
"Shares") would be converted into the right to receive shares ("Parent
Shares") of the common stock, $0.50 par value, of Parent; and
The Holder is the beneficial owner of the number of shares of
Class A Common Stock and/or Class B Common Stock (together with any shares
of Class A Common Stock and Class B Common Stock hereafter acquired by the
Holder, and any options, warrants or other rights to acquire shares of
Class A Common Stock and Class B Common Stock now owned or hereafter
acquired by the Holder, the "Subject Shares") set forth on the signature
page to this Agreement; and
As a condition of its entering into the Merger Agreement, Parent
has requested the Holder to agree, and the Holder has agreed, to enter into
this Agreement.
AGREEMENT
NOW, THEREFORE, the parties hereto agree as follows:
1. Agreement to Vote Shares. At every meeting of the
------------------------
stockholders of the Company called with respect to any of the following,
and at every adjournment thereof, and on every action or approval by
written consent of the stockholders of the Company with respect to any of
the following, the Holder shall vote all the Subject Shares that it
beneficially owns at the time of any such vote: (i) in favor of approval
of the Merger Agreement and the Merger and any matter necessary to
facilitate the Merger and (ii) against (x) approval of any Acquisition
Proposal made in opposition to or in competition with the Merger, (y) any
merger (including, without limitation, an Alternative Transaction),
consolidation, sale of assets requiring stockholder approval,
reorganization or recapitalization of the Company, with any other person
other than Parent or its affiliates, and (z) any liquidation or winding up
of the Company (each of the foregoing in this clause (ii) is hereinafter
referred to as an "Opposing Proposal").
<PAGE>
2. Agreement Not to Solicit. Prior to the earlier to occur of
------------------------
the Effective Time of the Merger or the Termination Date (as hereinafter
defined), the Holder will not, and will not permit any entity under its
control to: (1) solicit proxies or become a "participant" in a
"solicitation" (as such terms are defined in Regulation 14A under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) with
respect to an Opposing Proposal or otherwise encourage or assist any person
in taking or planning any action that would constitute an Opposing
Proposal; or (2) initiate a stockholders' vote or action by written consent
of the Company's stockholders with respect to an Opposing Proposal.
3. Agreement Not to Transfer Shares. (a) From and after the
--------------------------------
date hereof until the earlier to occur of 30 days prior to the Effective
Time of the Merger and the Termination Date, the Holder will not effect a
sale, exchange, pledge, disposition or other transfer or encumbrance (a
"Sale") of any of the Subject Shares to or in favor of any person, unless,
prior to any such Sale, such person shall have agreed in a writing, in form
and substance reasonably acceptable to Parent, for the benefit of and
delivered to Parent, to be bound by all provisions of this Agreement
applicable to the Holder; and provided that in no event shall the Holder
effect a Sale of any Class B Common Stock to a person who is not a
Permitted Transferee (as that term is defined in Article FOURTH of the
Company's Restated Certificate of Incorporation).
(b) From and after 30 days prior to the Effective Time of the
Merger, unless the Termination Date shall occur, the Holder shall not (i)
transfer, sell or otherwise dispose of any Shares prior to the Effective
Time or (ii) sell or otherwise reduce the Holder's risk (within the meaning
of the Securities and Exchange Commission's Financial Reporting Release No.
1, "Codification of Financial Reporting Policies," Section 201.01 [47 F.R.
21028] (April 15, 1982)) with respect to any Parent Shares until after such
time (the "Publication Time") as consolidated financial statements which
reflect at least 30 days of post-merger combined operations of Parent and
the Company have been published by Parent, except as permitted by Staff
Accounting Bulletin No. 76 issued by the Securities and Exchange
Commission. The Holder understands that the certificates representing the
Parent Shares received by the Holder in the Merger will be placed on the
"stop-transfer list" maintained by Parent's transfer agent and will remain
so listed until the Publication Time, and that there will be placed on the
certificate(s) representing such stock, or any certificate(s) delivered in
substitution therefor, a legend stating in substance:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN
COMPLIANCE WITH THE CONDITIONS SPECIFIED IN THE STOCKHOLDER AGREEMENT,
DATED AS OF MAY 14, 1996, RELATING THERETO, A COPY OF WHICH IS ON FILE WITH
THE CLERK OF TYCO INTERNATIONAL LTD."
(c) In the event that Parent elects not to treat the Merger as a
"pooling of interests" for accounting purposes, Parent shall promptly so
inform the Holder in writing, and, in such case, the provisions of
subsection (b) above shall terminate upon the giving of such notice;
provided, however, that, in such case, the provisions of subsection (a)
- -------- -------
above
<PAGE>
shall continue in effect until the earlier to occur of the Effective Time
and the Termination Date.
4. Agreement Not to Convert Shares. Prior to the earlier to
-------------------------------
occur of the Effective Time of the Merger or the Termination Date, the
Holder will not convert or request that the Company convert any of the
Subject Shares that are Class B Common Stock to Class A Common Stock.
5. Covenants under Rule 145
------------------------
(a) The Holder has been advised that the issuance of the Parent
Shares to the undersigned pursuant to the Merger will be registered under
the Securities Act of 1933, as amended (the "Securities Act"), pursuant to
a registration statement on Form S-4. The undersigned has also been
advised that the undersigned will or may be deemed an "affiliate" of the
Company at the time the Merger is submitted to a vote of the stockholders
of the Company, subject to Rule 145 under the Securities Act. Accordingly,
the Holder may not sell or otherwise dispose of any Parent Shares except in
accordance with Rule 145(d) or pursuant to an effective registration
statement under the Securities Act or an exemption from the registration
requirements of the Securities Act.
(b) The Holder understands and agrees that:
i. Parent is under no obligation to register the sale, transfer
or other disposition of the Parent Shares to be received by the Holder in
the Merger except as set forth in written agreements, if any, with the
undersigned entered into by Parent.
ii. Stop transfer instructions will be given to the transfer
agent of Parent with respect to the Parent Shares to be received by the
Holder in the Merger, and there will be placed on the certificate(s)
representing such stock, or any certificate(s) delivered in substitution
therefor, a legend stating in substance:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 UNDER THE SECURITIES ACT OF 1933 (THE "ACT")
APPLIES. THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED
ONLY IN ACCORDANCE WITH RULE 145(D) OR PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT OR EXEMPTION FROM REGISTRATION UNDER THE ACT."
iii. Unless the transfer by the Holder of the Parent Shares
is a sale made in conformity with the provisions of Rule 145(d), or is made
pursuant to a registration statement under the Securities Act, Parent
reserves the right to put an appropriate Securities Act legend on the
certificate issued to a transferee.
(c) Parent represents and agrees as follows:
-3-
<PAGE>
i. For so long as and to the extent necessary to permit the
Holder (or any transferee of Parent Shares not in violation of this
Agreement (a "Permissible Transferee")) to sell the Parent Shares pursuant
to Rule 145 and, to the extent applicable, Rule 144 under the Securities
Act, Parent shall use reasonable best efforts to file, on a timely basis,
all reports required to be filed with the SEC by it pursuant to Section 13
of the Exchange Act, so long as it is subject to such requirement, shall
furnish to the Holder or any Permissible Transferee upon request a written
statement as to whether Parent has complied with such reporting require-
ments during the 12 months preceding any proposed sale under Rule 145 and
shall otherwise use its reasonable best efforts to permit such sales
pursuant to Rule 145 and Rule 144. Parent has filed, on a timely basis,
all reports required to be filed with the SEC pursuant to Section 13 of the
Exchange Act during the preceding 12 months.
ii. Parent agrees that the stop transfer instructions and
legends referred to above shall be promptly terminated or removed if the
Holder or any Permissible Transferee shall have delivered to Parent a copy
of a letter from the staff of the SEC or an opinion of counsel with
recognized expertise in securities law matters, in form and substance
reasonably satisfactory to Parent, to the effect that such instructions and
legends are not required for the purposes of the Securities Act.
6. Hart-Scott-Rodino, etc. The Holder and Parent shall use all
-----------------------
reasonable efforts promptly to make all filings and applications with any
governmental or regulatory agencies required to be made in connection with
the acquisition by the Holder of Parent Shares in the Merger, including,
without limitation, under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, and to furnish all information required to be furnished in or in
connection with any such filing or application.
7. Binding Agreement. This Agreement shall be binding upon,
-----------------
and shall inure to the benefit of, the Holder, and his heirs, estate,
personal representatives and permitted assigns and Parent and its
successors and permitted assigns.
8. Notices. All notices and other communications given or made
-------
pursuant hereto shall be in writing and shall be deemed to have been duly
given or made if and when delivered personally or by overnight courier or
sent by electronic transmission, with confirmation received, to the
telecopy numbers specified below:
If to the Holder, at the address appearing on the signature page
beneath the Holder's name, with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Telecopier No.: (212 ) 310-8007
Telephone No.: (212 ) 310-8000
Attention: Stephen E. Jacobs, Esq.
-4-
<PAGE>
If to Parent or Merger Sub:
Tyco International Ltd.
One Tyco Park
Exeter, New Hampshire 03833
Telecopier No.: (603) 778-7330
Telephone No.: (603) 778-9700
Attention: Chairman
With a copy to:
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, New York 10022
Telecopier No.: (212) 715-8000
Telephone No.: (212) 715-9100
Attention: Joshua M. Berman, Esq.
or to such other address or telecopy number as any party may have furnished
to the other parties in writing in accordance herewith.
9. Specific Performance. The parties hereto agree that
--------------------
irreparable harm would occur in the event that any of the provisions of
this Agreement were not performed in accordance with its specific terms or
were otherwise breached. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof 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.
10. Amendment. (a) This Agreement may not be amended or
---------
modified, except by an instrument in writing signed on behalf of each of
the parties hereto.
(b) This Agreement may not be waived by either party hereto,
except by an instrument in writing signed on behalf of the party granting
such waiver.
11. Governing Law/Consent of Jurisdiction. This Agreement shall
-------------------------------------
be governed by and construed in accordance with the laws of the State of
New York, except to the extent mandatorily governed by the laws of the
State of Delaware or Massachusetts. Each party hereto 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 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. Each party hereto 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 such party at its address specified in Section 8 or
by any other method permitted by law.
-5-
<PAGE>
12. Counterparts. This Agreement may be executed in
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
13. Termination. (a) This Agreement shall terminate if and when
-----------
the Merger Agreement is terminated according to its terms. The date and
time at which this Agreement is terminated in accordance with this Section
13 is referred to herein as the "Termination Date."
(b) Upon any termination of this Agreement as provided in
Section 13, this Agreement shall thereupon become void and of no further
force and effect, and there shall be no liability in respect of this
Agreement or of any transactions contemplated hereby or by the Merger
Agreement on the part of any party hereto or any of its directors,
officers, partners, stockholders, employees, agents, advisors,
representatives or affiliates; provided, however, that nothing herein shall
-------- -------
relieve any party from any liability for such party's wilful breach of this
Agreement; and provided further that nothing herein shall limit, restrict,
-------- -------
impair, amend or otherwise modify the rights, remedies, obligations or
liabilities of any person under any other contract or agreement, including,
without limitation, the Merger Agreement.
[This space intentionally left blank]
-6-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by or on
behalf of each of the parties hereto, all as of the date first above
written.
TYCO INTERNATIONAL LTD.
By: /s/ Barbara S. Miller
------------------------------------
Name: Barbara S. Miller
Title: Vice President/Treasurer
THE HOLDER:
/s/ Grant M. Wilson
----------------------------------------
Name: Grant M. Wilson
Address:
-------------------------------
----------------------------------------
----------------------------------------
Number of Shares:
Class A Common Stock: 291,354
Class B Common Stock: 1,374,119
-7-
EXHIBIT 5
August 5, 1996
Tyco International Ltd.
One Tyco Park Exeter, New Hampshire 03833
Dear Sirs:
I am General Counsel of Tyco International Ltd., a Massachusetts corporation
(the "Company"). I refer to the registration statement on Form S-4 (the
"Registration Statement") filed by the Company with the Securities and Exchange
Commission (the "Commission"), relating to the issuance of a maximum of
3,230,000 shares (the "Shares") of the Company's common stock par value $.50 per
share (the "Common Stock"), in connection with an Agreement and Plan of Merger
(the "Merger Agreement"), dated as of May 14, 1996, by and among the Company, T2
Acquisition Corp., a wholly-owned subsidiary of the Company ("Merger Sub"), and
Carlisle Plastics, Inc. ("Carlisle"), pursuant to which Merger Sub will be
merged with and into Carlisle, and Carlisle will become a wholly-owned
subsidiary of the Company.
I have reviewed such documents and records as I have deemed necessary to
enable me to express an opinion on the matters covered hereby, and I have also
examined and relied upon representations, statements or certificates of public
officials and officers and representatives of the Company. Based on the
foregoing, I am of the opinion that the Shares, when issued in accordance with
the terms and conditions of the Merger Agreement, will be legally issued, fully
paid and non-assessable.
I hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the use of my name under the heading "Legal
Matters" in the Prospectus. In giving this consent, I do not thereby admit that
I am within the category of persons whose consent is required under Section 7 of
the Securities Act of 1993, as amended, or the rules and regulations of the
Commission thereunder.
Very truly yours,
/s/ M. BRIAN MOROZE
......................................
M. Brian Moroze
EXHIBIT 8(A)
TYCO TAX OPINION
August 5 , 1996
Tyco International Ltd.
One Tyco Park
Exeter, N.H. 03833-1108
We have acted as counsel to Tyco International Ltd., a Massachusetts
corporation ("Parent"), in connection with the planned merger (the "Merger")
into Carlisle Plastics, Inc., a Delaware corporation (the "Company"), of T2
Acquisition Corp. ("Merger Sub"), a Delaware corporation and a wholly owned
subsidiary of Parent, pursuant to an Agreement and Plan of Merger dated as of
May 14, 1996 among the Company, Merger Sub and Parent (the "Merger Agreement").
For purposes of the opinion set forth below, we have reviewed and relied
upon (i) the Merger Agreement, (ii) the Proxy Statement/Prospectus included in
the registration statement on Form S-4 (the "Registration Statement"), as
amended, filed by Parent with the Securities and Exchange Commission (the "Proxy
Statement/Prospectus"), and (iii) such other documents, records and instruments
as we have deemed necessary or appropriate as a basis for our opinion. In
addition, in rendering our opinion we have relied upon certain statements and
representations made by the Company, Parent, William H. Binnie, Grant M. Wilson
and the Grigoriou Family Limited Partnership (the "Certified Representations")
and in the Merger Agreement and the Proxy Statement/Prospectus, which we have
neither investigated nor verified. We have assumed that such statements and
representations are true, correct, complete and not breached, and that no
actions that are inconsistent with such statements and representations will be
taken. We have also assumed that all representations made in the Certified
Representations "to the best knowledge of" any persons or parties will be true,
correct and complete as if made without such qualification.
In addition, we have assumed that (i) the Merger will be consummated in
accordance with the Merger Agreement and as described in the Proxy
Statement/Prospectus (including satisfaction of all covenants and conditions to
the obligations of the parties without amendment or waiver thereof); (ii) the
Merger will qualify as a merger under the applicable laws of Delaware; (iii)
each of the Company, Parent and Merger Sub will comply with all reporting
obligations with respect to the Merger required under the Internal Revenue Code
of 1986, as amended (the "Code"), and the Treasury regulations promulgated
thereunder; (iv) the Merger Agreement and all other documents and instruments
referred to therein or in the Proxy Statement/Prospectus are valid and binding
in accordance with their terms; and (v) there are no shareholders that directly
own, at the Effective Time (as defined in the Merger Agreement), more than 5% of
the outstanding Company Common Stock, other than William H. Binnie, Grant M.
Wilson, the Grigoriou Family Limited Partnership, Ingalls & Snyder and FMR Corp.
Any inaccuracy in, or breach of, any of the aforementioned statements,
representations and assumptions or any change after the date hereof in
applicable law could adversely affect our opinion. No ruling has been (or will
be) sought from the Internal Revenue Service by the Company, Parent or Merger
Sub as to the federal income tax consequences of any aspect of the Merger.
Based upon and subject to the foregoing as well as the limitations set forth
below, it is our opinion, under presently applicable federal income tax law,
that (i) the Merger of Merger Sub with and into the Company will be a tax-free
reorganization within the meaning of sections 368(a)(1)(A) and (a)(2)(E) of the
Code and (ii) no gain or loss will be recognized by the Company, Parent or
Merger Sub as a result of the Merger. In addition, it is our opinion that the
section of the Proxy Statement/Prospectus entitled
<PAGE>
"Material Federal Income Tax Consequences," insofar as it expresses the opinions
set forth above, is correct.
No opinion is expressed as to any matter not specifically addressed above.
Also, no opinion is expressed as to the tax consequences of any of the
transactions under any foreign, state or local tax law. Furthermore, our opinion
is based on current federal income tax law and administrative practice, and we
do not undertake to advise you as to any changes after the Effective Time (as
defined in the Merger Agreement) in federal income tax law or administrative
practice that may affect our opinion unless we are specifically retained to do
so.
We hereby consent to the filing of this opinion as an exhibit to the
aforementioned Registration Statement and to the reference to this firm under
the captions "Certain Federal Income Tax Consequences" and "Legal Opinions" in
the Registration Statement and the Joint Proxy Statement/ Prospectus which is a
part thereof. The giving of this consent, however, does not constitute an
admission that we are "experts" within the meaning of Section 11 of the
Securities Act of 1933, as amended, or within the category of persons whose
consent is required by Section 7 of said Act.
This opinion has been delivered to you as contemplated by the Merger
Agreement and for the purpose of being included as an exhibit to the
Registration Statement and is intended solely for your benefit.
Very truly yours,
KRAMER, LEVIN, NAFTALIS, & FRANKEL
Exhibit 8.(b)
(212) 310-8000 August 1, 1996
Carlisle Plastics, Inc.
1314 North Third Street
Phoenix, AZ 85004
Ladies and Gentlemen:
You have requested our opinion regarding certain federal income
tax consequences of the merger (the "Merger") of T2 Acquisition Corp., a
Delaware corporation ("Merger Sub"), and a direct wholly-owned subsidiary
of Tyco International Ltd., a Massachusetts corporation ("Parent"), with
and into Carlisle Plastics, Inc., a Delaware corporation (the "Company").
In formulating our opinion, we examined such documents as we
deemed appropriate, including the Agreement and Plan of Merger, dated as of
May 14, 1996, among Parent, Merger Sub and the Company (the "Merger
Agreement") and the Joint Proxy Statement/Prospectus to be distributed to
stockholders of the Company and Parent in connection with the Merger, which
is included in the Registration Statement on Form S-4, as filed by Parent
with the Securities and Exchange Commission on August 2, 1996 (the "Joint
Proxy Statement/Prospectus").
Our opinion set forth below assumes (1) that the Merger is
consummated in the manner contemplated by, and in accordance with the terms
set forth in, the Merger Agreement and the Joint Proxy
Statement/Prospectus, and (2) the accuracy of (i) the statements and facts
concerning the Merger set forth in the Merger Agreement and the Joint Proxy
Statement/Prospectus, (ii) the representations made to us by the Company,
which are set forth in the certificate delivered to us by the Company dated
the date hereof, (iii) the representations made to us by Parent and Merger
Sub, which are set forth in the certificate delivered to us by Parent dated
the date hereof, and (iv) the representations made to us by certain holders
of common stock of the Company,
<PAGE>
Carlisle Plastics, Inc.
August 5, 1996
Page 2
which are set forth in the certificates delivered to us by such holders of
common stock of the Company dated the date hereof.
Based upon our examination and review of the documents referred
to above and subject to the assumptions set forth above and except to the
extent qualified therein, we are of the opinion that for federal income tax
purposes:
1. The Merger will constitute a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended (the
"Code").
2. No gain or loss will be recognized by a stockholder of the
Company upon the exchange of his or her shares of common stock of the
Company for shares of common stock of Parent, except that a
stockholder of the Company who receives cash proceeds in lieu of a
fractional share interest in common stock of Parent will recognize
gain or loss equal to the difference between such proceeds and the tax
basis allocated to the fractional share interest. Such gain or loss
will constitute capital gain or loss if such stockholder held the
shares of common stock of the Company as a capital asset at the
Effective Time (as defined in the Merger Agreement) and will be long-
term capital gain or loss if such shares have been held for more than
one year at the Effective Time.
3. The tax basis of the common stock of Parent received by a
stockholder of the Company will be the same as such stockholder's tax
basis in the common stock of the Company surrendered in exchange
therefor, decreased by the tax basis allocated to any fractional share
interest of common stock of Parent exchanged for cash.
4. The holding period of the common stock of Parent received by a
stockholder of the Company will include the period during which the
common stock of the Company surrendered in exchange therefor was held
(provided that such common stock of the Company was held by such
stockholder of the Company as a capital asset at the Effective Time.
Our opinion is based on current provisions of the Code, the
treasury regulations promulgated thereunder, published pronouncements of
the Internal Revenue Service and case law, any of which may be changed at
any time with retroactive effect. Any change in applicable laws or the
facts and circumstances surrounding the Merger, or any change or inaccuracy
in the
<PAGE>
Carlisle Plastics, Inc.
August 5, 1996
Page 3
statements, facts, assumptions and representations on which we have relied,
may affect the continuing validity of our opinion set forth herein. We
assume no responsibility to inform you of any such change or inaccuracy
that may occur or come to our attention. We express no opinion concerning
any tax consequences of the proposed Merger other than those specifically
set forth herein.
We hereby consent to your filing this opinion as an exhibit to
the Joint Proxy Statement/Prospectus and to the reference to our firm
therein.
Very truly yours,
/s/ Weil, Gotshal & Manges LLP
EXHIBIT 15
[DELOITTE & TOUCHE LLP LOGO]
August 5, 1996
Carlisle Plastics, Inc.
1314 North Third Street, Suite 300
Phoenix, Arizona 85004
Dear Sirs:
We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited interim financial
information of Carlisle Plastics, Inc. and subsidiaries for the periods ended
March 31, 1996 and 1995, as indicated in our report dated April 18, 1996 (May
14, 1996 as to Note F); because we did not perform an audit, we expressed no
opinion on that information.
We are aware that our report referred to above, which was included in your
Quarterly Report on Form 10-Q for the quarter ended March 31, 1996, is being
used in this Registration Statement.
We also are aware that the aforementioned report, pursuant to Rule 436(c) under
the Securities Act of 1993, is not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
EXHIBIT 23(A)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-4 of our report dated August 3, 1993 appearing on pages 20
and S-2 of Tyco International Ltd.'s Annual Reports on Form 10-K for the year
ended June 30, 1995. We also consent to the reference to us under the heading
"Experts" in such Prospectus.
PRICE WATERHOUSE LLP
Boston, Massachusetts
August 2, 1996
EXHIBIT 23(B)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement
on Form S-4 of our report dated August 1, 1995 on our audit of the consolidated
financial statements of Tyco International Ltd. for the years ended June 30,
1995 and 1994, the combination of the financial statements of Tyco International
Ltd. and Kendall International, Inc. for the year ended June 30, 1993 and the
consolidated statements of income and cash flows of Kendall International, Inc.
and subsidiaries for the year ended June 30, 1993, prior to their restatement
for pooling of interests, which report is included in the Annual Report of Form
10-K of Tyco International Ltd. for the year ended June 30, 1995. We also
consent to the reference to our firm under the caption "Experts".
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
August 2, 1996
EXHIBIT 23(C)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4) and related Prospectus of Tyco International
Ltd. for the registration of its common stock and the incorporation by reference
therein of our report, dated October 18, 1995 (except for Note 14, as to which
the date is November 1, 1995), with respect to the consolidated financial
statements of The Earth Technology Corporation (USA), incorporated by reference
in The Earth Technology Corporation (USA) Annual Report (Form 10-K) for the year
ended August 25, 1995, filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Long Beach, California
July 26, 1996
EXHIBIT 23(D)
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of Tyco International
Ltd. on Form S-4 of our report dated February 16, 1996, appearing in the Proxy
Statement/Prospectus, which is part of this Registration Statement. We also
consent to the reference to us under the heading "Experts" in such Proxy
Statement/Prospectus.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Phoenix, Arizona
August 1, 1996
Exhibit 23(g)
PERSONAL AND CONFIDENTIAL
- -------------------------
August 5, 1996
Board of Directors
Carlisle Plastics, Inc.
1314 North Third Street
Phoenix, AZ 85004-1751
Re: Registration Statement of Tyco International Ltd ("Tyco") relating to the
Common Stock, par value $0.50 per share, of Tyco (the "Tyco Common Stock")
being registered in connection with the exchange of Tyco Common Stock for
shares of Class A Common Stock, par value $0.01 per share (the "Carlisle
A Stock") and Class B Common Stock, par value $0.01 per share (The
"Carlisle B Stock") of Carlisle Plastics, Inc. ("Carlisle") filed on August
5, 1996.
Gentlemen:
Reference is made to our opinion letter dated August 5, 1996 with respect to
the fairness to the holders of the outstanding shares of Carlisle A Stock and
Carlisle B Stock of the exchange ratio of 0.172185 shares of Tyco Common
Stock to be exchanged for each share of Carlisle A Stock and each share of
Carlisle B Stock pursuant to the Agreement and Plan of Merger, dated as of
May 14, 1996, among Tyco, T2 Acquisition Corp., a wholly-owned subsidiary of
Tyco, and Carlisle.
The foregoing opinion letter is provided for the information and assistance of
the Board of Directors of Carlisle in connection with its consideration of
the transaction contemplated therein and is not to be used, circulated,
quoted or otherwise referred to for any other purpose, nor is it to
be filed with, included in or referred to in whole or in part in any
registration statement, proxy statement or any other document, except in
accordance with our prior written consent. We understand that Carlisle has
determined to include our opinion in the above-referenced Registration
Statement and has requested our consent to such inclusion.
In that regard, we hereby consent to the reference to the opinion of our Firm
under the captions "Summary--Opinion of Financial Advisor," "The Merger--
Recommendation of the Board of Directors of Carlisle" and "The Merger--Opinion
of Carlisle's Financial Advisor" and to the inclusion of the foregoing opinion
in the Proxy Statement included in the above-mentioned Registration Statement,
as amended. We are providing such consent in order to comply with requirements
under the federal securities laws. In doing so, however, except as may be
required by the federal securities laws, we do not intend that any person other
than the Borad of Diredctors of Carlisle rely upon such opinion. In giving
such consent, we do not thereby admit that we come within the category of
persons whose consent is required under Section 7 of the Securities Act of 1933
or the rules and regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
GOLDMAN, SACHS & CO.
