<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 23, 1997
REGISTRATION NO. 333-31227
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
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>
BERMUDA 7382 NOT APPLICABLE
(State or other jurisdiction
of incorporation or (Primary Standard Industrial (I.R.S. Employer
organization) Classification Code Number) Identification No.)
</TABLE>
CEDAR HOUSE
41 CEDAR AVENUE
HAMILTON HM12, BERMUDA
(441) 292-2033
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
MARK H. SWARTZ
C/O TYCO INTERNATIONAL (US) INC.
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)
*Tyco International Ltd. maintains its registered and principal executive
offices at Cedar House, 41 Cedar Avenue, Hamilton HM12 Bermuda. The executive
offices of the subsidiary that supervises the activities of the subsidiaries of
Tyco International Ltd. in North America are located at One Tyco Park, Exeter,
New Hampshire 03833. The telephone number there is (603) 778-9700.
------------------------
COPIES TO:
JOSHUA M. BERMAN, ESQ. W. SCOTT MCGINNESS, JR.
KRAMER, LEVIN, NAFTALIS & FRANKEL MILLER & MARTIN
919 THIRD AVENUE SUITE 1000 VOLUNTEER BUILDING
NEW YORK, NEW YORK 10022 832 GEORGIA AVENUE
CHATTANOOGA, TENNESSEE 37402
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective and
all other conditions to the merger contemplated by the Agreement and Plan of
Merger, dated as of May 12, 1997, described in the Proxy Statement/ Prospectus
included in the Registration Statement have been satisfied or waived.
------------------------
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>
[LOGO]
MERGER PROPOSED--YOUR VOTE IS VERY IMPORTANT
To the Shareholders of INBRAND Corporation:
The Board of Directors of INBRAND Corporation has agreed upon a merger with
Tyco International Ltd. and is seeking your vote for this important transaction.
If the merger is approved by shareholders, INBRAND will become a subsidiary
of Tyco, and shareholders of INBRAND will become Tyco shareholders. Tyco is a
diversified manufacturing and service company that operates in more than 50
countries around the world and has annual sales of approximately $10 billion.
The merger will give shareholders of INBRAND an interest in a substantially
larger and more diversified company.
Shareholders of INBRAND are being asked, at a Special Meeting of
shareholders, to approve the merger and the merger agreement relating to the
merger. You can find the full text of the merger agreement at the back of this
document in Annex A.
Whether or not you plan to attend the Special Meeting, please take the time
to vote on the proposal submitted to you by completing and mailing the enclosed
proxy card to us. YOUR VOTE IS VERY IMPORTANT.
The date, time and place of the meeting is:
August 27, 1997 at 10:00 a.m. Eastern time
at INBRAND's offices located at
1169 Canton Road,
Marietta, Georgia 30066
This document provides you with detailed information about the proposed
merger. In addition, you may obtain information about Tyco and INBRAND from
documents that Tyco and INBRAND have filed with the Securities and Exchange
Commission. We encourage you to read this entire document carefully.
If you have any questions about the merger, please contact James R. Johnson
or Garnett A. Smith 1-800-241-8205 (toll free in the United States).
/s/ Garrett A. Smith
Garnett A. Smith
Chairman and Chief Executive Officer
INBRAND Corporation
- --------------------------------------------------------------------------------
Neither the Securities and Exchange Commission nor any state securities
regulators have approved the securities to be issued under this Proxy
Statement/Prospectus or determined if this Proxy Statement/ Prospectus is
accurate or adequate. Any representation to the contrary is a criminal offense.
The information in this prospectus is not complete and may be amended. This
prospectus is not an offer to sell nor is it seeking an offer to buy these
securities in any state where the offer or sale is not permitted.
- --------------------------------------------------------------------------------
Proxy Statement/Prospectus dated July 23, 1997 and first mailed to shareholders
July 25, 1997.
<PAGE>
INBRAND CORPORATION.
1169 CANTON ROAD
MARIETTA, GA 30066
------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
------------------------
To our Shareholders:
Notice is hereby given that the Special Meeting of Shareholders (the
"Special Meeting") of INBRAND Corporation. ("INBRAND") will be held at 10:00
a.m., Eastern time, on August 27, 1997 at the offices of INBRAND Corporation
located at 1169 Canton Road, Marietta, GA 30066 for the following purposes:
1. To approve the merger of INBRAND with T7 Acquisition Corp., a
wholly-owned subsidiary of Tyco International Ltd., a Bermuda company, and
to approve the Agreement and Plan of Merger relating thereto.
2. To consider and act upon any other business as may properly come
before the Special Meeting or any adjournment or postponement thereof.
Only holders of INBRAND Common Stock of record at the close of business on
July 11, 1997 are entitled to notice of and to vote at the Special Meeting or
any adjournment or postponement thereof.
By Order of the Board of Directors
/s/ James R. Johnson
James R. Johnson,
SECRETARY
July 23, 1997
WHETHER OR NOT YOU EXPECT TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, SIGN
AND DATE THE ENCLOSED PROXY AND PROMPTLY RETURN IT IN THE RETURN ENVELOPE
PROVIDED TO FIRST UNION NATIONAL BANK, CORPORATE FINANCIAL SERVICES, TWO FIRST
UNION CENTER, CHARLOTTE, NORTH CAROLINA, 28288. IN ORDER TO AVOID THE ADDITIONAL
EXPENSE TO THE COMPANY OF FURTHER SOLICITATION, WE ASK YOUR COOPERATION IN
MAILING IN YOUR PROXY PROMPTLY.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
QUESTIONS AND ANSWERS ABOUT THE TYCO/INBRAND MERGER........................................................ 1
SUMMARY.................................................................................................... 2
The Companies............................................................................................ 2
The Meeting.............................................................................................. 2
Reasons for the Merger................................................................................... 2
Recommendations to Shareholders.......................................................................... 3
The Merger............................................................................................... 3
Certain Considerations................................................................................... 5
SELECTED FINANCIAL DATA FOR TYCO AND INBRAND............................................................... 6
Selected Tyco Historical Financial Information........................................................... 6
Selected INBRAND Historical Financial Information........................................................ 8
COMPARATIVE PER SHARE INFORMATION.......................................................................... 9
INBRAND SPECIAL MEETING.................................................................................... 11
Purpose of the INBRAND Special Meeting................................................................... 11
Record Date; Voting Rights; Proxies...................................................................... 11
Solicitation of Proxies.................................................................................. 11
Quorum................................................................................................... 12
Required Vote............................................................................................ 12
THE MERGER................................................................................................. 12
General.................................................................................................. 12
Effective Time........................................................................................... 13
Conversion of Shares; Procedures for Exchange of Certificates............................................ 13
Background of the Merger................................................................................. 14
Reasons of Tyco for the Merger........................................................................... 14
Recommendation of the Board of Directors of INBRAND;
Reasons of INBRAND for the Merger...................................................................... 15
Opinion of INBRAND's Financial Advisor................................................................... 16
Certain Considerations................................................................................... 19
Interests of Certain Persons in the Merger............................................................... 20
Certain United States Federal Income Tax and Bermuda Tax Consequences.................................... 20
Anticipated Accounting Treatment......................................................................... 23
Effect on Employee Benefits Plans........................................................................ 23
Certain Legal Matters.................................................................................... 23
Federal Securities Law Consequences...................................................................... 24
Stock Exchange Listing................................................................................... 25
Dividends................................................................................................ 25
Appraisal Rights......................................................................................... 25
Fees and Expenses........................................................................................ 25
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
THE MERGER AGREEMENT AND RELATED AGREEMENTS................................................................ 26
Terms of the Merger...................................................................................... 26
Exchange of Certificates................................................................................. 27
Representations and Warranties........................................................................... 28
Conduct of Business Pending the Merger................................................................... 29
Additional Agreements.................................................................................... 31
Conditions to the Merger................................................................................. 33
Termination.............................................................................................. 35
Amendment and Waiver..................................................................................... 36
Shareholder Agreements................................................................................... 37
COMPARATIVE PER SHARE PRICES AND DIVIDENDS................................................................. 39
Tyco..................................................................................................... 39
INBRAND.................................................................................................. 39
BUSINESSES OF TYCO......................................................................................... 40
Disposable and Specialty Products........................................................................ 40
Fire and Safety Services................................................................................. 43
Flow Control Products.................................................................................... 45
Electrical and Electronic Components..................................................................... 46
Proposed Acquisition..................................................................................... 47
BUSINESS OF INBRAND........................................................................................ 48
General.................................................................................................. 48
Products and Markets..................................................................................... 48
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT OF INBRAND.................................................................................. 50
DESCRIPTION OF SHARE CAPITAL OF TYCO....................................................................... 52
Authorized Share Capital................................................................................. 52
Tyco Common Shares....................................................................................... 52
Tyco Preference Shares................................................................................... 53
Stock Exchange Listing................................................................................... 53
COMPARISON OF SHAREHOLDER RIGHTS........................................................................... 54
OTHER MATTERS.............................................................................................. 64
LEGAL MATTERS.............................................................................................. 64
EXPERTS.................................................................................................... 64
SHAREHOLDER PROPOSALS...................................................................................... 64
WHERE TO FIND MORE INFORMATION............................................................................. 64
LIST OF DEFINED TERMS...................................................................................... 67
LIST OF ANNEXES............................................................................................
Annex A Agreement and Plan of Merger....................................................................
Annex B Opinion of Salomon Brothers Inc.................................................................
</TABLE>
ii
<PAGE>
QUESTIONS AND ANSWERS
ABOUT THE TYCO/INBRAND MERGER
<TABLE>
<S> <C>
Q: WHY HAS INBRAND CORPORATION AGREED TO BE
ACQUIRED IN A MERGER BY TYCO
INTERNATIONAL LTD.?
A: INBRAND is a producer of adult inconti-
nence products, feminine hygiene
products and baby diapers. Tyco is a
diversified manufacturing and service
company with annual sales of
approximately $10 billion. Through its
Kendall Healthcare operations, Tyco
markets a broad range of disposable
medical health care products, including
incontinence products.
For the two companies, the merger is an
attractive strategic combination which
will benefit from synergies and cost
savings. For INBRAND shareholders, the
merger offers a premium over the
historic market value of their shares.
It will also provide them with an
interest in a substantially larger and
more diverse enterprise with an
opportunity for greater liquidity in
their investment.
For a more detailed discussion of the
reasons for the merger, see "The
Merger--Reasons of Tyco for the Merger";
and "--Recommendation of the Board of
Directors of INBRAND; Reasons of INBRAND
for the Merger."
Q: WHAT WILL HAPPEN TO THE STOCK OF INBRAND
IN THE MERGER?
A: In the merger, INBRAND shareholders will
receive 0.43 shares in Tyco for each
share of INBRAND stock. Cash will be
paid instead of the distribution of
fractional shares.
FOR EXAMPLE, AN INBRAND SHAREHOLDER THAT
OWNED 110 SHARES OF INBRAND WILL OWN 47
SHARES OF TYCO AND RECEIVE A CHECK FOR
THE MARKET VALUE OF 0.3 SHARES OF TYCO.
Q: WHEN WILL THE MERGER TAKE EFFECT?
A: Tyco and INBRAND expect that the merger
will become effective promptly after the
shareholders of INBRAND approve the
merger and the merger agreement. The
special shareholders meeting of INBRAND
is scheduled for August 27, 1997.
Q: WHAT ARE THE FEDERAL INCOME TAX
CONSEQUENCES OF THE MERGER FOR THE
SHAREHOLDERS OF INBRAND?
A: The receipt of the shares of Tyco in the
merger will generally be tax free to the
shareholders of INBRAND; however, a
shareholder may be required to pay taxes
on cash received in lieu of a fractional
share of Tyco. For a detailed discussion
of the tax consequences of the merger,
see "The Merger--Certain United States
Federal Income Tax and Bermuda Tax
Consequences."
Q: WILL SHAREHOLDERS HAVE APPRAISAL RIGHTS?
A: Shareholders of INBRAND will not have
any appraisal rights as a result of the
merger.
Q: WHAT SHOULD SHAREHOLDERS DO NOW?
A: Shareholders should mail their signed
proxy card in the enclosed envelope, as
soon as possible, so that their shares
will be represented at the INBRAND
special shareholders meeting. The Board
of Directors of INBRAND recommends that
INBRAND shareholders vote in favor of
the merger. After the merger is
completed, shareholders will receive
written instructions for exchanging
their share certificates.
Q: CAN SHAREHOLDERS CHANGE THEIR VOTE AFTER
THEY HAVE MAILED IN A SIGNED PROXY CARD?
A: Yes. Shareholders can change their vote
in one of three ways at any time before
their proxies are used. First,
shareholders can revoke their proxies by
written notice. Second, shareholders can
complete new later dated proxy cards.
Third, shareholders can attend the
special shareholders meeting and vote in
person.
Q: WHOM SHOULD SHAREHOLDERS CALL WITH QUES-
TIONS?
A: Shareholders who have questions about
the merger should call James R. Johnson
or Garnett A. Smith at 1-800-241-8205
(toll-free in the United States).
</TABLE>
<PAGE>
SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS PROXY
STATEMENT/PROSPECTUS AND MAY NOT CONTAIN ALL OF THE INFORMATION THAT IS
IMPORTANT TO YOU. TO UNDERSTAND THE MERGER FULLY AND FOR A MORE COMPLETE
DESCRIPTION OF THE LEGAL TERMS OF THE MERGER, YOU SHOULD READ CAREFULLY THIS
ENTIRE DOCUMENT AND THE DOCUMENTS TO WHICH YOU HAVE BEEN REFERRED. SEE "WHERE TO
FIND MORE INFORMATION." FOR A TABLE OF THE DEFINED TERMS USED IN THIS SUMMARY
AND ELSEWHERE IN THIS PROXY STATEMENT/PROSPECTUS, SEE PAGE 67.
THE COMPANIES
INBRAND CORPORATION
1169 Canton Road
Marietta, GA 30066
(770) 422-3036
INBRAND Corporation ("INBRAND") was organized in Georgia in 1971. It is
engaged in the production and marketing of adult incontinence, feminine hygiene
and baby diaper products in North American and Europe.
For further information on the business of INBRAND, see "Business of
INBRAND."
TYCO INTERNATIONAL LTD.
Cedar House
41 Cedar Avenue
Hamilton HM12, Bermuda
(441) 292-2033
Tyco International Ltd., a Bermuda company ("Tyco"), is the continuing
public company resulting from the business combination (the "ADT Merger") on
July 2, 1997 of Tyco International Ltd., a Massachusetts corporation (now known
as Tyco International (US) Inc.; "Old Tyco"), and ADT Limited, a Bermuda company
("ADT").
Tyco manufactures and distributes disposable medical supplies and other
specialty products, flow control products, electrical and electronic components
and underwater telecommunication systems. In addition, Tyco is the largest
contractor in the world for design, installation and servicing of fire
protection systems and is a leading manufacturer and distributor of fire
detection and fire suppression products. Tyco is also the largest provider of
electronic security services in North America and the United Kingdom. These
services include the sale, installation, monitoring and maintenance of
electronic security devices and systems for intrusion detection, surveillance
and access control. Tyco also operates a network of vehicle auction centers in
the United States.
Tyco's strategy is to be a low-cost, high quality producer and provider in
each of its markets. It promotes its leadership position by investing in
existing businesses, developing new markets and acquiring complementary
businesses and products. Combining the strengths of its existing operations and
its business acquisitions, Tyco seeks to enhance shareholder value through
increased earnings per share.
The headquarters address for Tyco's North American operations is Tyco
International (US) Inc., One Tyco Park, Exeter, New Hampshire 03833. The
telephone number at this address is (603) 778-9700.
For further information on the businesses of Tyco, see "Businesses of Tyco."
THE MEETING
The special meeting of the INBRAND shareholders will be held on August 27,
1997.
The record date for INBRAND shareholders entitled to receive notice of and
to vote at the INBRAND special meeting is July 11, 1997. On that date there were
11,772,523 shares of Common Stock of INBRAND outstanding.
REASONS FOR THE MERGER
For Tyco, the Merger is consistent with its strategy of seeking growth
through internal expansion and through acquisitions that are likely to benefit
from synergies and cost savings with Tyco's existing operations and that are
expected to be non-dilutive. For INBRAND shareholders, the Merger presents the
opportunity to receive a premium over the historic market price for their
shares. It also should enable INBRAND shareholders to participate in a larger
and more diversified
2
<PAGE>
company. In addition, because Tyco has a substantially larger public float and
trading volume than INBRAND, the Merger should give INBRAND shareholders greater
liquidity in their investment.
To review the reasons for the merger in greater detail, see "The
Merger--Reasons of Tyco for the Merger"; and "--Recommendation of the Board of
Directors of INBRAND; Reasons of INBRAND for the Merger."
RECOMMENDATIONS TO SHAREHOLDERS
The INBRAND Board of Directors believes that the Merger is fair and in the
best interests of INBRAND shareholders and unanimously recommends that
shareholders vote FOR the proposal to approve the Merger and the Merger
Agreement.
THE MERGER
THE MERGER AGREEMENT IS ATTACHED AS ANNEX A TO THIS PROXY
STATEMENT/PROSPECTUS. YOU SHOULD READ THE MERGER AGREEMENT, AS IT IS THE LEGAL
DOCUMENT WHICH GOVERNS THE MERGER.
CONSEQUENCES OF THE MERGER
In the Merger, INBRAND will merge with a subsidiary of Tyco. As a result,
INBRAND will become a wholly-owned subsidiary of Tyco, and the former
shareholders of INBRAND will become shareholders of Tyco.
WHAT INBRAND SHAREHOLDERS WILL RECEIVE IN THE MERGER
In the Merger, INBRAND shareholders will receive 0.43 Tyco Common Shares for
each share of INBRAND Common Stock. Cash will be paid in lieu of fractional Tyco
Common Shares.
CERTAIN UNITED STATES FEDERAL INCOME TAX AND BERMUDA TAX CONSEQUENCES
The transaction is a tax free reorganization under the United States
Internal Revenue Code. Shareholders of INBRAND generally should not have any
taxable gain or loss for U.S. federal income tax purposes upon receipt of Tyco
Common Shares in the Merger; however, a shareholder may be required to pay tax
on cash received in lieu of a fractional Tyco Common Share. There will be no
Bermuda tax of any kind payable in respect of the exchange of shares in the
Merger.
For further details, see "The Merger-- Certain United States Federal Income
Tax and Bermuda Tax Consequences."
SHAREHOLDER VOTE REQUIRED
The favorable vote of a majority of the outstanding shares of INBRAND Common
Stock is required to approve the Merger and the Merger Agreement. IF YOU FAIL TO
RETURN YOUR CARD, THE EFFECT WILL BE THE SAME AS A VOTE FOR THE MERGER (UNLESS
YOU APPEAR IN PERSON AT THE SPECIAL MEETING).
INTERESTS OF OFFICERS AND DIRECTORS IN THE MERGER
In considering the recommendation of the INBRAND Board of Directors in favor
of the Merger, INBRAND shareholders should be aware that members of the Board of
Directors of INBRAND and certain members of its management will receive benefits
as a result of the Merger that will be in addition to benefits received by
shareholders generally. For further details, see "The Merger--Interests of
Certain Persons in the Merger."
CONDITIONS OF THE MERGER
The consummation of the Merger depends upon satisfaction of a number of
conditions, including the following:
(1) approval of the Merger and the Merger Agreement by the shareholders of
INBRAND;
(2) listing on the New York Stock Exchange of the Tyco Common Shares to be
issued in the Merger;
(3) receipt of any required regulatory approvals;
(4) receipt by Tyco and INBRAND of the written opinion of their respective
counsel that the Merger will constitute a reorganization within the
meaning of Section 368 of the Code;
3
<PAGE>
(5) absence of governmental action prohibiting the Merger or requiring Tyco
to divest or hold separate any material portion of its business or
assets;
(6) absence of any law that makes the Merger illegal; and
(7) receipt of the opinions of Coopers & Lybrand and Joseph Decosimo and
Company, LLP, regarding the qualification of the Merger as a "pooling of
interests" for accounting purposes.
These conditions may be waived by the party entitled to assert the
conditions. For further details, see "The Merger Agreement and Related
Agreements--Conditions to the Merger."
TERMINATION OF THE MERGER AGREEMENT
Either INBRAND or Tyco may terminate the Merger Agreement if:
(1) the Merger is not completed by October 15, 1997;
(2) a court or governmental agency permanently prohibits the Merger;
(3) the other party breaches its representations, warranties or obligations
under the Merger Agreement and that breach cannot be remedied; or
(4) the Board of Directors of INBRAND adversely modifies its approval of the
Merger, but INBRAND may only terminate under these circumstances if the
Board's modification is in keeping with its fiduciary obligations to its
shareholders.
Tyco may also terminate the Merger Agreement if:
(5) the shareholders of INBRAND do not approve the Merger by October 15, 1997;
or
(6) the INBRAND Board of Directors recommends a tender offer or merger proposal
made by a third party.
For further details, see "The Merger Agreement and Related Agreements--
Termination."
TERMINATION FEES AND EXPENSES
INBRAND is required to pay to Tyco a termination fee of $9 million, plus up
to $600,000 of reasonable out-of-pocket expenses, if the Merger Agreement is
terminated under certain circumstances. Tyco is required to pay to INBRAND up to
$600,000 of reasonable out-of-pocket expenses if the Merger Agreement is
terminated under certain circumstances.
REGULATORY APPROVALS
Tyco and INBRAND have given each other a commitment to use their best
efforts to take whatever actions are required to obtain necessary regulatory
approvals.
The U.S. Hart-Scott-Rodino statute prohibits Tyco and INBRAND from
completing the Merger until they have furnished certain information and
materials to the Antitrust Division of the U.S. Department of Justice and the
Federal Trade Commission and a required waiting period has expired. On June 10,
1997, this waiting period was terminated. The U.S. Department of Justice and the
Federal Trade Commission have the authority to challenge the Merger on antitrust
grounds before or after the Merger is completed. Each state and country where
either Tyco or INBRAND has operations may also review the Merger under such
jurisdictions antitrust law.
ACCOUNTING TREATMENT
Tyco and INBRAND expect the Merger to qualify as a pooling of interests for
accounting purposes, which means that the companies will be treated as if they
had always been combined for accounting and financial reporting purposes. Each
company must receive a letter from its independent accounting firm that in their
opinion the Merger will qualify to be accounted for as a pooling of interests.
See "The Merger-- Anticipated Accounting Treatment."
4
<PAGE>
OPINION OF FINANCIAL ADVISOR
Before approving the Merger Agreement, the Board of Directors of INBRAND
received the oral opinion of Salomon Brothers Inc., its financial advisor, that
the Exchange Ratio was fair to INBRAND shareholders from a financial point of
view. The written fairness opinion of Salomon Brothers Inc, dated July 23, 1997,
is attached as Annex B to this Proxy Statement/ Prospectus. You are encouraged
to read this opinion in its entirety. See "The Merger-- Opinion of INBRAND's
Financial Advisor."
In connection with its opinion, Salomon Brothers Inc performed a variety of
analyses. The analyses included comparing INBRAND and Tyco historical stock
prices, comparing the financial terms of the Merger with those of other publicly
announced transactions, and estimating the relative values and contribution of
INBRAND and Tyco.
APPRAISAL RIGHTS
INBRAND shareholders do not have appraisal rights in connection with the
Merger.
COMPARATIVE PER SHARE MARKET PRICE INFORMATION; LISTING
Tyco Common Shares are listed on the New York Stock Exchange, the London
Stock Exchange and the Bermuda Stock Exchange. Prior to the business combination
of Old Tyco and ADT, the common stock of Old Tyco was listed on the New York
Stock Exchange; this stock may be viewed as equivalent to the Tyco Common Shares
prior to July 2, 1997. INBRAND Common Stock is quoted on the National Market
System of The Nasdaq Stock Market. The New York Stock Exchange closing price per
share for the common stock of Old Tyco was $63.25 on May 12, 1997, the last full
trading day prior to the public announcement of the Merger. On July 22, 1997,
the closing price per Tyco Common Share on the New York Stock Exchange was
$82.125. The closing price per share on Nasdaq/NMS of the INBRAND common stock
was $16.00 on May 12, 1997, and $35.50 on July 22, 1997.
Application will be made to list the Tyco Common Shares issuable in the
Merger on the New York Stock Exchange, the London Stock Exchange and the Bermuda
Stock Exchange.
CERTAIN CONSIDERATIONS
FIXED EXCHANGE RATIO
Under the terms of the Merger Agreement, each share of INBRAND Common Stock
will be exchanged for 0.43 Tyco Common Shares. This ratio was determined on the
basis of the closing price per share of the common stock of Old Tyco on the New
York Stock Exchange of $62.86 on May 9, 1997, the second business day preceding
the first public announcement of the Merger. Because the exchange ratio is
fixed, the interest of INBRAND shareholders in Tyco will not change even though
the price of Tyco shares at the time of the Merger will likely differ from the
price of the common stock of Old Tyco on May 9, 1997. In particular, INBRAND
shareholders will not receive a greater interest in Tyco if the price of Tyco
shares at the time of the Merger is less than $62.86. The price per Tyco share
is likely to be different at the time of the Merger from the price of the common
stock of Old Tyco on May 9, 1997 as a result of the ADT Merger, changes in the
business, operations or prospects of Tyco, regulatory considerations, general
market and economic conditions and other factors. INBRAND shareholders are urged
to obtain current market quotations for Tyco shares and INBRAND shares.
SHAREHOLDINGS IN A BERMUDA COMPANY
If the Merger is consummated, shareholders of INBRAND will become
shareholders of Tyco, a Bermuda company. There are significant differences
between the corporate laws of Bermuda and the corporate laws of Georgia and
between the constitutional documents of INBRAND and Tyco. See "Comparison of
Shareholder Rights." These differences may materially affect the rights of
INBRAND shareholders.
5
<PAGE>
SELECTED FINANCIAL DATA FOR TYCO AND INBRAND
The following financial information is being provided to assist in analyzing
the financial aspects of the Merger. The information for Tyco has been derived
from Tyco's audited supplemental consolidated financial statements as of
December 31, 1996 and 1995 and for the three years in the period ended December
31, 1996. All other Tyco historical information presented below has been derived
by combining ADT's and Old Tyco's historical audited and unaudited financial
statements. The information for INBRAND has been derived from INBRAND's audited
financial statements for the fiscal years ended June 27, 1992 through June 29,
1996 and INBRAND's unaudited financial statements for the nine months ended
March 30, 1996 and March 29, 1997. The information is only a summary. The
information should be read in conjunction with the historical financial
statements (and related notes) contained in the annual, quarterly and other
reports filed by Tyco and INBRAND with the Securities and Exchange Commission
(the "Commission"). See "Where To Find More Information."
SELECTED TYCO HISTORICAL FINANCIAL INFORMATION
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
AT OR FOR THE
THREE MONTHS
ENDED MARCH 31, AT OR FOR THE YEAR ENDED DECEMBER 31,
-------------------- -----------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1997 1996 1996 1995 1994 1993 1992(1)
--------- --------- --------- --------- --------- --------- ---------
INCOME STATEMENT DATA:
Net sales..................................... $ 2,114.9 $ 1,668.9 $ 7,425.8 $ 6,318.5 $ 5,705.8 $ 5,447.9 $ 4,618.7
Operating (loss)income (2).................... 260.8 (534.6) (102.9) 649.1 596.6 451.9 360.1
(Loss) income before extraordinary items and
cumulative effect of accounting
changes(3)(4)............................... 141.7 (626.1) (338.6) 247.6 271.8 205.2 254.4
(Loss) income per share before extraordinary
items and cumulative effect of accounting
changes(3)(4)............................... 0.60 (2.87) (1.53) 1.14 1.21 0.91 1.56
Cash dividends per common share(5)............ 0.03 0.03 0.13 0.11 0.08 0.07 0.07
BALANCE SHEET DATA:
Total assets(6)............................... $ 8,700.7 $ 7,928.5 $ 6,801.2 $ 6,556.9 $ 6,642.4 $ 5,820.4
Long-term debt (including current portion).... 1,896.0 1,962.4 1,686.7 1,799.9 1,766.0 1,602.8
Total shareholders' equity.................... 3,932.6 2,987.8 3,060.0 2,743.5 2,403.6 2,095.0
</TABLE>
- ------------------------
(1) On October 19, 1994, Tyco merged with Kendall International, Inc. in a
transaction accounted for as a pooling of interests. The summary historical
financial data reflects the combined results of Tyco and Kendall for all
periods presented subsequent to June 30, 1992, the date on which Kendall
undertook a financial restructuring. The summary historical data at and for
the year ended December 31, 1992 reflect only the results of operations and
financial position of Tyco.
(2) Operating loss in 1996 included restructuring and other non-recurring
charges of $237.3 million relating principally to ADT Security's operations
in the United States and the United Kingdom and a charge of $744.7 million,
which occurred in the three month period ended March 31, 1996, relating to
the impairment of long-lived assets of ADT Security and ADT Automotive
following the adoption of Statement of Financial Accounting Standards No.
121 ("SFAS 121"). Operating income in 1995 included restructuring and other
non-recurring charges of $34.2 million relating principally to ADT
Security's United States operations and to ADT Security's corporate
restructuring in Europe, and a charge of $37.2 million related to merger and
transaction costs associated with the Kendall merger. Operating income in
1993 included a non-recurring inventory charge of $22.5 million principally
relating to Kendall, and a restructuring charge of $39.3 million relating
principally to the European and Australian fire protection contracting
operations, as well as the Grinnell flow control distribution operations.
Operating income in 1992 included a restructuring charge of $25.6 million
relating to European fire products manufacturing, North American fire
protection operations and corporate headquarters and Grinnell flow control
distribution operations.
(3) In 1996, Tyco recorded certain non-recurring items including (i) a non-cash
charge relating to the write-down of specific ADT Security's and ADT
Automotive's assets to their estimated fair values in accordance with SFAS
121, (ii) a charge principally relating to costs associated with integrating
the businesses of Automated Security (Holdings) plc in the United Kingdom
and the United States into ADT Security, together with the costs of
administrative, accounting, management information and technological
infrastructure enhancements currently being implemented in the United States
electronic security services operations, (iii) a gain arising on the sale of
Tyco's interest in Limelight Group plc, which was recorded on the balance
sheet at a nominal value and (iv) a gain represented by cash receivable as a
result of the settlement of Tyco's litigation against BDO Binder Hamlyn.
Tyco's
6
<PAGE>
historical net income before these non-recurring items amounted to $488.4
million or $2.19 per share ($2.14 per share on a fully diluted basis).
(4) In the three months ended March 31, 1997, Tyco recorded certain
non-recurring charges in connection with the ADT Merger and the unsolicited
proposals of Western Resources, Inc. Tyco's historical net income before
these non-recurring items amounted to $151.3 million or $0.65 per share
($0.64 per share on a fully diluted basis). In the three months ended March
31, 1996, Tyco recorded certain non-recurring charges which principally
represented non-cash charges relating to the write down of specific assets
of ADT Security and ADT Automotive to their estimated fair value in
accordance with SFAS 121. Tyco's historical net income before these
non-recurring items amounted to $108.4 million, or $0.50 per share ($0.48
per share on a fully diluted basis).
(5) Prior to the ADT Merger, ADT had not declared any dividends on its common
shares since April 1991. Old Tyco declared dividends of $0.20 per share in
1996, 1995 and 1994, $0.19 per share in 1993 and $0.18 per share in 1992.
(6) During 1996, Tyco recorded a charge of $744.7 million relating to the
impairment of ADT Security's and ADT Automotive's long-lived assets.
7
<PAGE>
SELECTED INBRAND HISTORICAL FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
AT OR FOR THE NINE
MONTHS ENDED AT OR FOR THE YEAR ENDED
------------------------ ------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MARCH 29, MARCH 30, JUNE 29, JULY 1, JULY 2, JULY 3,
1997 1996 1996 1995 1994 1993
----------- ----------- --------- --------- --------- ---------
INCOME STATEMENT DATA:
Net sales........................................... $ 172,470 $ 93,475 $ 141,951 $ 85,044 $ 69,596 $ 58,381
Operating income (loss)............................. 14,317 9,272 12,215 12,672 10,706 (1,001)
Income (loss) before extraordinary items and
cumulative effect of accounting changes........... 7,480 4,612 5,468 7,590 6,282 (1,106)
Income (loss) per share before extraordinary items
and cumulative effect of accounting changes....... 0.64 0.39 0.47 0.64 0.54 (0.12)
BALANCE SHEET DATA:
Total assets........................................ $ 136,352 $ 105,620 $ 48,358 $ 36,870 $ 25,364
Long-term debt (including current portion).......... 42,330 30,381 4,062 0 4,195
Total shareholders' equity.......................... 46,564 40,000 33,960 28,544 10,383
<CAPTION>
<S> <C>
JUNE 27,
1992
-----------
INCOME STATEMENT DATA:
Net sales........................................... $ 47,359
Operating income (loss)............................. 4,668
Income (loss) before extraordinary items and
cumulative effect of accounting changes........... 2,075
Income (loss) per share before extraordinary items
and cumulative effect of accounting changes....... 0.23
BALANCE SHEET DATA:
Total assets........................................ $ 21,729
Long-term debt (including current portion).......... 5,514
Total shareholders' equity.......................... 6,627
</TABLE>
8
<PAGE>
COMPARATIVE PER SHARE INFORMATION
<TABLE>
<CAPTION>
TYCO AND
INBRAND
UNAUDITED INBRAND
TYCO PRO FORMA EQUIVALENT PRO
HISTORICAL COMBINED FORMA PER SHARE
PER SHARE DATA PER SHARE DATA DATA
-------------- -------------- -----------------
<S> <C> <C> <C>
AT OR FOR THE THREE MONTHS ENDED MARCH 31, 1997
(Loss) income from continuing operations per common share...... $ 0.60 $ 0.59(1) $ 0.25(1)
Cash dividends declared per common share....................... 0.03 0.03 0.01
Book value per common share.................................... 16.23 16.09 6.92
AT OR FOR THE YEAR ENDED DECEMBER 31, 1996
(Loss) income from continuing operations per common share...... (1.53) (1.47)(1) (0.63)(1)
Cash dividends declared per common share....................... 0.13 0.13 0.05
Book value per common share.................................... 13.39 13.29 5.71
AT OR FOR THE YEAR ENDED DECEMBER 31, 1995
(Loss) income from continuing operations per common share...... 1.14 1.14 0.49
Cash dividends declared per common share....................... 0.11 0.11 0.05
Book value per common share.................................... 14.03 13.88 5.97
AT OR FOR THE YEAR ENDED DECEMBER 31, 1994
(Loss) income from continuing operations per common share...... 1.21 1.22 0.52
Cash dividends declared per common share....................... 0.08 0.07 0.03
Book value per common share.................................... 13.25 13.08 5.62
</TABLE>
- ------------------------
(1) See notes (3) and (4) to "Selected Tyco Historical Financial Information"
for information on Tyco's income per share before certain non-recurring
items. On a pro forma combined basis, net income per share for the three
months ended March 31, 1997 before these non-recurring items is $0.65 ($0.63
per share on a fully diluted basis). On an equivalent pro forma basis, net
income per share for the three months ended March 31, 1997 before these
non-recurring items is $0.28 ($0.27 per share on a fully diluted basis.) On
a pro forma combined basis, net income per share for 1996 before these non-
recurring items is $2.17 ($2.13 per share on a fully diluted basis). On an
equivalent pro forma basis, net income per share before non-recurring items
is $0.94 ($0.92 per share on a fully diluted basis).
(a) Prior to the ADT Merger, ADT had not declared any dividends on its common
shares since April 1991. Old Tyco declared dividends of $0.05 per share in
the quarter ended March 31, 1997, and $0.20 per share in 1996, 1995 and
1994.
(b) The information for INBRAND for the years ended December 31, 1996, 1995 and
1994 has been derived from INBRAND's unaudited historical financial
statements. The historical financial information has been adjusted to
conform to Tyco's year end.
(c) The unaudited pro forma (loss) income and book value per share are based on
INBRAND shareholders receiving 0.43 of a Tyco Common Share for each share of
INBRAND Common Stock held. The INBRAND equivalent pro forma per share data
are calculated by the multiplying the unaudited pro forma combined per share
data by 0.43.
9
<PAGE>
OLD TYCO OPERATING RESULTS
YEAR ENDED JUNE 30, 1997
Old Tyco has announced its results of operations for the fiscal year ended
June 30, 1997 ("fiscal 1997"). Net income increased 35.0% to $419.0 million, or
$2.61 per share, for fiscal 1997, compared to $310.1 million, or $2.03 per share
for the fiscal year ended June 30, 1996 ("fiscal 1996"). Sales increased 30.0%
to $6.6 billion in fiscal 1997 from $5.1 billion in fiscal 1996. The internal
growth of existing companies was also enhanced by continued worldwide expansion
of products and services coupled with productivity enhancements which improved
profit margins. Earnings of Tyco's Disposable and Specialty Products group
increased 25.0% to $364.4 million in fiscal 1997 compared to $291.7 million in
fiscal 1996. Earnings of Tyco's Fire Protection group increased 55.0% to $198.9
million in fiscal 1997, compared to $128.1 million in fiscal 1996. Earnings of
Tyco's Flow Control group increased 37.0% to $156.3 million in fiscal 1997,
compared to $114.1 million fiscal 1996. Earnings of Tyco's Electrical and
Electronic Components groups increase 24.0% to $109.3 million in fiscal 1997,
compared to $88.5 million in fiscal 1996. See "Businesses of Tyco." Earnings of
Tyco's four business groups are stated before deduction for general corporate
expenses, interest expense and taxes.
The following table sets forth the announced summary results of operations
of Old Tyco for fiscal 1997, compared to fiscal 1996.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
----------------------------
JUNE 30, 1997 JUNE 30, 1996
------------- -------------
(IN THOUSANDS EXCEPT
PER SHARE AMOUNTS)
<S> <C> <C>
Sales............................................................................... $ 6,597,629 $ 5,089,828
------------- -------------
------------- -------------
Income before income taxes and extraordinary item................................... $ 687,889 $ 523,897
Income taxes........................................................................ (268,887) (213,750)
------------- -------------
Net Income.......................................................................... $ 419,002 $ 310,147
------------- -------------
------------- -------------
Earnings Per Share
Income before extraordinary item.................................................... $ 2.61 $ 2.03
Common equivalent shares............................................................ 160,268 152,809
------------- -------------
------------- -------------
</TABLE>
10
<PAGE>
INBRAND SPECIAL MEETING
PURPOSE OF THE INBRAND SPECIAL MEETING
At the special meeting of INBRAND shareholders (the "Special Meeting"),
holders of INBRAND Common Stock will consider and vote upon a proposal to
approve the Merger (the "Merger") of INBRAND and T7 Acquisition Corp., a Georgia
subsidiary of Tyco ("Merger Sub"), and to approve the Agreement and Plan of
Merger (the "Merger Agreement"), dated as of May 12, 1997, among Old Tyco,
Merger Sub, successor by assignment to T5 Acquisition Corp., a subsidiary of Old
Tyco ("T5"), and INBRAND, providing for the Merger, and such other matters as
may properly be brought before the Special Meeting.
THE BOARD OF DIRECTORS OF INBRAND HAS UNANIMOUSLY APPROVED THE MERGER AND
APPROVED AND ADOPTED THE MERGER AGREEMENT AND RECOMMENDS THAT INBRAND
SHAREHOLDERS VOTE FOR APPROVAL OF THE MERGER AND THE MERGER AGREEMENT. SEE "THE
MERGER--BACKGROUND OF THE MERGER," "--RECOMMENDATION OF THE BOARD OF DIRECTORS
OF INBRAND; REASONS OF INBRAND FOR THE MERGER" AND "--INTERESTS OF CERTAIN
PERSONS IN THE MERGER."
RECORD DATE; VOTING RIGHTS; PROXIES
The INBRAND Board of Directors has fixed the close of business on July 11,
1997 as the record date (the "Record Date") for determining holders entitled to
notice of and to vote at the Special Meeting.
As of the Record Date, there were 11,772,523 shares of INBRAND Common Stock
issued and outstanding, each of which entitles its holder to one vote. All
shares of INBRAND 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 INBRAND COMMON STOCK WILL BE VOTED IN FAVOR OF APPROVAL OF THE
MERGER AND THE MERGER AGREEMENT. INBRAND does not know of any matters other than
approval of the Merger and the Merger Agreement 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
will have the discretion to vote on such matters in accordance with their best
judgment, unless such authorization is withheld. A shareholder who has given a
proxy may revoke it at any time prior to its exercise by giving written notice
of revocation to the Secretary of INBRAND, by signing and returning a later
dated proxy, or by voting in person 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 shareholders for a vote. 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 not be considered as present and
entitled to vote with respect to that matter.
SOLICITATION OF PROXIES
INBRAND 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.
11
<PAGE>
QUORUM
The presence in person or by properly executed proxy of holders of a
majority of the issued and outstanding shares of INBRAND Common Stock is
necessary to constitute a quorum at the Special Meeting.
REQUIRED VOTE
The approval of the Merger and the Merger Agreement requires the affirmative
vote of the holders of a majority of the outstanding shares of INBRAND Common
Stock. Abstentions and broker non-votes will have the effect of votes against
approval of the Merger and the Merger Agreement. In certain circumstances,
including if INBRAND shareholders fail to approve the Merger and the Merger
Agreement, INBRAND will obligated to pay to Tyco a termination fee of $9
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 INBRAND and their affiliates were beneficial owners of
approximately 39% of the outstanding shares of INBRAND Common Stock. Holders of
approximately 22% of the INBRAND Common Stock outstanding as of the Record Date
have entered into certain Shareholder Agreements with Tyco pursuant to which
such holders have agreed, subject to certain terms and conditions, to vote in
favor of the Merger Agreement. See "The Merger Agreement and Related
Agreements-- Shareholder Agreements" and "Security Ownership of Certain
Beneficial Owners and Management of INBRAND."
THE MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING ARE OF GREAT IMPORTANCE
TO THE SHAREHOLDERS OF INBRAND. ACCORDINGLY, INBRAND SHAREHOLDERS 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. The following
discussion is qualified in its entirety by reference to the Merger Agreement,
which is attached as Annex A to this Proxy Statement/Prospectus, and to the
other agreements and documents that are discussed, which are filed as exhibits
to the Registration Statement of which this Proxy Statement/Prospectus forms a
part. All shareholders are urged to read the Merger Agreement in its entirety.
GENERAL
The Merger Agreement provides that the Merger will be consummated if the
required approval of the INBRAND shareholders 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 INBRAND, and INBRAND will become
a wholly-owned subsidiary of Tyco.
Pursuant to the Merger Agreement, each outstanding share of common stock,
par value $.10, of INBRAND ("INBRAND Common Stock") will be converted into 0.43
common shares, par value $.20, of Tyco ("Tyco Common Shares"). Based upon the
number of shares of INBRAND Common Stock outstanding on the Record Date, and
assuming the exercise of all outstanding Stock Options currently exercisable, a
maximum number of 5,571,147 Tyco Common Shares may be issued in connection with
the Merger.
12
<PAGE>
Based upon the capitalization of Tyco and INBRAND as of July 22, 1997, the
shareholders of INBRAND will own approximately 2% of the outstanding Tyco Common
Shares following consummation of the Merger.
EFFECTIVE TIME
The effective time of the Merger (the "Effective Time") will occur upon the
filing of a Certificate of Merger with the Secretary of State of the State of
Georgia (the "Certificate of Merger") or at such later time as is specified on
such certificate. The filing of the Certificate of Merger will occur as soon as
practicable after the closing of the transactions contemplated by the Merger
Agreement. The Merger Agreement may be terminated by either party if the Merger
has not been consummated on or before October 15, 1997. The Merger Agreement may
also be terminated under certain other circumstances. See "The Merger Agreement
and Related Agreements--Conditions to the Merger," and "--Termination."
CONVERSION OF SHARES; PROCEDURES FOR EXCHANGE OF CERTIFICATES
The conversion of INBRAND Common Stock into the right to receive Tyco Common
Shares, in the ratio (the "Exchange Ratio") of 0.43 Tyco Common Shares for each
share of INBRAND 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 INBRAND shareholder informing
shareholders of the procedures to follow in forwarding stock certificates
representing INBRAND Common Stock to the Exchange Agent. Upon receipt of a
shareholder's INBRAND stock certificates, the Exchange Agent will deliver
certificates for full Tyco Common Shares to such shareholder 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 shareholder is entitled.
If any issuance of Tyco Common Shares in exchange for shares of INBRAND
Common Stock is to be made to a person other than the INBRAND shareholder 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 be in proper form for transfer and that the INBRAND
shareholder 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 INBRAND
Common Stock on the stock transfer books of INBRAND. If a certificate
representing INBRAND Common Stock is presented for transfer, it will be
cancelled and a certificate representing the appropriate number of full Tyco
Common Shares 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 INBRAND 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 Tyco
Common Shares into which such shares of INBRAND Common Stock were converted at
the Effective Time. No dividends or other distributions, if any, payable to
holders of Tyco Common Shares will be paid to the holders of any certificates
for shares of INBRAND 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 Shares in
respect of a record date after the Effective Time will be paid to the holder of
record of the full Tyco Common Shares represented by the certificate issued in
exchange therefor, without interest. See "The Merger Agreement and Related
Agreements--Exchange of Certificates."
INBRAND SHAREHOLDERS SHOULD NOT FORWARD STOCK CERTIFICATES TO THE EXCHANGE
AGENT UNTIL THEY HAVE RECEIVED TRANSMITTAL LETTERS. INBRAND
13
<PAGE>
SHAREHOLDERS SHOULD NOT RETURN STOCK CERTIFICATES WITH THE ENCLOSED PROXY.
BACKGROUND OF THE MERGER
Except where otherwise specified, in this section and the following sections
captioned "Reasons of Tyco for the Merger," "Recommendation of the Board of
Directors of INBRAND; Reasons of INBRAND for the Merger," "Opinion of INBRAND's
Financial Advisor" and "Certain Considerations," references to Tyco for all
times prior to consummation of the ADT Merger on July 2, 1997 are to Old Tyco.
Tyco first identified INBRAND as a potential acquisition opportunity in
1996. On February 14, 1997, Tyco sent INBRAND a letter expressing interest in a
potential acquisition. After an initial meeting on March 18, 1997 between
representatives of Tyco and INBRAND, the parties executed a March 21, 1997
confidentiality agreement with respect to mutual disclosure of non-public
information.
Following execution of the confidentiality agreement, during March, April
and May of 1997, Tyco conducted a due diligence investigation of INBRAND,
including document reviews, visits to INBRAND facilities and meetings with
representatives of INBRAND. During April and May, representatives of Tyco and
INBRAND conducted a series of meetings and conference calls to negotiate the
terms of a possible business combination.
On April 8, 1997, INBRAND retained Salomon Brothers Inc ("Salomon") as its
financial advisor in connection with the possible sale of all or a portion of
the common stock or assets of INBRAND.
Between April 15 and May 9, 1997, Tyco and INBRAND negotiated the purchase
price for the shares of INBRAND Common Stock, while Tyco continued its due
diligence investigation of INBRAND. On May 9, 1997, the parties agreed upon an
exchange ratio of 0.43 Tyco shares for each share of INBRAND Common Stock. The
merger consideration would consist of Tyco Common Shares, unless the ADT Merger
were not consummated, in which case the Merger consideration would consist of
common stock, par value $0.50 per share, shares of Old Tyco ("Old Tyco Stock").
On May 12, 1997, representatives of Tyco and INBRAND, the parties'
respective legal counsel and INBRAND's financial advisor, met to negotiate
certain remaining legal issues relating to the Merger Agreement and to the
Shareholder Agreements to be executed by INBRAND's principal shareholders. Later
on the same day, INBRAND's Board of Directors convened a telephone meeting. The
INBRAND Board was informed of the results of the negotiations between the
parties, and Salomon provided to the INBRAND Board of Directors its oral opinion
that the Exchange Ratio was fair to the INBRAND shareholders from a financial
point of view. The INBRAND Board of Directors then unanimously approved the
Merger and the execution of the Merger Agreement. The Board of Directors of Tyco
also met by conference call on May 12, 1997 to consider the terms of the
proposed merger transaction. The Tyco Board concluded that the Merger was in the
best interests of Tyco's shareholders, unanimously approved the proposed terms
of the Merger and authorized Tyco's officers to complete and execute the
documentation for the transaction.
After approval of the Merger by the Boards of Directors of INBRAND and Tyco,
on May 12, 1997, the Merger Agreement and the Shareholder Agreements were
executed by the appropriate parties. The transaction was publicly announced
before the opening of trading on the morning of May 13, 1997.
REASONS OF TYCO FOR THE MERGER
The Tyco Board of Directors believes that the Merger is in keeping with
Tyco's corporate strategy of seeking growth through internal expansion and
through acquisition, where attractive acquisition opportunities present
themselves that are likely to benefit from cost reductions and synergies with
Tyco's existing operations and that are non-dilutive. In particular, the Tyco
board believes that there are several significant benefits from this
transaction, including: (i) utilization of Tyco's existing manufacturing and
distribution
14
<PAGE>
expertise in the disposable product markets in which INBRAND is active; (ii)
utilization of INBRAND's distribution network to support additional products,
such as certain of Tyco's existing disposable medical and hygiene products;
(iii) the opportunity to utilize INBRAND's operations as a platform for future
growth in this area; and (iv) reduction of certain INBRAND corporate costs,
possible elimination of excess facilities and potential cost reduction for
materials and services.
RECOMMENDATION OF THE BOARD OF DIRECTORS OF INBRAND; REASONS OF INBRAND FOR THE
MERGER
The Board of Directors of INBRAND has unanimously approved the Merger and
unanimously adopted and approved the Merger Agreement, has unanimously
determined that the Merger is fair and in the best interests of INBRAND and its
shareholders and unanimously recommends that holders of shares of INBRAND Common
Stock vote FOR approval of the Merger and the Merger Agreement.
In reaching its decision to approve the Merger and adopt and approve the
Merger Agreement and to recommend that INBRAND's shareholders vote to approve
the Merger and the Merger Agreement, INBRAND's Board of Directors considered the
following material factors in determining that the Merger is in the best
interests of INBRAND shareholders: (i) the opportunity for INBRAND shareholders
to receive Tyco Common Shares in a tax-free exchange valued at a significant
premium over the market price for shares of INBRAND Common Stock prevailing
prior to the public announcement of the Merger; (ii) the opportunity for INBRAND
shareholders to participate, as holders of Tyco shares, in a larger, more
strategically balanced company of which INBRAND would be a part; and (iii) the
substantially larger public float and trading volume of Tyco shares compared to
the public float and trading volume of INBRAND Common Stock, which should
provide INBRAND's shareholders with greater liquidity in their investment.
In addition, the INBRAND Board of Directors considered the following factors
in determining the financial fairness of the Merger to INBRAND and its
shareholders: (i) its knowledge of the business, operations, properties, assets,
financial condition and operating results of INBRAND 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 INBRAND's future prospects; (iii) presentations by INBRAND's
management and by Salomon, INBRAND's financial advisor, with respect to INBRAND
and Tyco; (iv) the opinion of Salomon as to the fairness from a financial point
of view of the Exchange Ratio to the shareholders of INBRAND (see "Opinion of
INBRAND'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 INBRAND Common Stock and Tyco shares; (vii) the
compatibility of the respective business philosophies of Tyco and INBRAND; and
(viii) the ability of INBRAND'S Board of Directors to terminate the Merger
Agreement under certain circumstances.
The INBRAND 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 INBRAND and its
shareholders outweighed the loss of independence.
The foregoing discussion of the information and factors considered and given
weight by the INBRAND 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 INBRAND 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
INBRAND Board of Directors may have given different weights to different
factors. For a discussion of the interests of certain members of INBRAND's
management and INBRAND's Board of Directors in the Merger, see "Interests of
Certain Persons in the Merger" below.
15
<PAGE>
THE INBRAND BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE HOLDERS OF
INBRAND COMMON STOCK VOTE FOR APPROVAL OF THE MERGER AND THE MERGER AGREEMENT.
OPINION OF INBRAND'S FINANCIAL ADVISOR
At the meeting of the INBRAND Board on May 12, 1997, Salomon delivered its
oral opinion, and later confirmed such opinion in writing, that as of such date,
the Exchange Ratio was fair, from a financial point of view, to the holders of
INBRAND Common Stock.
The full text of the written opinion of Salomon dated July 23, 1997 is
attached as Annex B to this Proxy Statement/Prospectus and sets forth a complete
description of the assumptions made, procedures followed, matters considered and
limits of the review undertaken by Salomon. No limits were imposed by the
INBRAND Board of Directors upon Salomon with respect to the investigations made
or the procedures followed by Salomon in rendering its opinion. Holders of
INBRAND Common Stock are urged to read Salomon's opinion in its entirety. The
summary of the opinion as set forth in this Proxy Statement/Prospectus is
qualified in its entirety by reference to the full text of such opinion.
In connection with rendering its opinion, Salomon reviewed certain publicly
available information concerning INBRAND, Tyco, and ADT and certain other
financial information concerning INBRAND and Tyco, including financial forecasts
that were provided to Salomon by INBRAND and Tyco. Salomon discussed the past
and current business operations, financial conditions and prospects of INBRAND
and Tyco with certain officers and employees of INBRAND and Tyco, respectively.
Salomon also considered such other information, financial studies, analyses,
investigations and financial, economic, market and trading criteria that it
deemed relevant.
In its review and analysis and in arriving at its opinion, Salomon assumed
and relied upon the accuracy and completeness of the information reviewed by
Salomon for the purpose of its opinion and Salomon did not assume any
responsibility for independent verification of such information. With respect to
the financial forecasts of INBRAND and Tyco, Salomon assumed that such forecasts
were reasonably prepared on bases reflecting the best currently available
estimates and judgments of the respective managements of INBRAND and Tyco, and
Salomon expressed no opinion with respect to such forecasts or the assumptions
on which they were based. Salomon did not assume any responsibility for any
independent evaluation or appraisal of any of the assets (including properties
and facilities) or liabilities of INBRAND and Tyco. Salomon was not asked to,
and did not solicit other proposals to acquire INBRAND. Salomon's opinion
necessarily was based upon conditions as they existed and could be evaluated as
of the date thereof. Salomon's opinion did not imply any conclusion as to the
likely trading range for Tyco Common Shares following the consummation of the
ADT Merger (or, if the ADT Merger were not consummated, the Old Tyco Stock) and
the Merger, which may vary depending upon, among other factors, changes in
interest rates, dividend rates, market conditions, general economic conditions
and other factors that generally influence the price of securities. In addition,
Salomon assumed that the Merger will qualify as a tax-free reorganization for
federal income tax purposes and will be accounted for as a pooling of interests
transaction.
The following is a summary of the reports and analyses presented on May 12,
1997, by Salomon to the INBRAND Board of Directors in connection with the
rendering of Salomon's opinion.
16
<PAGE>
(i) CERTAIN FINANCIAL DATA. Salomon reviewed data relating to the financial
performance and operating characteristics of INBRAND and Tyco, each on an
independent basis. This data included five-year historical and latest 12-month
("LTM") income statement data, balance sheet data and financial ratios for
INBRAND and two-year historical and partial year historical income statement
data for, and four-year growth rates for, Tyco.
(ii) HISTORICAL STOCK PRICE AND EXCHANGE RATIO ANALYSIS. Salomon reviewed
the performance of the per share daily closing price of INBRAND Common Stock
during the period from May 9, 1996 through May 9, 1997 and compared such daily
closing prices with the performance of an index of diaper companies comprised of
Drypers Corporation, DSG International Limited and Paragon Trade Brands, Inc.
(the "Composite Index") as well as Standard and Poor's 500 Index (the "S&P 500
Index"). Salomon also reviewed the performance of the per share daily closing
price of the Old Tyco Stock over the same period and compared such daily closing
prices with the performance of INBRAND Common Stock and the S&P 500 Index.
Salomon noted that during the period from May 9, 1996 to May 9, 1997, the Old
Tyco Stock had outperformed the S&P 500 Index, while each of INBRAND Common
Stock and the Composite Index had underperformed the S&P 500 Index. Salomon also
noted that the 52-week trading range for INBRAND Common Stock ranged from a low
of $11.00 per share to a high of $24.50 per share.
Salomon also reviewed the historical ratio of the daily closing prices of
INBRAND Common Stock to the Old Tyco Stock over the period from May 9, 1996
through May 9, 1997. Based on such prices and over such period, the high, low
and average exchange ratios implied by such prices were 0.50, 0.22 and 0.38,
respectively, of a share of Old Tyco Stock to each share of INBRAND Common
Stock, as compared to the Exchange Ratio of 0.43 of a share of Old Tyco Stock to
each share of INBRAND Common Stock. Salomon also noted that, based on per share
daily closing prices for INBRAND Common Stock and the Old Tyco Stock during the
three months, six months, nine months and twelve months ended May 9, 1997, the
average exchange ratios implied by such daily closing prices were 0.23, 0.31,
0.36 and 0.38, respectively, and that on May 9, 1997, the exchange ratio implied
by such daily closing prices was 0.25.
(iii) DISCOUNT CASH FLOW ANALYSIS. Using a discounted cash flow methodology
("DCF"), Salomon valued INBRAND by estimating the present value of its future
unlevered free cash flows. Unlevered free cash flow is calculated as after-tax
operating income plus non-cash expenses, adjusted for any cash effects from
changes in working capital and capital expenditures. Salomon aggregated (x) the
present value of the unlevered free cash flows over the five fiscal-year period
from 1998 to 2002 with (y) the present value of the range of the terminal values
described below. The range of terminal values was calculated by applying
multiples ranging from 5.5x to 7.5x to INBRAND's estimated earnings before
interest, taxes, depreciation and amortization ("EBITDA") for the fiscal year
ending June 30, 2002. As part of its analysis, Salomon applied weighted average
costs of capital ("WACCs") of 11.5% to 13.5% based on INBRAND's capital
structure and its cost of equity. Salomon estimated the present value of future
unlevered free cash flows based on the following scenarios of INBRAND's future
financial and operating performance: (i) forecasts developed by management of
INBRAND, including estimated cost savings (the "Base Case"); (ii) forecasts
representing the Base Case adjusted to reflect no improvement in INBRAND's
operating margins from fiscal 1997 levels (the "Conservative Case"); (iii)
forecasts developed by management of Tyco, including Tyco's estimates of
synergies and cost savings resulting from the Merger (the "Acquiror Case") and
(iv) forecasts representing the Acquiror Case adjusted to exclude such estimated
synergies and cost savings (the "Standalone Case"). Applying WACCs ranging from
12.0% to 13.0% and EBITDA multiples ranging from 6.0x to 7.0x, the DCF analysis
resulted in implied equity values per share for INBRAND Common Stock of $25.19
to $30.80 under the Base Case, $17.32 to $21.57 under the Conservative Case,
$27.89 to $33.70 under the Acquiror Case and $20.93 to $25.63 under the
Standalone Case.
(iv) PUBLIC MARKET ANALYSIS. Salomon compared the financial and market
performance of INBRAND with the following group of publicly traded diaper and
private label companies: American Safety Razor Company, Drypers Corporation, DSG
International Limited and Paragon Trade Brands, Inc. (collectively,
17
<PAGE>
the "Selected Public Companies"). Salomon examined certain publicly available
financial and operating data of the Selected Public Companies during the LTM and
earnings estimates, based on First Call estimates, for fiscal years ending June
30, 1997 and June 30, 1998. Salomon noted that, based on the price of INBRAND
Common Stock on May 9, 1997, INBRAND had implied ratios of Firm Value to LTM
Revenues, LTM EBITDA and LTM EBIT of 116%, 9.6x and 12.8x, respectively, and
actual and estimated P/E Ratios of 20.7x, 18.3x and 14.3x, respectively, for the
LTM and for the fiscal years ended June 30, 1997, and June 30, 1998. Salomon
then applied a P/E multiple range of 11.0x to 13.0x to INBRAND management's
estimated 1998 earnings to derive a public market valuation for INBRAND Common
Stock of $17.65 to $20.86 per share.
No company used in the Public Market Analysis was identical to Tyco or
INBRAND. Accordingly, an analysis of the results of the foregoing necessarily
involves complex considerations and judgments concerning differences in
financial and operating characteristics of the companies and other factors that
could affect the public trading value of the companies to which they are being
compared. Mathematical analysis is not, in itself, a meaningful method of
ensuring comparable company data.
(v) PRO FORMA COMBINATION ANALYSIS. Salomon analyzed certain pro forma
effects on INBRAND and Tyco resulting from the Merger for the fiscal years
ending June 30, 1998 and June 30, 1999. This analysis, based upon INBRAND's
stand-alone earnings per share under the Base Case, showed dilution to the
shareholders of INBRAND in earnings per share of (i) 10.4% and 19.6% for the
fiscal years 1998 and 1999, respectively, without giving effect to the synergies
projected by management of Tyco to be realized in the Merger and (ii) 10.0% and
19.1% for the fiscal years ended 1998 and 1999, respectively, after giving
effect to the synergies projected by management of Tyco to be realized in the
Merger. This analysis also showed, based upon certain estimates provided by Tyco
management of Tyco's stand-alone earnings per share (pro forma for the ADT
Merger and Tyco's acquisition of Submarine Systems, Inc. from AT&T), accretion
to the shareholders of Tyco in earnings per share of (i) 0.5% and 0.7% for the
fiscal years ending 1998 and 1999, respectively, without giving effect to the
synergies projected by management of Tyco to be realized in the Merger and (ii)
0.9% and 1.4% for the fiscal years ending 1998 and 1999, respectively, after
giving effect to the synergies projected by management of Tyco to be realized in
the Merger.
The preparation of a fairness opinion is a complex process not susceptible
to partial analysis or summary descriptions. The summary set forth above does
not purport to be a complete description of the analyses underlying the Salomon
opinion or of Salomon's presentation to the INBRAND Board of Directors. Salomon
believes that its analysis and the summary set forth above must be considered as
a whole and that selecting portions of its analyses and the factors considered
by it, without considering all analyses and factors, could create an incomplete
view of the processes underlying the analysis set forth in its opinion. Salomon
has not indicated that any of the analysis which it performed has a greater
significance than any other. The ranges of valuations resulting from any
particular analysis described above should not be taken to be the view of
Salomon of the actual value of INBRAND, Tyco or the combined entity.
In performing its analyses, Salomon made numerous assumptions with respect
to industry performance, general business, financial market and economic
conditions and other matters, many of which are beyond the control of INBRAND or
Tyco. The analyses which Salomon performed are not necessarily indicative of
actual values or factual future results, which may be significantly more or less
favorable than suggested by such analyses. Such analyses were prepared solely as
part of Salomon's analysis of the fairness, from a financial point of view, of
the Exchange Ratio to the holders of INBRAND Common Stock. The analyses do not
purport to be appraisals or to reflect the prices at which a company might
actually be sold or the prices at which any securities may trade at the present
time or any time in the future. In addition, Salomon's opinion did not address
INBRAND's underlying business decision to effect the Merger, and Salomon
expressed no view on the effect on INBRAND of the Merger, the ADT Merger or any
related transactions. Salomon's opinion was directed only to the fairness, from
a financial point of
18
<PAGE>
view, of the Exchange Ratio to holders of INBRAND Common Stock and did not
constitute a recommendation concerning how holders of INBRAND Common Stock
should vote with respect to the Merger or the Merger Agreement.
As described above, the opinion of Salomon was one of many factors taken
into consideration by the INBRAND Board in making its determination to approve
the Merger and the Merger Agreement. The opinion of Salomon does not address the
relative merits of the Merger as compared to any alternative business strategies
that might exist for INBRAND or the effect of any other business combination in
which INBRAND might have engaged.
In the ordinary course of its business, Salomon may actively trade the
equity securities of INBRAND and Tyco for its own account and the accounts of
its customers and, accordingly, may at any time hold a long or short position in
such securities. Pursuant to an engagement letter dated April 8, 1997, INBRAND
agreed to pay Salomon a fee of (i) $75,000 upon execution of the letter plus
(ii) an additional amount upon consummation of the Merger. INBRAND also agreed,
under certain circumstances, to reimburse Salomon for certain out-of-pocket
expenses incurred by Salomon in connection with the Merger, and agreed to
indemnify Salomon and certain related persons against certain liabilities,
including liabilities under the federal securities laws, relating to or arising
out of its engagement.
Salomon is an internationally recognized investment banking firm that
provides financial services in connection with a wide range of business
transactions. As part of its business, Salomon regularly engages in the
valuation of companies and their securities in connection with mergers and
acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and other
purposes. The INBRAND Board of Directors retained Salomon based on Salomon's
expertise in the valuation of companies as well as its familiarity with
companies in the personal care industry.
CERTAIN CONSIDERATIONS
In considering whether to approve the Merger and the Merger Agreement,
INBRAND shareholders should carefully evaluate the information contained in this
Proxy Statement/Prospectus and, in particular the following factors:
- FIXED EXCHANGE RATIO. Under the terms of the Merger Agreement, each share
of INBRAND Common Stock will be exchanged for 0.43 Tyco Common Shares.
This ratio was determined on the basis of the closing price per share of
Old Tyco Stock on the New York Stock Exchange of $62.86 on May 9, 1997,
the second business day preceding the first public announcement of the
Merger. Because the Exchange Ratio is fixed, the interest of INBRAND
shareholders in Tyco will not change even though the price of Tyco Common
Shares at the time of the Merger will likely differ from the price on May
9, 1997. In particular, INBRAND shareholders will not receive a greater
interest in Tyco if the price of Tyco Common Shares at the time of the
Merger is less than $62.86. The price per Tyco Common Share is likely to
be different at the time of the Merger from its price on May 9, 1997 as a
result of the ADT Merger, changes in the business, operation or prospects
of Tyco, regulatory considerations, general market and economic conditions
and other factors.
- HISTORICAL PERFORMANCE NO INDICATION. The historical share and earnings
performance of Tyco is not necessarily indicative of Tyco's future share
price or earnings results.
- BERMUDA COMPANY. If the Merger is consummated, shareholders of INBRAND
will become shareholders of a Bermuda company. There are significant
differences between the corporate laws of Bermuda and the corporate laws
of Georgia and between the constitutional documents of INBRAND and Tyco.
See "Comparison of Shareholder Rights." These differences may materially
affect the rights of INBRAND shareholders.
19
<PAGE>
INBRAND shareholders are urged to obtain current market quotations for Tyco
Common Shares and the INBRAND Common Stock.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the INBRAND Board of Directors that the
INBRAND shareholders approve the Merger and the Merger Agreement, INBRAND
shareholders should be aware that certain directors and officers of INBRAND have
interests in the Merger in addition to their interests solely as shareholders of
INBRAND. The INBRAND Board of Directors was aware of these interests when it
considered and approved the Merger and the Merger Agreement. Each of Garnett A.
Smith, Chairman and Chief Executive Officer of INBRAND, H. Scott Sigler,
President and Chief Operating Officer of INBRAND, and James R. Johnson, Senior
Vice President and Chief Financial Officer of INBRAND, will enter into
employment agreements with INBRAND, effective upon the consummation of the
Merger, expiring on December 31, 1998. Under these agreements, Messrs. Smith,
Sigler and Johnson will receive an annual base salary of $380,000, $265,000 and
$210,000, respectively.
In addition, the Merger Agreement provides that, after the Effective Time,
INBRAND, as the Surviving Corporation in the Merger, shall, to the fullest
extent permitted under the law or the Surviving Corporation's Articles of
Incorporation or By-Laws, indemnify and hold harmless each present and former
director, officer or employee of INBRAND 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 INBRAND's Articles 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 not less than six years after such date. The Merger
Agreement further provides that the provisions with respect to indemnification
in INBRAND's Articles of Incorporation or By-Laws existing on the date of the
Merger Agreement shall continue in full force and effect in the Articles of
Incorporation and 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 INBRAND as of
the Effective Time, for a period of not less than six years from the Effective
Time. The Merger Agreement also provides that the Surviving Corporation will
maintain directors' and officers' liability insurance policies as currently
maintained by INBRAND for three years after the Effective Time to the extent
that such policies are obtainable at an annual cost of not greater than twice
INBRAND'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. Old Tyco has
guaranteed the Surviving Corporation's obligations under these provisions. See
"The Merger Agreement and Related Agreements."
CERTAIN UNITED STATES FEDERAL INCOME TAX AND BERMUDA TAX CONSEQUENCES
UNITED STATES FEDERAL TAX CONSEQUENCES
It is a condition to the obligation of INBRAND to consummate the Merger that
INBRAND receive an opinion from Miller & Martin, tax counsel for INBRAND, to the
effect that the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "Code"). It is a condition to the obligation of Tyco to
consummate the Merger that Tyco receive an opinion to the same effect from
Kramer, Levin, Naftalis & Frankel. Such opinions will be based upon facts
existing at the Effective Time, and, in rendering the opinions of counsel
referred to in this section, such counsel will rely upon certain
representations, made as of the Effective Time, including representations by
INBRAND, Tyco and certain shareholders of INBRAND, which counsel will assume to
be true, correct and complete, including representations as to the intent of the
historic shareholders of INBRAND to retain ownership of the Tyco Common Shares
which
20
<PAGE>
they receive in the Merger. If such representations are untrue, incorrect or
incomplete, the opinions could be adversely affected. No ruling has been or will
be sought from the Internal Revenue Service (the "IRS") as to the United States
federal income tax consequences of the Merger, and the opinions of counsel set
forth herein are not binding upon the IRS 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, Miller & Martin, counsel to INBRAND, 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 and 5 below.
1. Except as provided below, no gain or loss will be recognized by an
INBRAND shareholder upon the exchange of his or her INBRAND Common Stock for
Tyco Common Shares. An INBRAND shareholder who receives cash proceeds in lieu of
a fractional share interest in Tyco Common Shares 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 shareholder's INBRAND Common Stock is held as a capital asset at
the Effective Time and will be long-term capital gain or loss if shares of
INBRAND Common Stock have been held for more than one year at the Effective
Time. A United States Holder (as defined below) of INBRAND Common Stock owning
at least five percent (measured by vote or value) of the Tyco Common Shares
immediately after the Merger (taking into account the constructive ownership
rules of Section 958(b) of the Code (a "5% Shareholder")) will recognize gain
(but not loss) with respect to the INBRAND Common Stock exchanged in the Merger
at the Effective Time, unless, in general, such 5% Shareholder (i) complies with
certain reporting requirements and (ii) enters into an agreement with the IRS to
recognize retroactively all or a portion of such gain (with interest) if, during
the five year period following the taxable year of the Merger, Tyco disposes of
all or a portion of the INBRAND Common Stock acquired in the Merger or INBRAND,
not in the ordinary course of business, disposes of all or a substantial portion
of its assets. 5% SHAREHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS.
2. The tax basis of the Tyco Common Shares received by an INBRAND
shareholder will be the same as such shareholder's tax basis in the INBRAND
Common Stock surrendered in exchange therefor, decreased by the tax basis
allocated to any fractional share interest exchanged for cash, and increased,
with respect to a 5% Shareholder that does not enter into a gain recognition
agreement, by the amount of any gain recognized with respect to the INBRAND
Common Stock exchanged in the Merger.
3. The holding period of the Tyco Common Shares received by an INBRAND
shareholder will include the period during which the INBRAND Common Stock
surrendered in exchange therefor was held (provided that such INBRAND Common
Stock was held by such INBRAND shareholder as a capital asset at the Effective
Time).
4. No gain or loss will be recognized by INBRAND, Tyco or Merger Sub as a
result of the Merger.
5. Distributions with respect to Tyco Common Shares will be treated as
dividends and taxable as ordinary income to a United States Holder of Tyco
Common Shares to the extent that such distributions are made out of Tyco's
current or accumulated earnings and profits as determined for United States
federal income tax purposes (regardless of whether such distributions are
treated as a return of capital for non-tax purposes), with any excess being
treated as a tax-free return of capital which reduces such United States
Holder's tax basis in the Tyco Common Shares to the extent thereof and
thereafter as gain from the sale of exchange of property. Such dividends
generally will be treated as foreign source "passive income" for United States
foreign tax credit purposes. The amount of any distribution of property other
than cash will be the fair market value of such property on the date of
distribution by Tyco. United States Holders that are corporations generally will
not be entitled to claim a dividends received deduction with respect to
distributions by Tyco. Gain or loss realized by a United States Holder on the
sale or exchange of Tyco Common Shares held as capital assets (including a
distribution in liquidation) will be subject to United States federal income
taxation as a capital gain or loss in an amount equal to the difference between
the
21
<PAGE>
amount realized on such sale or exchange and such Holder's adjusted tax basis in
the Tyco Common Shares sold or exchanged. Such gain or loss will be long-term
capital gain or loss if such Holder's holding period for the Tyco Common Shares
is more than one year. Any gain so realized generally will be United States
source income. Certain noncorporate United States Holders may be subject to
backup withholding at a rate of 31% on distributions with respect to Tyco Common
Shares or the proceeds of a disposition of Tyco Common Shares. Backup
withholding will apply only if the Holder (i) fails to furnish its Taxpayer
Identification Number ("TIN"), (ii) furnishes an incorrect TIN, (iii) is
notified by the IRS that it has failed to properly report payments of interest
and dividends or (iv) under certain circumstances fails to certify, under
penalty of perjury, that it has furnished a correct TIN and that it has not been
notified by the IRS that it is subject to backup withholding for failure to
report interest and dividend payments. The amount of any backup withholding from
a payment to a United States Holder will be allowed as a credit against such
Holder's United States federal income tax liability and may entitle such Holder
to a refund, provided that certain required information is furnished to the IRS.
As used in this section, a "United States Holder" means a holder that is,
for United States federal income tax purposes, a citizen or resident of the
United States, a corporation or partnership created or organized in or under the
laws of the United States, or any political subdivision thereof, or an estate or
trust the income of which is subject to United States federal income taxation
regardless of its source. For its taxable years beginning after December 31,
1996, a trust generally will be a United States Holder only if a court within
the United States is able to exercise primary supervision over its
administration and one or more United States fiduciaries have the authority to
control all substantial decisions of the trust.
BERMUDA TAX CONSEQUENCES
In the opinion of Appleby, Spurling & Kempe, attorneys in Bermuda for Tyco,
there will be no Bermuda income, corporation or profits tax, withholding tax,
capital gains tax, capital transfer tax, estate duty or inheritance tax payable
in respect of an exchange of Tyco Common Shares for INBRAND Common Stock
pursuant to the Merger. In addition, as of the date hereof, there is no Bermuda
income, corporation or profits tax, withholding tax, capital gains tax, capital
transfer tax, estate duty or inheritance tax payable in respect of capital gains
realized on a disposition of Tyco Common Shares or in respect of distributions
by Tyco with respect to Tyco Common Shares. Furthermore, Tyco has received from
the Minister of Finance of Bermuda under the Exempted Undertakings Tax
Protection Act of 1966, as amended, an undertaking that, in the event of there
being enacted in Bermuda any legislation imposing any tax computed on profits or
income, including any dividend or capital gains withholding tax, or computed on
any capital assets, gain or appreciation, or any tax in the nature of an estate
or inheritance tax or duty, the imposition of such tax shall not be applicable
to Tyco or any of its operations, nor to its Common Shares, nor to obligations
of Tyco until the year 2016. This undertaking applies to Tyco Common Shares. It
does not, however, prevent the application of Bermuda taxes to persons
ordinarily resident in Bermuda.
THE FOREGOING DISCUSSION IS INTENDED ONLY AS A SUMMARY OF CERTAIN MATERIAL
UNITED STATES FEDERAL INCOME AND BERMUDA TAX CONSEQUENCES OF THE MERGER AND OF
HOLDING TYCO COMMON SHARES 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 OF THE MERGER AND THE MERGER AGREEMENT. THE DISCUSSION DOES
NOT ADDRESS THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES THAT MAY BE
RELEVANT TO A PARTICULAR INBRAND SHAREHOLDER 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 SHAREHOLDERS
WHO ACQUIRED INBRAND COMMON STOCK PURSUANT TO THE EXERCISE OF STOCK OPTIONS OR
OTHERWISE AS COMPENSATION, NOR DOES IT ADDRESS ANY
22
<PAGE>
CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCALITY OR FOREIGN
JURISDICTION, OTHER THAN BERMUDA. THE DISCUSSION OF UNITED STATES FEDERAL INCOME
TAX CONSEQUENCES 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. INBRAND SHAREHOLDERS ARE URGED TO CONSULT THEIR OWN
TAX ADVISORS CONCERNING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES
OF THE MERGER TO THEM.
ANTICIPATED ACCOUNTING TREATMENT
The Merger is expected to qualify as a "pooling of interests" for accounting
and financial reporting purposes. Under this method of accounting, the recorded
assets and liabilities of Tyco and INBRAND will be carried forward to the
combined corporation at their recorded amounts, subject to any adjustments
required to conform the accounting policies of the companies; income of the
combined corporation will include income of Tyco and INBRAND for the entire
fiscal year in which the Merger occurs; and the reported income of the separate
corporations for prior periods will be combined and restated as income of the
combined corporation.
The Merger Agreement provides that a condition to the consummation of the
Merger is the receipt of a letter from Coopers & Lybrand, independent certified
public accountants of Tyco, and a letter from Joseph Decosimo and Company, LLP,
independent certified public accountants to INBRAND, regarding the qualification
of the Merger as a "pooling of interests" for accounting purposes.
EFFECT ON EMPLOYEE BENEFITS PLANS
At the Effective Time, each then outstanding option to purchase INBRAND
Common Stock (a "Stock Option") granted under the INBRAND Corporation Stock
Incentive Plan or any other stock option plan or agreement of INBRAND, whether
or not then vested, will be assumed by Tyco and will be deemed to constitute an
option to acquire, on the same terms and conditions as were applicable under
such Stock Option prior to the Effective Time, the number of Tyco Common 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 (whether or not such option was in fact exercisable). The
exercise price per Tyco Common Share will be equal to (x) the aggregate exercise
price for INBRAND Common Stock otherwise purchasable pursuant to such Stock
Option divided by (y) the aggregate number of Tyco Common Shares deemed
purchasable pursuant to the Stock Option. Upon exercise of a Stock Option,
fractional Tyco Common Shares will not be issued and holders of stock option
will instead be paid a cash amount based on the closing price per Tyco Common
Share on the NYSE on the trading day immediately preceding the date of exercise.
As of July 23, 1997, there were outstanding Stock Options to acquire 1,355,330
shares of INBRAND Common Stock. See "The Merger Agreement and Related
Agreements--Terms of the Merger--Options."
CERTAIN LEGAL MATTERS
Tyco and INBRAND have given each other a commitment to use their best
efforts to take whatever actions are required to obtain necessary regulatory
approvals. See "The Merger Agreement and Related Agreements--Additional
Agreements."
Pursuant to the requirements of the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), Tyco and INBRAND 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
23
<PAGE>
the U.S. Department of Justice (the "Antitrust Division"). The waiting period
under the HSR Act with respect to such filings expired on June 10, 1997.
Tyco and INBRAND 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. Even though the HSR Act waiting period has expired, 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 INBRAND. 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 or requires Tyco to
divest or hold separate any material portion of its business or assets.
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.
Tyco and INBRAND conduct operations in a number of foreign countries where
regulatory filings or approvals may be required in connection with the
consummation of the Merger. Tyco and INBRAND believe that all such material
filings and approvals have been made or obtained, or will be made or obtained,
as the case may be.
FEDERAL SECURITIES LAW CONSEQUENCES
All Tyco Common Shares issued in connection with the Merger will be freely
transferable, except that any Tyco Common Shares received by persons who are
deemed to be "affiliates" (as such term is defined under the Securities Act of
1933, as amended (the "Securities Act")) of INBRAND prior to the Merger may be
sold by them only in transactions permitted by the resale provisions of Rule 145
under the Securities Act, or as otherwise permitted under the Securities Act.
Persons who may be deemed to be affiliates of INBRAND generally include
individuals or entities that control, are controlled by, or are under common
control with, INBRAND and may include certain officers and directors of INBRAND
as well as principal shareholders of INBRAND.
In general, under Rule 145, for one year following the Effective Time, an
INBRAND affiliate (together with certain related persons) would be entitled to
sell Tyco Common Shares acquired in connection with the Merger only through
unsolicited "broker transactions" or in transactions directly with a "market
maker," as such terms are defined in Rule 144. 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 Tyco Common Shares
or the average weekly trading volume of such stock during the four calendar
weeks preceding such sale. Rule 145 would only be available, however, if Tyco
remained current with its informational filings with the Commission under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). After the end
of one year from the Effective Time, an INBRAND affiliate would be able to sell
Tyco Common Shares received in the Merger 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. Two years after
the Effective Time, an affiliate of INBRAND would be able to sell such Tyco
Common Shares without any restrictions so long as such affiliate had not been an
affiliate of Tyco for at least three months prior thereto.
INBRAND has agreed to use its best efforts to cause its affiliates to agree
in writing that they will comply with Rule 145 and that they will not sell
INBRAND Common Stock or Tyco Common Shares at a time that would prevent the
Merger from qualifying as a pooling of interests for financial accounting
purposes.
24
<PAGE>
STOCK EXCHANGE LISTING
It is a condition to the Merger that the Tyco Common Shares to be issued in
connection with the Merger be authorized for listing on the New York Stock
Exchange (the "NYSE"), subject to official notice of issuance. In addition, it
is contemplated that such shares will also be listed on the London Stock
Exchange and the Bermuda Stock Exchange.
DIVIDENDS
Tyco expects to declare regularly scheduled dividends consistent with the
practices of Old Tyco prior to the ADT Merger. INBRAND does not currently pay
dividends on its 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 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 Georgia Business Corporation Code (the "GBCC"), the holders of
INBRAND Common Stock are not entitled to any appraisal rights with respect to
the Merger.
FEES AND EXPENSES
INBRAND has agreed to pay Tyco a fee (a "Fee") of $9 million plus Tyco's
reasonable, documented out-of-pocket expenses up to $600,000, if the Merger
Agreement is terminated under certain circumstances. Tyco has agreed to pay to
INBRAND its reasonable documented out-of-pocket expenses up to $600,000, if the
Merger is terminated under certain other circumstances. See "The Merger
Agreement and Related Agreements--Termination."
The Fee payable under certain circumstances by INBRAND to Tyco is intended,
among other things, to compensate Tyco for its costs, including lost opportunity
costs, if the Merger is not consummated as a result of certain actions or
inactions by INBRAND or its shareholders. The Fee may have the effect of
increasing the likelihood that the Merger will be consummated in accordance with
the terms of the Merger Agreement. The Fee may also 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 INBRAND 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 INBRAND will each pay their own expenses in connection
with the Merger.
25
<PAGE>
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.
The Merger Agreement was executed prior to consummation of the ADT Merger on
May 12, 1997 among Old Tyco, T5, a subsidiary of Old Tyco, and INBRAND.
Subsequent to the consummation of the ADT Merger, T5 assigned its rights under
the Merger Agreement to Merger Sub, a subsidiary of Tyco. References to "Tyco"
in the description of the Merger Agreement and related agreements below are to
Old Tyco, which is a wholly-owned subsidiary of Tyco.
TERMS OF THE MERGER
THE MERGER. At the Effective Time (as defined below), and subject to and
upon the terms and conditions of the Merger Agreement and the GBCC, Merger Sub
will be merged with and into INBRAND, the separate corporate existence of Merger
Sub will cease, and INBRAND 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 Georgia in accordance with the provisions of the GBCC. The
time of such filing is referred to as the "Effective Time."
CERTIFICATE OF INCORPORATION AND BY-LAWS. The Merger Agreement provides
that the Articles of Incorporation and By-Laws of INBRAND, as in effect
immediately prior to the Effective Time, will be the Articles of Incorporation
and By-Laws of the Surviving Corporation, except that provisions related to
INBRAND's capital stock will be deleted and replaced such that the
capitalization 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 INBRAND immediately prior to the Effective Time will be the
initial officers of the Surviving Corporation.
CONVERSION OF INBRAND COMMON STOCK AND THE STOCK OF MERGER SUB IN THE
MERGER. At the Effective Time, each share of INBRAND 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 0.43
fully paid and nonassessable Tyco Common Shares.
Each share of INBRAND Common Stock held in the treasury of INBRAND and each
share owned by Tyco, Merger Sub or any subsidiary of INBRAND 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 Stock Option to purchase
INBRAND Common Stock which by its terms is not extinguished in the Merger will
be deemed to constitute an option to acquire, on the same terms and conditions,
MUTATIS MUTANDIS, as were applicable to such Stock Option prior to the Effective
Time, the number of Tyco Common 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 (whether or not such
Stock Option was in fact exercisable), at a price per share equal to the
aggregate exercise price for INBRAND Common Stock purchasable pursuant to such
Stock Option divided by the number of Tyco Common Shares purchasable pursuant to
such Stock Option;
26
<PAGE>
PROVIDED, HOWEVER, that the number of Tyco Common Shares 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 of a Tyco Common Share on the
trading day immediately preceding the date of exercise. "Closing Price" means,
on any day, the last reported sale price per Tyco Common Share on the NYSE.
The Tyco Common Shares issuable upon exercise of the Stock Options are to be
registered under the Securities Act as soon as practicable after the Effective
Time and Tyco will use its best efforts to maintain the effectiveness of such
registration for so long as the Stock Options remain outstanding.
FRACTIONAL SHARES. No certificates representing fractional shares of Tyco
Common Shares will be issued in connection with the Merger. In lieu of any such
fractional share, each INBRAND shareholder who would otherwise have been
entitled to a fractional Tyco Common Shares will be paid an amount equal to such
fraction multiplied by the Closing Price on the date of the Effective Time.
EXCHANGE OF CERTIFICATES
EXCHANGE AGENT. ChaseMellon Shareholder Services, L.L.C., or such other
bank or trust company as shall be mutually designated by INBRAND and Tyco (the
"Exchange Agent"), will 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
INBRAND Common Stock a letter of transmittal and instructions to effect the
surrender of the certificates representing INBRAND Common Stock in exchange for
certificates evidencing Tyco Common Shares. Upon surrender of a certificate
representing INBRAND 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 Tyco Common Shares which such holder has the
right to receive in the Merger, (ii) any dividends or other distributions on the
Tyco Common Shares declared or made after the Effective Time to which such
holder is entitled, and (iii) cash in respect of fractional Tyco Common Shares
as provided above (the Tyco Common Shares, 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 INBRAND Common Stock which is not registered in the transfer records of
INBRAND as of the Effective Time, Tyco Common Shares, 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
INBRAND 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 Common
Shares into which such shares of INBRAND Common Stock shall have been so
converted.
DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED INBRAND COMMON STOCK. No
dividends or other distributions declared or made after the Effective Time with
respect to Tyco Common Shares will be paid to the holder of an unsurrendered
certificate representing shares of INBRAND Common Stock. Subject to applicable
law, following surrender of any certificate formerly representing shares of
INBRAND Common Stock, there will be paid to the record holder of the
certificates representing Tyco Common Shares 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 paid with
respect to such Tyco Common Shares.
TRANSFERS OF OWNERSHIP. If any certificate for Tyco Common Shares is to be
issued in a name other than that in which the certificate representing shares of
INBRAND Common Stock surrendered in exchange is registered, it will be a
condition of the issuance that the certificate surrendered will be properly
27
<PAGE>
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
Tyco Common Shares 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 INBRAND will be
liable to any holder of INBRAND 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 paid to any INBRAND shareholder 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 INBRAND Common Stock have been lost, stolen or destroyed,
the Exchange Agent will issue Tyco Common Shares 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, HOWEVER, 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
INBRAND SHAREHOLDERS PROMPTLY FOLLOWING THE EFFECTIVE TIME AS TO THE METHOD OF
EXCHANGING CERTIFICATES FORMERLY REPRESENTING SHARES OF INBRAND COMMON STOCK.
INBRAND SHAREHOLDERS 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
INBRAND, in respect of itself and its subsidiaries, and of Tyco, in respect of
itself 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 INBRAND 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 INBRAND 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
28
<PAGE>
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
absence of actions that, to the knowledge of certain officers of the parties,
could reasonably be expected to prevent the Merger from being accounted for as a
pooling of interests.
In addition, Old Tyco represented that Tyco (the Bermuda company) will have
authorized the issuance of Tyco Common Shares pursuant to the Merger Agreement.
CONDUCT OF BUSINESS PENDING THE MERGER
CONDUCT OF BUSINESS BY INBRAND. The Merger Agreement provides that, prior
to the Effective Time, unless Tyco otherwise agrees in writing, INBRAND 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 INBRAND will use reasonable commercial efforts to
preserve substantially intact the business organization of INBRAND and its
subsidiaries, to keep available the services of the present officers, employees
and consultants of INBRAND and its subsidiaries and to preserve the present
relationships of INBRAND and its subsidiaries with customers, suppliers and
other persons with which INBRAND or any of its subsidiaries has significant
business relations. Except as contemplated by the Merger Agreement, neither
INBRAND nor any of its subsidiaries, without the prior written consent of Tyco,
will:
(i) amend or otherwise change INBRAND's Articles 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 INBRAND, any of its subsidiaries or affiliates (with exceptions
for shares and options issuable under the INBRAND Corporation Stock Option
Plan);
(iii) sell, pledge, dispose of or encumber any assets of INBRAND 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 INBRAND 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 (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business organization or
division (subject to certain exceptions); (2) incur any indebtedness for
borrowed money, except for borrowings and reborrowings under INBRAND's
existing credit facilities, or issue any debt securities or assume,
guarantee (other than guarantees of bank debt of INBRAND'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) authorize any capital expenditures or
purchase of fixed assets which are, in the aggregate, in excess of $21.8
29
<PAGE>
million, for INBRAND and its subsidiaries taken as a whole; or (4) enter
into or amend any contract, agreement, commitment or arrangement to effect
any of the foregoing;
(vi) increase the compensation payable or to become payable to its
officers or employees, except for increases in salary or wages of employees
of INBRAND or its subsidiaries in accordance with past practices, or grant
severance or termination pay to or enter into any employment or severance
agreement in excess of $100,000 with any director, officer or other employee
of INBRAND or any subsidiary, or establish, adopt, enter into or amend any
collective bargaining, employment, termination, severance or benefit plan,
agreement, trust, fund, policy or arrangement for any current or former
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 INBRAND'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 liabilities reflected or
reserved against in INBRAND'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, or any action
which would make any of the representations or warranties of INBRAND
contained in the Merger Agreement untrue or incorrect or prevent INBRAND
from performing its covenants under the Merger Agreement.
NO SOLICITATION. The Merger Agreement provides that INBRAND will not,
directly or indirectly, through any officer, director, employee, representative
or agent of INBRAND 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 INBRAND or any subsidiaries of INBRAND (the foregoing being referred
to as "Acquisition Proposals"). However, the Board of Directors of INBRAND is
not prevented from (i) considering, negotiating, approving and recommending to
the shareholders of INBRAND a bona fide Acquisition Proposal not solicited in
violation of the Merger Agreement, (ii) taking and disclosing to its
shareholders a position contemplated by Exchange Act Rule 14e-2 or (iii) making
any disclosure to the INBRAND shareholders, PROVIDED the Board of Directors of
INBRAND 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, INBRAND 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 INBRAND or any of its subsidiaries in connection with an Acquisition Proposal
or for access to the properties, books or records of INBRAND or any subsidiary
by any person or entity that informs the Board of Directors of INBRAND or such
subsidiary that it is considering making, or has made, an Acquisition Proposal.
If the Board of Directors of INBRAND 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 INBRAND 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 INBRAND and Tyco, INBRAND may provide such person with access to
information regarding INBRAND.
30
<PAGE>
The Merger Agreement also provides that INBRAND will not release any third
party from the confidentiality provisions of any confidentiality agreement to
which INBRAND is a party.
INBRAND is required to ensure that the officers, directors and employees of
INBRAND and its subsidiaries and any investment banker or other advisor or
representative retained by INBRAND are aware of the foregoing restrictions.
CONDUCT OF BUSINESS BY TYCO. The Merger Agreement provides that, prior to
the Effective Time, unless INBRAND 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 ADT
Merger, and will not, without the prior written consent of INBRAND:
(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;
(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 quarterly cash dividends of $.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 and subject to any other agreement by which INBRAND and
Tyco are bound, INBRAND and Tyco will each 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, INBRAND and Tyco
each 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 INBRAND may
reasonably request. Each party shall keep such information confidential in
accordance with the terms of a confidentiality letter between INBRAND and Tyco,
dated March 21, 1997.
CONSENTS; APPROVALS. INBRAND and Tyco will each use their best efforts to
obtain all consents, waivers, approvals, authorizations or orders, and INBRAND
and Tyco will make all filings, required in connection with the authorization,
execution and delivery of the Merger Agreement and the consummation by them of
the transactions contemplated thereby.
INDEMNIFICATION AND INSURANCE. The Merger Agreement provides that the
Articles of Incorporation and By-Laws of the Surviving Corporation will contain
the provisions with respect to indemnification set forth in the Articles of
Incorporation and By-Laws of INBRAND, 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 INBRAND,
unless such modification is required by law.
31
<PAGE>
After the Effective Time, the Surviving Corporation will, to the fullest
extent permitted under applicable law or under the Surviving Corporation's
Articles of Incorporation or By-Laws, indemnify and hold harmless, each present
and former director, officer or employee of INBRAND 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 INBRAND's Articles 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 INBRAND's directors' and officers' liability insurance policy on terms
comparable to those now applicable to directors and officers of INBRAND,
PROVIDED, HOWEVER, that Tyco or the Surviving Corporation will not be required
to expend in excess of 200% of the annual premium currently paid by INBRAND 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.
Tyco has agreed to guarantee the obligations of the Surviving Corporation
under the foregoing provisions.
NOTIFICATION OF CERTAIN MATTERS. INBRAND and Tyco will each give the other
prompt notice of the occurrence or nonoccurrence 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, or cause to be taken, all actions
and do other things necessary, proper or advisable to consummate as promptly as
practicable the transactions contemplated by the Merger 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 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 INBRAND 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 or The Nasdaq Stock Market.
LISTING OF TYCO SHARES. The Merger Agreement provides that Tyco will use
its best efforts to cause the Tyco Common Shares to be issued in the Merger to
be listed, upon official notice of issuance, on the NYSE prior to the Effective
Time.
ACCOUNTANT'S LETTERS. Upon reasonable notice from the other, INBRAND or
Tyco will use its respective best efforts to cause Coopers & Lybrand to deliver
to INBRAND a letter covering such matters as are requested by INBRAND and as are
customarily addressed in accountant's "comfort" letters and INBRAND will use its
best efforts to cause Joseph Decosimo and Company, LLP, to deliver to Tyco a
32
<PAGE>
letter covering such matters as are requested by Tyco and as are customarily
addressed in an accountant's "comfort" letter.
POOLING ACCOUNTING TREATMENT. Each of Tyco and INBRAND agrees not to take
any action that would reasonably be expected to adversely affect the ability of
Tyco to treat the Merger as a pooling of interests, and each of Tyco and INBRAND
agrees to use its best efforts to take such action as may be reasonably required
to negate the impact of any past actions which, to its knowledge, could
reasonably be expected to adversely impact the ability of Tyco to treat the
Merger as a pooling of interests.
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) SHAREHOLDER APPROVAL. The Merger Agreement and the Merger shall
have been approved by the requisite vote of the shareholders of INBRAND;
(ii) LISTING. The Tyco Common Shares issuable in the Merger shall have
been authorized for listing on the NYSE, upon official notice of issuance;
(iii) HART-SCOTT-RODINO APPROVAL. All waiting periods applicable to
the consummation of the Merger under HSR Act shall have expired or
terminated;
(iv) 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 other legal restraint, in either case, preventing
or seeking to prevent or limiting or seeking to limit Tyco (which, for
purposes of this clause (iv), means the Bermuda company) 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 compelling 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;
(v) 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
(vi) TAX OPINIONS. INBRAND and Tyco shall have received written
opinions of Miller & Martin 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.
33
<PAGE>
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 INBRAND contained in the Merger Agreement shall be true and correct in
all respects on 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 President and the Chief Financial Officer of INBRAND;
(ii) AGREEMENTS AND COVENANTS. INBRAND 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 President and the Chief Financial
Officer of INBRAND;
(iii) CONSENTS OBTAINED. All material consents, waivers, approvals,
authorizations or orders required to be obtained, and all filings required
to be made, by INBRAND 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 INBRAND, except where the
failure to receive such consents, etc. could not reasonably be expected to
have a Material Adverse Effect on INBRAND or Tyco;
(iv) OPINIONS OF ACCOUNTANTS. Tyco shall have received an opinion of
Coopers & Lybrand and INBRAND shall have received an opinion of Joseph
Decosimo and Company, LLP, each in form and substance reasonably
satisfactory to Tyco, regarding the qualification of the Merger as a
"pooling of interests" for accounting purposes; and
(v) AFFILIATE AGREEMENTS. Tyco shall have received from each person
who is identified as an "affiliate" of INBRAND an agreement to comply with
restrictions on such affiliates pursuant to Rule 145 under the Securities
Act and under pooling of interests accounting treatment.
ADDITIONAL CONDITIONS TO OBLIGATION OF INBRAND. The obligation of INBRAND
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 on and as of the Effective Time, except for (1)
changes contemplated by the Merger Agreement, (2) changes resulting from the
consummation of the ADT Merger, (3) 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 (4) 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 INBRAND shall have received a certificate to such effect signed by the
President or any Vice-President 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 on or prior to the Effective Time, and INBRAND shall have received a
certificate to such effect signed by the President or any Vice-President 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 hereby shall have been obtained and made by Tyco
and Merger Sub, except
34
<PAGE>
where the failure to receive such consents, etc. could not reasonably be
expected to have a Material Adverse Effect on INBRAND 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
shareholders of INBRAND or Tyco:
(i) by mutual written consent duly authorized by the Boards of Directors
of Tyco and INBRAND; or
(ii) by either Tyco or INBRAND if the Merger shall not have been
consummated by October 15, 1997 (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 INBRAND 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 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 or INBRAND, if the requisite vote of the shareholders of
INBRAND shall not have been obtained by October 15, 1997; or
(v) by Tyco, if (1) the Board of Directors of INBRAND 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 INBRAND shall have recommended to the shareholders
of INBRAND an Alternative Transaction (as defined in the Merger Agreement);
or (3) a tender offer or exchange offer for 25% or more of the outstanding
shares of INBRAND Common Stock is commenced (other than by Tyco or an
affiliate of Tyco) and the Board of Directors of INBRAND recommends that the
shareholders of INBRAND tender their shares in such tender or exchange
offer; or
(vi) by INBRAND, if the Board of Directors of INBRAND shall withdraw,
modify or change its approval of the Merger Agreement or the Merger in a
manner adverse to Tyco or shall have resolved to do so in compliance with
its fiduciary obligation (after consultation with independent counsel)
because of an Acquisition Proposal; or
(vii) by Tyco or INBRAND, (1) if any representation or warranty of
INBRAND or Tyco, respectively, set forth in the Merger Agreement shall be
untrue when made (a "Terminating Misrepresentation"), or (2) upon a breach
of any covenant or agreement on the part of INBRAND or Tyco, respectively,
set forth in the Merger Agreement (a "Terminating Breach"), such that the
conditions set forth in "Conditions to the Merger--Additional Conditions to
Obligations of Tyco and Merger Sub-- Representations and Warranties" or
"--Agreements and Covenants" above, or in "Conditions to the
Merger--Additional Condition to Obligation of INBRAND--Representations and
Warranties" or "--Agreements and Covenants" above, as the case may be, would
not be satisfied, PROVIDED that, if such Terminating Misrepresentation or
Terminating Breach is curable prior to October 15, 1997 by INBRAND or Tyco,
as the case may be, through the exercise of its reasonable best efforts and
for so long as INBRAND or Tyco, as the case may be, continues to exercise
such reasonable best efforts, neither Tyco nor INBRAND, respectively, may
terminate the Merger Agreement under this clause; or
35
<PAGE>
(viii) by Tyco, if any representation or warranty of INBRAND 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
INBRAND, 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 Obligations of INBRAND--Representations and Warranties" would
not be satisfied, in either case other than by reason of a Terminating
Breach; PROVIDED that, if such Terminating Breach is curable prior to
October 15, 1997 by INBRAND or Tyco, as the case may be, through exercise of
its reasonable best efforts and for so long as INBRAND or Tyco, as the case
may be, continues to exercise such reasonable best efforts, Tyco or INBRAND,
respectively, may not terminate the Merger Agreement under this clause.
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 INBRAND shall share equally all filing fees and printing
expenses, incurred in connection with the printing and filing of this Proxy
Statement/Prospectus and the Registration Statement.
The Merger Agreement provides that INBRAND will pay Tyco a Fee of $9
million, plus actual, documented and reasonable out-of-pocket expenses of Tyco
up to $600,000 relating to the transactions contemplated by the Merger Agreement
(including, but not limited to, fees and expenses of Tyco's counsel, accountants
and financial advisers, but excluding any fees paid to such financial advisors),
upon the first to occur of any of the following events:
(i) the termination of the Merger Agreement by Tyco or INBRAND as a
result of the failure to receive the requisite vote for approval of the
Merger Agreement by the shareholders of INBRAND by October 15, 1997; 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 INBRAND pursuant to
clause (vi) under "Conditions to Termination" above; or
(iv) the termination of the Merger Agreement by Tyco on account of a
Terminating Breach of INBRAND.
Upon a termination of the Merger Agreement by Tyco or INBRAND, as the case
may be, pursuant to clause (vii) under "Conditions to Termination" above, the
other party shall pay to the terminating party documented and reasonable
out-of-pocket expenses of up to $600,000.
The Fee and aforesaid 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/or expenses was in material breach of its obligations under the Merger
Agreement.
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
shareholders of INBRAND, no amendment may be made which by law requires further
approval by such shareholders 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
36
<PAGE>
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.
SHAREHOLDER AGREEMENTS
In connection with the execution of the Merger Agreement, each of Garnett A.
Smith, The Garnett A. Smith Family Foundation Inc., Howard Holdings, Inc., The
Navarre Investment Company, The Chrysalis Foundation, William Navarre Bailey
1993 Trust and Mary Navarre Moore (the "Shareholders") entered into certain
agreements with Tyco with respect to the securities of INBRAND (the "Shareholder
Agreements") held by them. See "Security Ownership of Certain Beneficial Owners
and Management of INBRAND."
AGREEMENT TO VOTE. The Shareholder Agreements each provide that the
respective Shareholder will vote the shares of INBRAND Common Stock beneficially
owned by the Shareholder 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, any corporate transaction of INBRAND with any person other than Tyco or
its affiliates, and any liquidation or winding up of INBRAND (each, an "Opposing
Proposal").
The Shareholders collectively own approximately 22% of the shares of INBRAND
Common Stock outstanding as of the Record Date.
REPRESENTATION AND WARRANTY. Under the Shareholder Agreements, each
Shareholder represents and warrants that it knows of no plan or intention on the
part of the holders of shares of capital stock of INBRAND to engage in 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") in Related Transactions of a number of Tyco Common Shares
to be received in the Merger which would, in the aggregate, constitute more than
50% of the value of the capital stock of INBRAND outstanding immediately prior
to the Merger. Each Shareholder agrees to represent at the Effective Time that,
as of the Effective Time, it has no plan or intention to engage in any Sale of
Tyco Common Shares in a Related Transaction. A Sale of Tyco Common Shares will
be considered to have occurred in a "Related Transaction" if such Sale occurs in
a transaction that is related to the Merger or pursuant to the Merger Agreement.
Shares of capital stock of INBRAND with respect to which a Sale occurs in a
Related Transaction prior to the Merger will be treated for these purposes as if
such shares of capital stock of INBRAND were exchanged for Tyco Common Shares,
and such shares were disposed of in a Sale in a Related Transaction.
SOLICITATION. The Shareholder Agreements provide that each Shareholder 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 shareholders' vote or action
by written consent of INBRAND's shareholders with respect to an Opposing
Proposal.
SALES. From and after the date of the Shareholder Agreements until 30 days
prior to the Effective Time, each Shareholder has agreed not to effect a Sale of
any INBRAND securities to any person unless such person shall agree in writing
to be bound by all provisions of the respective Shareholder Agreement.
From and after 30 days prior to the Effective Time, each Shareholder has
agreed not to engage in any Sale of securities of INBRAND or Tyco until such
time (the "Publication Time") as Tyco has published financial results covering
at least 30 days of combined operations of Tyco and INBRAND after the Effective
Time. Tyco has agreed that it will advise the Shareholders in writing of the
date of the proposed Effective Time at least 35 days prior to the Effective
Time, and that it will use its reasonable best efforts to publish financial
results covering at least 30 days of combined operations of Tyco and INBRAND
after the
37
<PAGE>
Effective Time, as soon as practicable and in no event later than 30 days after
the end of the first fiscal quarter which includes at least 30 days of such
combined operations after the Effective Time.
The Shareholder Agreements also contain provisions relating to the
restrictions on sales of Tyco Common Shares received in the Merger by affiliates
of INBRAND pursuant to Rule 145 under the Securities Act, as they may apply to
the Shareholders.
TERMINATION. The Shareholder Agreements will terminate if the Merger
Agreement is terminated according to its terms.
38
<PAGE>
COMPARATIVE PER SHARE PRICES AND DIVIDENDS
TYCO
Tyco Common Shares are listed and traded on the NYSE, the London Stock
Exchange and the Bermuda Stock Exchange. The following table sets forth the high
and low sales prices per share of Tyco Stock as reported on the NYSE Composite
Transaction Tape, and the dividends paid on such Tyco Stock, for the quarterly
periods presented below. The price and dividends for Tyco Stock 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. "Tyco Stock" refers to Old
Tyco Stock for all times on or prior to July 2, 1997, the consummation date of
the ADT Merger, and to Tyco Common Shares for all times thereafter.
<TABLE>
<CAPTION>
TYCO STOCK
-----------------------------
<S> <C> <C> <C>
HIGH LOW DIVIDEND
------- ------- -------
Calendar 1995:
First quarter...................................................... $26 13/16 $23 1/4 $0.05
Second quarter..................................................... 29 1/8 25 1/2 0.05
Third quarter...................................................... 31 5/8 26 11/16 0.05
Fourth quarter..................................................... 35 5/8 29 1/2 0.05
Calendar 1996:
First quarter...................................................... 39 1/4 32 3/8 0.05
Second quarter..................................................... 41 3/8 35 1/8 0.05
Third quarter...................................................... 44 7/8 35 1/2 0.05
Fourth quarter..................................................... 56 42 7/8 0.05
Calendar 1997:
First quarter...................................................... 62 51 3/4 0.05
Second quarter..................................................... 71 7/8 54 0.05
Third quarter (through July 22, 1997).............................. 82 1/8 69 7/8
</TABLE>
On May 12, 1997, the last trading day prior to announcement of the execution
of the Merger Agreement, the closing price per share of Tyco Stock, as reported
on the NYSE Composite Transaction Tape, was $63.25. On July 22, 1997, the most
recent date for which prices were available prior to printing this Proxy
Statement/Prospectus, the Closing Price per Tyco Common Share as reported on the
NYSE Composite Transaction Tape was $82.125. Shareholders are urged to obtain
current market quotations.
Prior to the ADT Merger, dividends were paid on the Tyco Stock in the amount
of $.05 per quarter or $.20 per year. Tyco currently expects to continue this
dividend practice, although this may be changed at any time by the Tyco Board of
Directors. The payment of dividends by Tyco in the future will depend on
business conditions, Tyco's financial condition and earnings and other factors.
INBRAND
INBRAND Common Stock is listed and traded on the National Market System of
The Nasdaq Stock Market ("Nasdaq/NMS"). The following table sets forth the high
and low sales prices per share of
39
<PAGE>
INBRAND Common Stock as reported on Nasdaq/NMS, for the quarterly fiscal periods
of INBRAND indicated below.
<TABLE>
<CAPTION>
INBRAND COMMON
STOCK
------------------
<S> <C> <C>
HIGH LOW
------- -------
Fiscal 1996:
First quarter............................................................... $18 3/4 $14
Second quarter.............................................................. 18 13
Third quarter............................................................... 25 16 3/4
Fourth quarter.............................................................. 29 1/2 22 1/2
Fiscal 1997:
First quarter............................................................... 20 15 3/16
Second quarter.............................................................. 24 1/2 18
Third quarter............................................................... 22 1/2 11
Fourth quarter.............................................................. 30 1/4 13
Fiscal 1998:
First quarter (through July 22, 1997)....................................... 35 1/2 30
</TABLE>
On May 12, 1997, the last trading day prior to announcement of the execution
of the Merger Agreement, the closing price per share of INBRAND Common Stock as
reported on Nasdaq/NMS was $16.00. On July 22, 1997, the most recent date for
which prices were available prior to printing this Proxy Statement/Prospectus,
the closing price per share of INBRAND Common Stock as reported in the
Nasdaq/NMS was $35.50. Shareholders are urged to obtain current market
quotations.
INBRAND has not paid cash dividends on the INBRAND Common Stock and does not
anticipate payment of dividends in the near future. Under the terms of the
Merger Agreement, INBRAND is not permitted to declare, set aside, make or pay
any dividend on distribution in respect of its capital stock from the date of
the Merger Agreement until the earlier of the termination of the Merger
Agreement and the Effective Time.
BUSINESSES OF TYCO
Tyco, through its divisions and operating subsidiaries, engages in the
manufacture and distribution of disposable medical supplies and other specialty
products, the design, manufacture, installation and servicing of fire protection
and suppression systems, the installation, monitoring and maintenance of
electronic security systems, the manufacture and distribution of flow control
products and manufacture and distribution of electrical and electronic
components, including underwater telecommunication systems. Tyco, which operates
in more than 50 countries around the world, has annual revenues of approximately
$10 billion.
DISPOSABLE AND SPECIALTY PRODUCTS
Tyco's Disposable and Specialty Products Group consists of Kendall
International ("Kendall"), Ludlow Laminating and Coating, Armin Plastics
("Armin"), Twitchell, Accurate Forming, Carlisle Plastics, Inc. ("Carlisle") and
ADT Automotive. Kendall manufactures and distributes medical supplies,
disposable medical products and adhesive products and tapes. Ludlow Laminating
and Coating manufactures laminated and coated products. Armin manufactures
polyethylene film and packaging products. Twitchell manufactures extrusion
coated polyester yarns and woven fabrics. Accurate Forming manufactures deep-
drawn metal parts. Carlisle, which was acquired in September 1996, is a leading
manufacturer of specialty
40
<PAGE>
packaging materials and garment hangers. ADT Automotive operates a network of
large modern vehicle auction and reconditioning centers in the United States.
KENDALL. Kendall conducts its operations through four business units:
Kendall Healthcare, Kendall International, Kendall-Polyken and Ludlow Technical
Products.
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 is the industry leader in gauze production with
its Kerlix-Registered Trademark- and Curity-Registered Trademark- 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.-Registered Trademark- brand name, sequential pneumatic compression
devices sold under the SCD-TM- brand name and a venous plexus foot pump. Kendall
Healthcare pioneered the pneumatic compression form of treatment and continues
to be the dominant participant in the pneumatic compression and elastic stocking
segments of the vascular therapy market.
Kendall Healthcare also offers a range of other patient care products,
including incontinent care products marketed primarily to nursing homes and
other institutional providers of long term care, urological, wound care,
surgical care and respiratory care products, a broad line of disposable medical
supplies including respiratory, urology and nursing care products and airway
management, temperature monitoring and specialty products serving patients in
anesthesia, critical care and emergency medicine.
Kendall International is responsible for the manufacturing, marketing,
distribution and export of Kendall products in numerous countries worldwide.
Kendall International's operations are organized primarily into three geographic
regions: Europe, Latin America and the Far East. Kendall International generally
markets a range of products similar to those of Kendall Healthcare, although the
mix of product lines varies from country to country.
The Kendall-Polyken division manufactures and markets specialty adhesive
products and tapes for industrial applications, including external corrosion
protection tape products for oil, gas and water pipelines. Other industrial
applications include tapes used in the automotive industry for wire harness
wraps, sealing and other purposes, and tapes used in the aerospace and heating,
ventilation and air conditioning (HVAC) industries. Kendall-Polyken also
produces duct, foil, strapping, packaging and electrical tapes and spray
adhesives for industrial and consumer markets worldwide and manufactures
bandages and medical tapes for Kendall Healthcare and others. Kendall's Betham
division develops and markets pressure sensitive adhesives and coatings,
principally for the automotive, medical and specialty markets.
The Ludlow Technical Products division manufactures and sells a variety of
disposable medical products, specialized paper and film products. These products
include transcutaneous electrical nerve stimulation electrodes and related
products which are used primarily in physical therapy and other forms of
rehabilitative medicine, medical electrodes for EKGs and similar diagnostic
tests, gels which are used with medical electrodes for testing and other
monitoring purposes, hydrogel wound care products, and neonatal electrodes,
diagnostic and monitoring electrodes, electrotherapy electrodes and cable and
lead wires. Ludlow Technical Products also produces adhesive tapes, pressure
sensitive coated papers and films used for business forms and printing
applications, high quality facsimile paper and recording chart papers for
medical and industrial instrumentation.
LUDLOW LAMINATING AND COATING. Ludlow Laminating and Coating 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,
41
<PAGE>
frozen foods, health care products, electrical and metallic components,
agricultural chemicals, cement and specialty resins.
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, incorporating such
additives as coloring, slip and anti-block chemicals. Armin's products include
plastic supermarket packaging, greenhouse sheeting, shipping covers and liners
and a variety of other packaging configurations for the aerospace, agricultural,
automotive, construction, cosmetics, electronics, food processing, healthcare,
pharmaceutical and shipping industries. Armin also manufactures a number of
other polyethylene products, such as reusable plastic pallets, transformer pads
for electric utilities, and a large variety of disposable gloves for the
cosmetic, medical, foodhandling and pharmaceutical industries.
TWITCHELL. Twitchell manufactures extrusion coated polyester yarns and
woven PVC-coated yarn fabrics and woven and knit paper fabrics. These fabrics
are sold for use principally in outdoor furniture, wall coverings, window
screening, awnings, housewares and other specialty products. Non-woven fabric is
coated and sold for use as disposable medical clothing.
ACCURATE FORMING. Accurate Forming manufactures 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.
CARLISLE. Carlisle is a leading producer of industrial and consumer plastic
products. Carlisle's products include trash bags, flexible packaging, sheeting
and garment hangers. Carlisle supplies plastic trash bags to mass merchants,
grocery chains, and institutional customers. Carlisle manufactures
Ruffies-Registered Trademark-, a national brand consumer trash bag, for mass
merchants and other retail stores. Carlisle also provides heavy duty trash can
liners for institutional customers, such as food service distributors,
janitorial supply houses, restaurants, hotels and hospitals.
Film-Gard-Registered Trademark-, 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 products are sold for various uses, including painting,
renovation, construction, landscaping and agriculture. Carlisle's industrial
packaging film is sold for use as shrink wrap and for other packaging
requirements.
Carlisle sells molded plastic garment hangers to garment manufacturers,
national retailers, regional or local retailers, and mass merchants. Garment
manufacturers place their clothes on Carlisle's hangers before shipping to
retail outlets. Carlisle creates, manufactures and sells customized hanger
designs to national retailers. Regional or local retailers buy standard Carlisle
hanger lines for retail clothing displays. Carlisle also supplies mass merchants
with consumer plastic hangers for sale to the general public.
ADT AUTOMOTIVE. ADT Automotive operates a network of large modern auction
centers and provides a comprehensive range of vehicle redistribution services.
Vehicle auctions constitute a principal channel of distribution and
redistribution for used vehicles. An auction brings together dealers seeking to
restock and diversify their inventory of used cars with a high volume of various
makes and models provided by sellers seeking to dispose of their vehicles. The
principal sources of vehicles for sale through auctions are consignments by new
and used vehicle dealers, vehicle manufacturers, corporate owners of vehicles
such as fleet operators, daily rental companies, leasing companies, banks and
other financial institutions, manufacturers' credit subsidiaries and government
agencies.
ADT Automotive collects and transports a seller's vehicles to an auction
center, reconditions the vehicles to retail standards, matches the vehicles with
the auction market most likely to generate the highest amount of sale proceeds
and delivers the vehicles to the buyer. ADT Automotive acts solely as an agent
in auction transactions and does not purchase vehicles for its own account.
However, it does
42
<PAGE>
repurchase a small number of vehicles under its buyer protection programs, which
require it to repurchase vehicles that have suffered odometer tampering or that
have an undisclosed salvage history. ADT Automotive operates almost exclusively
in the wholesale marketplace, and the public is generally not permitted to
attend its auctions.
FIRE AND SAFETY SERVICES
Tyco is the largest contractor in the world for the design and installation
of fire detection, suppression and sprinkler systems, and for the servicing for
such systems. Tyco is also a leading manufacturer and distributor of fire
detection and suppression products. Tyco's ADT Security business is the largest
provider of electronic security services in North America and the United
Kingdom.
Tyco's Grinnell subsidiary ("Grinnell"), which was founded in 1850, is the
largest installer, manufacturer and supplier of automatic fire sprinkler and
fire alarm and detection systems in North America. Wormald International Limited
("Wormald"), which was founded in 1889, operates as a major fire protection
company with contracting, manufacturing and distribution operations throughout
Western Europe and the Asia-Pacific region. Grinnell and Wormald, in
combination, is the largest fire protection company in the world, forming a
network of over 300 offices on five continents. The acquisition of Thorn
Security Group ("Thorn") in July 1996 further expands Tyco's worldwide position
in the fire detection and security systems market.
CONTRACTING AND SERVICE. Tyco designs, fabricates, installs and services
automatic fire sprinkler systems, fire alarm and detection systems, special
hazard suppression systems and security systems in buildings and other
installations. Grinnell's fire protection contracting and service business in
North America operates through a network of offices located in the United
States, Canada, Mexico and Puerto Rico. Internationally, Tyco engages in fire
protection contracting and service through a network of offices in the United
Kingdom, Continental Europe, Saudi Arabia, United Arab Emirates, Australia, New
Zealand, Southeast Asia and South America.
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. Revenue from the servicing, maintenance, repair and inspection of fire
protection, detection and suppression systems installed by Tyco and other
contractors has increased in recent years. The retrofitting and servicing of
fire protection systems in existing buildings represented approximately 65% of
Grinnell's North American contracting sales in 1996.
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. Tyco holds exclusive
manufacturing and distribution rights in several regions of the world for
INERGEN-Registered Trademark- fire suppression products.
INERGEN-Registered Trademark-, 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.
In Australia, New Zealand and Asia, Tyco's O'Donnell Griffin division
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 for different types of construction, including
applications for railroad and bridge construction.
43
<PAGE>
Substantially all of the mechanical components (and, in North America, most
of the pipe) used in the fire protection systems installed by Tyco are
manufactured by Tyco. 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 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. Tyco
also installs alarms, detection and activation devices and centralized monitors.
With the acquisition of Thorn, Tyco is now a major manufacturer of alarms,
detection and activation devices and central monitoring stations.
MANUFACTURING. 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, Tyco 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, Tyco manufactures and
sells sprinkler heads, specialty valves, fire doors and electronic panels for
use in fire detection systems. In Mexico, Tyco manufactures fire extinguishers,
fire hose and related equipment. With the recent addition of Thorn, Tyco now
manufactures a complete line of alarm and detection equipment that is installed
by Tyco's units and sold to other alarm and detection installers.
Tyco's Ansul subsidiary manufactures and sells various lines of dry
chemical, liquid and gaseous portable fire extinguishers and related agents for
industrial, government, commercial and consumer applications. Ansul also
manufactures and sells special hazard fire suppression systems designed for use
in restaurants, marine applications, mining applications, the petrochemical
industry, confined industrial spaces and commercial spaces housing electronic
and other delicate equipment. Ansul also manufactures spill control products
designed to absorb, neutralize and solidify spills of various hazardous
materials.
ADT SECURITY. ADT Security sells, installs and maintains monitored security
systems, integrated electronic security systems and other electronic security
products in both the commercial and residential markets. ADT Security's
electronically monitored security systems involve the use on a customer's
premises of devices designed to detect or react to various occurrences or
conditions, such as intrusions, movement, fire, smoke, flooding, environmental
conditions (including temperature or humidity variations), industrial operations
(such as water, gas or steam pressure and process flow controls) and other
hazards. In most systems, these detection devices are connected to a
microprocessor based control panel which communicates through telephone lines to
an ADT Security monitoring center where alarm and supervisory signals are
received and recorded. Systems may also incorporate an emergency "panic button,"
which when pushed causes the control panel to transmit an alarm signal that
takes priority over other alarm signals. In most systems, control panels can
identify the nature of the alarm and the areas within a building where the
sensor was activated and transmit the information to an ADT Security customer
monitoring center. Monitoring center personnel will respond to alarms by
relaying appropriate information to the local fire or police departments,
notifying the customer or taking other appropriate action, such as dispatching
employees to the customer's premises. ADT Security's other electronic security
products include card or keypad activated access central systems and closed
circuit television systems.
ADT Security conducts its commercial operations in the United States,
Canada, the United Kingdom, Spain, France, Belgium, Greece, The Netherlands and
the Republic of Ireland. These operations provide electronic security services
and products to financial institutions, industrial and commercial businesses and
complexes, warehouses, facilities of federal, state and local government
departments, defense installations, and health care and educational facilities.
ADT Security's systems and products are typically tailored to its customers'
specific needs, but ADT Security also markets standard security packages for
specific types of commercial customers, such as retailers and banks. ADT
Security also sells integrated electronic security systems that combine a
variety of electronic security services and products into a single computer
controlled security system. Integrated security systems can range in price from
a few thousand to several million dollars.
44
<PAGE>
Commercial security systems may be owned by ADT Security or, as in the case
of most integrated systems, by the customer. In addition to obtaining systems
equipment from ADT Security, most customers pay an annual service charge for
monitoring and maintenance. Service contracts are negotiated on an individual
basis depending upon the number of systems monitored, the type of alarm
transmission and the level of response services required.
Residential electronic security services are primarily marketed to customers
in North America and consist of the sale, installation, monitoring and
maintenance of electronically monitored security systems to detect intrusion and
fire. Residential customer service and monitoring are performed from the same
facilities as those used for commercial accounts.
In North America, ADT Security usually retains ownership of standard
residential systems, although more sophisticated systems are usually purchased
by the customer. Substantially all residential customers pay an annual service
charge for monitoring and may also subscribe for maintenance services. Uniform
package prices are offered to residential customers who purchase ADT Security's
standard residential security system, which includes a fixed number of detection
devices. Frequently, customers add detection devices to expand the coverage of
their system, for which ADT Security imposes additional charges. Pricing for
residential customers who require more sophisticated systems depends upon the
monitoring components installed, the type of alarm transmission and the mix of
services provided.
ADT Security entered the mobile security services market in 1996 with the
launch of CarCop-Registered Trademark-, a vehicle security system introduced in
conjunction with Mobile Security Communications, Inc. which is responsible for
the sale and installation of the CarCop product. CarCop combines ADT Security's
24 hour monitoring services with cellular communications technology and the
Global Positioning Satellite system to provide constant security coverage for a
vehicle and its occupants whether the vehicle is parked, unattended or in use.
The system can detect a range of emergency situations and, through ADT
Security's 24 hour monitoring services and satellite tracking technology,
appropriate assistance can be despatched to the vehicle's exact location at any
time, day or night.
ADT Security maintains an installation, service and maintenance force in
North America and Europe. These employees are trained by ADT Security to install
and service the various types of commercial and residential security systems
which are marketed by ADT Security. ADT Security also uses sub-contracted
personnel where appropriate.
ADT Security does not manufacture any of the components used in its
electronic security services business, although it does provide its own
specifications to manufacturers for certain security system components and
undertakes some final assembly work in respect of more sophisticated systems.
ENVIRONMENTAL SERVICES. Tyco's The Earth Technology Corporation ("Earth
Tech") is a provider of a broad range of environmental, consulting and
engineering services. The principal services of Earth Tech consist of
full-spectrum environmental and hazardous waste management services. They also
include infrastructure design and construction services, facilities engineering
and construction management services for institutional, civic, commercial and
industrial clients, and contract operations and management services for water,
waste water and remediation treatment facilities operated by municipal and
industrial clients. Services are provided through a network of 40 offices
located throughout North America.
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. Tyco's Flow Control Group includes
Grinnell, Allied Tube & Conduit, Mueller Co. and a number of specialized
manufacturers of valves, fittings and couplings.
45
<PAGE>
Tyco manufactures and distributes a wide range of flow control products,
including pipe and pipe fittings, tubing, valves, meters, couplings, pipe
hangers, 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 manufactures
certain related products such as steel tubing, custom iron castings, malleable
iron pipe fittings and fencing materials.
Allied is the leading North American manufacturer of pipe and other tubular
products. Allied produces 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 markets. Allied also manufactures
metal framing systems used in the construction, industrial and OEM markets.
Mueller, a manufacturer of water and gas distribution products, produces
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.
Over the past five years, Tyco has expanded its worldwide manufacturing and
distribution presence through a series of acquisitions and internal growth. In
North America, Grinnell manufactures forged steel fittings and valves. In
Switzerland, Neotecha manufactures Teflon lined specialty valves for use in
highly corrosive environments. In the United Kingdom, Charles Winn (Valves) Ltd.
and Hindle Cockburns manufacture specialty high performance butterfly valves and
ball valves that are used principally in the oil and gas, chemical and
processing industries. In Spain, Belgicast manufactures valves used for
waterworks and other industrial applications. In Malaysia, Tyco manufactures
couplings, fittings, steel tubing and metal framing products.
In September 1996, Tyco acquired Henry Pratt Co., James Jones Company and
Edward Barber & Co. from Watts Industries, Inc. These three operations, located
in the United States and the United Kingdom, are engaged in the manufacture and
sale of valves, hydrants and fittings used primarily in water utility,
wastewater treatment and power generation markets.
ELECTRICAL AND ELECTRONIC COMPONENTS
Tyco's Electrical and Electronic Components group consists of Tyco Submarine
Systems ("TSS"), Allied's electrical conduit division and Tyco's Printed Circuit
Group. TSS manufactures underwater communications cable and cable assemblies and
is a leading full-service provider of undersea communication systems and
services. Allied manufactures and distributes electrical conduit and related
components used in commercial electrical installations. The Printed Circuit
Group manufactures printed circuit boards and assembles backplanes for the
electronics industry.
TYCO SUBMARINE SYSTEMS. TSS is a fully-integrated source for the design,
engineering, manufacturing, installation and maintenance of undersea cable
telecommunication systems. TSS combines the manufacturing capabilities of Tyco's
Simplex Technologies business with the submarine services business acquired by
Tyco from AT&T Corp. in July 1997. TSS designs and builds both repeatered and
non-repeatered cable systems. Repeatered systems, which use optical amplifier
repeater and cable technology and advanced add-drop multiplexing, have capacity
to connect points over 10,000 kilometers apart. Non-repeatered systems, which
allow for greater circuit capacity and reduced transmission costs, are designed
for short haul systems of several hundred kilometers. Over the past ten years,
TSS has manufactured more than 100,000 kilometers of undersea optical cable.
TSS also operates the world's largest fleet of ships for installing and
maintaining undersea fiber optic transmission systems. These ships lay cable,
perform upgrades and repairs, monitor transmission quality
46
<PAGE>
and perform system tests. TSS also employs a variety of other undersea tools,
including robotic vehicles for undersea burial and retrieval operations.
For more than thirty years, Simplex Technologies has been the primary
supplier of cable and cable assemblies to the U.S. Navy for use in
data-gathering systems. Simplex Technologies also manufactures underwater
electric power cable and optical ground wire for use by power authorities and
utilities, and electro-mechanical cable for unique field operations.
ALLIED ELECTRICAL CONDUIT. 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.
The conduit also serves as an electrical ground that 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 as well as metal framing and other products.
PRINTED CIRCUIT GROUP. Tyco's Printed Circuit Group of companies is one of
the largest independent manufacturers of complex multi-layered printed circuit
boards and assemblers of backplanes in the United States. Printed circuit boards
are used in the electronics industry to mount and interconnect components to
create electronic systems. They are categorized by the number of sides or layers
that contain circuitry, which could be single-sided, double-sided or
multi-layer. In general, single and double-sided boards are less advanced.
Multi-layer boards provide greater interconnection density while decreasing the
number of separate printed circuit boards which are required to accommodate
powerful and sophisticated components. Backplanes include printed circuit boards
and are assemblies of connectors and other electronic components which
distribute power and interconnect printed circuit boards, power supplies and
other system elements.
The Printed Circuit Group manufactures highly sophisticated double-sided,
mass molded boards of up to eight layers, precision tooled, custom laminated
multi-layer boards of up to 68 layers and sophisticated flex-rigid circuit
boards for use in environmentally demanding conditions. The majority of the
group's sales are derived from its high-density multi-layer boards. Tyco'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 Tyco
are designed by customers and are manufactured on a job order basis to the
customers' specifications. In January 1997, Tyco acquired ElectroStar, Inc., a
leading U.S. manufacturer of complex printed circuit boards used in
sophisticated electronic equipment.
PROPOSED ACQUISITION
On May 20, 1997, Old Tyco entered into a definitive merger agreement for the
acquisition of Keystone International, Inc. ("Keystone") in a stock for stock
transaction valued at approximately $1.2 billion. Keystone, with annual revenues
of approximately $700 million, designs, manufactures and markets on a worldwide
basis, industrial valves, actuators and accessories used to control the flow of
liquids, gases and solid materials. Keystone products are sold to the food and
beverage, water and sewage, petroleum production and refining, natural gas,
chemical power, and pulp and paper industries. In the transaction, which will be
accounted for as a pooling of interests, Keystone shareholders will receive Tyco
Common Shares in exchange for their shares of Keystone common stock. The
exchange ratio will depend upon the average daily trading price for Tyco Common
Shares on the NYSE for the ten trading days ending five trading days prior to
the meeting of Keystone shareholders to vote on the transaction. For an average
daily trading price between $57.21 and $68.29, the exchange ratio would be
0.54183. The exchange ratio will be higher or lower for an average daily trading
price below or above this range. According to publicly filed documents, as of
May 1, 1997, Keystone had 35,623,829 shares of common stock outstanding. The
transaction is contingent upon regulatory review and approval by the Keystone
shareholders.
47
<PAGE>
BUSINESS OF INBRAND
GENERAL
INBRAND engages in the design, manufacture and marketing of a broad line of
disposable personal absorbent products which include incontinence products for
adults, feminine hygiene products and disposable baby diapers.
INBRAND serves both the clinical and retail markets in North America and
Europe. Customers in the clinical market consist primarily of long-term care
facilities, hospitals and home healthcare providers. INBRAND services the
clinical market principally through medical/surgical distributors, supported in
the U.S. by INBRAND's field sales force which develops direct customer
relationships. In the retail market, INBRAND supplies private label programs of
grocery and drug chains, mass-merchants, and food and drug wholesalers.
In July 1995, INBRAND acquired Hygieia Healthcare Holdings Limited
("Hygieia"). Hygieia, located in Sunderland, England, designs, manufactures and
markets feminine hygiene products through private label programs in the United
Kingdom and Europe. Hygieia's product line includes maxipads, liners, ultrathin
winged products and tampons. INBRAND now markets similar products in the U.S.
and Canada.
In February 1996, through its subsidiary, INBRAND France, S.A. ("INBRAND
France"), INBRAND acquired certain of the assets and subsidiaries of Celatose,
S.A. INBRAND France manufactures and distributes adult incontinence products and
disposable baby diapers, primarily for the European market. The manufacturing
and distribution operations of INBRAND France are based in Lille, France.
Complementing the acquisition of the Celatose assets, INBRAND acquired Julian T.
Holding, B.V. ("JTH") through its INBRAND Europe, B.V. subsidiary in July 1996.
JTH, based in Goirle, The Netherlands, manufactures adult incontinence products
and distributes these products, together with disposable baby diapers, through
its distribution operations in the Benelux countries and the United Kingdom.
JTH's manufacturing operations are based in the United Kingdom. In addition,
INBRAND has recently begun a distribution operation in Spain.
PRODUCTS AND MARKETS
INBRAND offers a broad range of high-quality, disposable personal absorbent
products, including adult incontinence products, feminine hygiene products and
disposable baby diapers. INBRAND's incontinence products accommodate the varied
levels and types of incontinence and the different lifestyles of incontinent
adults. The feminine hygiene products are designed to provide comfort, security
and ease of use. Finally, like the body worn adult incontinence product, the
disposable baby diaper is designed to protect against leakage and skin
irritation. INBRAND manufactures substantially all of the products it sells.
PRODUCTS. INBRAND's adult incontinence products, feminine hygiene products
and disposable baby diapers generally share basic design criteria, product
functionality criteria and manufacturing characteristics. The absorbency
capabilities are achieved by placing an absorbent core between two layers of
material. The layer which is placed next to the skin is a soft, non-woven fabric
which allows fluids to past through it into the absorbent inner core which traps
and contains the fluid. This absorbent core is generally made of fluff pulp and
is frequently combined with super-absorbent polymers to improve absorbency. A
soft film backing covers the underside of the core and provides a moisture
barrier. The raw materials, although differing dimensionally from product to
product, are similar across all product categories. This similarity in design
and raw materials permits INBRAND to use manufacturing equipment for its
different products that is similar in basic design and operating techniques.
INBRAND's adult incontinence product category includes products which can be
characterized as either body worn or underpads. Body worn products, while
differing in their specific design characteristics, are generally worn directly
against the body of an ambulatory person. They may be self contained in the
48
<PAGE>
that they have integrated fastening systems allowing them to be worn with no
additional support requirements or they may be designed as an absorbent pad to
be worn fastened to the inside of the wearer's underwear. These products are
produced with a variety of features and multiple sizes which determine their
performance characteristics as well as their selling price. Underpads are
larger, rectangular pads which cover bedding or furniture and are also produced
in varying sizes and weights to fit differing needs of the user.
INBRAND's feminine hygiene product category includes products which can be
classified as either sanitary pads, panty-liners or tampons. Sanitary pads are
smaller in size and are designed to be worn inside underpants for external
control of menstrual flows. Panty-liners are also designed to be worn inside
underpants but have lighter absorbency characteristics and are generally used
for additional protection. Tampons are designed for internal use in absorbing
menstrual flow and are generally used as an alternative to sanitary pads.
INBRAND's disposable baby diaper category incudes products which are all
body worn and, although substantially smaller in size, are very similar to the
INBRAND body-worn adult incontinence products. They are designed with integrated
fastening systems, generally consisting of refastenable tape tabs and, as with
adult incontinence products, can be produced with a variety of additional
features and in multiple sizes which determine their performance characteristics
as well as their selling price.
MARKETS. The market for incontinence products includes clinical and retail
customers, while the market for feminine hygiene and disposable baby diaper
products is almost exclusively retail. The clinical market includes long-term
care facilities, hospitals and home healthcare providers. The retail market
includes grocery and drug chains and mass-merchants who sell national brands,
private labels and control labels. Each of the North American and European
markets, as well as the clinical and retail markets contained within them, has a
different profile, may require a different product mix and has different growth
potential and characteristics.
Patients within the clinical market are typically elderly and a significant
number of them are affected by some degree by incontinence. Because of the
increase in the elderly population in North America and Europe and the increase
in average life span, there is a growing number of incontinent patients. While
many nursing homes continue to use reusable products for incontinent patients,
INBRAND believes that enhanced skin care, comfort and ease of use afforded by
disposable products create significant opportunities to further penetrate this
market.
Particularly in North America, the retail consumer has become more aware of
the existence and availability of incontinence products through extensive
advertising of successful national product brands. Current incontinence products
are designed to restore dignity, permit a more active lifestyle and facilitate
care of home-bound patients. Both in North America and Europe, the retail
consumer of feminine hygiene and disposable baby diaper products who is aware of
the existence and availability of private label alternatives is increasingly
willing to purchase such products instead of their nationally branded
equivalents. Disposable personal absorbent products have become increasingly
important to grocery and drug store chains, as well as mass-merchants who see an
opportunity to introduce these products as part of their private label programs.
In North America, INBRAND offers to its customers private label adult
incontinence and feminine hygiene product programs, while in Europe, these same
product offerings are coupled with the disposable baby diaper product. INBRAND
does not offer its baby diaper products in North America.
49
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
OF INBRAND
The following table sets forth information regarding beneficial ownership of
the INBRAND Common Stock as of July 22, 1997, with respect to (i) each person
known by INBRAND to own beneficially more than five percent of the outstanding
INBRAND Common Stock, (ii) each director of INBRAND, (iii) each executive
officer of INBRAND and (iv) all directors and executive officers as a group. The
address of each of the holders of more than 5% of the INBRAND Common Stock is
c/o INBRAND Corporation, 1169 Canton Road, Marietta, Georgia 30066.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
NAME OF BENEFICIAL OWNER: BENEFICIAL
OFFICERS, DIRECTORS AND 5% SHAREHOLDERS OWNERSHIP(1)(2) PERCENT
- ---------------------------------------------------------------------------- ------------------------ -------------
<S> <C> <C>
Garnett A. Smith(3)......................................................... 1,571,576 12.8%
H. Scott Sigler............................................................. 547,633 4.6
James R. Johnson(4)......................................................... 423,724 3.5
Eric J. Bruce(5)............................................................ 9,313 *
Mary N. Moore(6)............................................................ 755,653 6.4
Joseph H. Davenport, III(7)................................................. 940,743 8.0
W. Thorpe McKenzie.......................................................... 433,716 3.7
Tommy D. Greer.............................................................. 21,567 *
John C. Thornton............................................................ 33,688 *
All directors and officers as a group (9 persons)........................... 4,728,426 39.0
Howard Holdings, Inc........................................................ 813,426 6.9
</TABLE>
- ------------------------
* Less than one percent of the INBRAND Common Stock.
(1) Beneficial ownership is determined in accordance with Rule 13d-3 under the
Exchange Act (except as provided in note (2) below), and generally includes
voting power and/or investment power with respect to securities. Except as
indicated by footnote, and subject to community property laws where
applicable, INBRAND believes that the persons named in the table above have
sole voting and investment power with respect to all shares of INBRAND
Common Stock shown as beneficially owned by them.
(2) Share amounts for the officers and directors include shares issuable
pursuant to presently exercisable stock options and stock options that by
their terms become exercisable upon consummation of the Merger held by such
individuals as follows:
<TABLE>
<CAPTION>
NAME OPTION SHARES
- ------------------------------------------------------------------------------- -------------
<S> <C>
Garnett A. Smith............................................................... 512,387
H. Scott Sigler................................................................ 256,192
James R. Johnson............................................................... 170,795
Eric J. Bruce.................................................................. 8,750
Mary N. Moore.................................................................. 17,067
Joseph H. Davenport, III....................................................... 17,067
W. Thorpe McKenzie............................................................. 17,067
Tommy D. Greer................................................................. 17,067
John C. Thornton............................................................... 8,063
</TABLE>
(3) Includes 59,189 shares of INBRAND Common Stock owned by The Garnett A. Smith
Family Foundation, Inc., a charitable foundation established by Mr. Smith of
which Mr. Smith is the President.
50
<PAGE>
(4) Includes 83,785 shares of INBRAND Common Stock held in an individual
retirement account for Mr. Johnson and his wife.
(5) Includes 563 shares owned by Mr. Bruce as of June 4, 1997 which were
purchased through INBRAND's employee stock purchase plan. Additional
purchases made through the employee stock purchase plan subsequent to June
4, 1997 are not included.
(6) Includes 457,649 shares of INBRAND Common Stock owned by Navarre Investment
Company of which Ms. Moore is the general partner and chief executive
director, 189,563 shares of INBRAND Common Stock which are held by Ms. Moore
as trustee of the William Navarre Bailey 1993 Trust for the benefit of her
son as to which shares Ms. Moore disclaims beneficial ownership, and 80,611
shares of INBRAND Common Stock owned by The Chrysalis Foundation, Inc., a
charitable foundation established by Ms. Moore.
(7) Includes 813,426 shares of INBRAND Common Stock owned by Howard Holdings,
Inc., of which Mr. Davenport is the president and principal stockholder, and
101,250 shares of INBRAND Common Stock held by Mr. Davenport's wife as
custodian for their minor children, as to which custodial shares Mr.
Davenport disclaims beneficial ownership.
51
<PAGE>
DESCRIPTION OF SHARE CAPITAL OF TYCO
The summary of the terms of the share capital of Tyco set forth below does
not purport to be complete and is qualified by reference to the Tyco Memorandum
of Association (the "Tyco Memorandum") and the Bye-laws of Tyco (the "Tyco
Bye-Laws"). Copies of the Tyco Memorandum and the Tyco Bye-Laws are incorporated
by reference in this Proxy Statement/Prospectus and will be sent to holders of
INBRAND Common Stock upon request. See "Where To Find More Information."
AUTHORIZED SHARE CAPITAL
Tyco's authorized share capital consists of 750,000,000 Tyco Common Shares,
par value $0.20 per share, 125,725,000 convertible cumulative redeemable
preference shares, par value $1 per share, divided into three classes (the
"Convertible Preference Shares") (including a class of first preference shares
(the "First Preference Shares")), and 25,000 exchangeable cumulative redeemable
preference shares, par value $1 per share (the "Exchangeable Preference Shares")
(the Convertible Preference Shares and the Exchangeable Preference Shares,
collectively, the "Preference Shares"). As of July 3, 1997, there were
242,804,288 Tyco Common Shares outstanding and no Preference Shares outstanding.
TYCO COMMON SHARES
DIVIDENDS. The Board of Directors of Tyco may declare dividends out of
profits of Tyco available for that purpose as long as there are no reasonable
grounds for believing that Tyco is, or after such dividend would be, unable to
pay its liabilities as they became due or if the realizable value of Tyco's
assets would thereby be less than the aggregate of its liabilities and its
issued share capital and share premium accounts. Subject to such special rights
as may be attached to any other shares in Tyco, all dividends are payable
according to the amounts paid or credited as paid on Tyco Common Shares.
Dividends are normally payable in U.S. dollars, but holders with a registered
address in the United Kingdom and other countries outside the United States may
receive payment in another currency. Any dividend which is unclaimed may be
invested or otherwise made use of by the Board of Directors of Tyco and after a
period of 12 years is forfeited and reverts to Tyco.
VOTING RIGHTS. At any general meeting of Tyco, votes may be given in person
or by proxy and each holder of Tyco Common Shares is entitled, on a show of
hands, to one vote and, on a poll, to one vote for each Tyco Common Share held
by him. Any proxy must be a shareholder of Tyco.
LIQUIDATION. On a liquidation of Tyco, holders of Tyco Common Shares are
entitled to receive any assets remaining after the payment of Tyco's debts and
the expenses of the liquidation, subject to such special rights as may be
attached to any other class of shares.
SUSPENSION OF RIGHTS. In certain circumstances, the rights of a shareholder
to vote and to receive any payment or income or capital in respect of a Tyco
Common Share may be suspended. Those circumstances include failure to provide
information about ownership of and other interests in Tyco Common Shares, if so
required in accordance with Tyco Bye-Laws. See "Comparison of Shareholder
Rights."
VARIATION OF RIGHTS. If at any time the share capital of Tyco is divided
into different classes of shares, the rights attached to any class (unless
otherwise provided by the terms of the issue of the shares of that class) may be
varied with the consent in writing of the holders of three-fourths of the issued
shares of that class or with the sanction of a resolution passed at a separate
general meeting of the holders of the shares of that class by a majority of
three-fourths of such holders voting in person or by proxy.
TRANSFERS. A Tyco Common Share may be transferred in any manner the Tyco
Board of Directors may approve. The Board of Directors may require the transfer
to be by an instrument signed by the transferor and, in the case of a partly
paid share, also by the transferee. The instrument must be in writing in the
usual common form or in any other form which the Board of Directors may approve
and must be
52
<PAGE>
lodged at the office of the registrar of Tyco for registration. The Tyco Board
of Directors may decline to register any transfer of shares on which Tyco has a
lien, any transfer of shares not fully paid up to a transferee of whom they do
not approve and any transfer of shares by a transferor or to a transferee on
whom Tyco has duly served a notice under the provisions of the Tyco Bye-Laws
described under "--Suspension of Rights" above, during a period of suspension
of voting rights.
GENERAL. The Tyco Common Shares to be issued pursuant to the Merger will be
duly authorized, validly issued, fully paid and non-assessable. All such shares
will be in registered form.
AS&K Services Limited is Tyco's Registrar. ChaseMellon Shareholder Services,
L.L.C. is the transfer agent for Tyco Common Shares.
TYCO PREFERENCE SHARES
Under the Tyco Bye-Laws, the Tyco Board of Directors, in its sole
discretion, may designate, allot and issue one or more series of First
Preference Shares from the authorized and unissued First Preference Shares.
Subject to limitations imposed by law, the Tyco Memorandum or the Tyco Bye-Laws,
the Board of Directors is empowered to determine the designation of, and the
number of shares constituting, each series of First Preference Shares, the
dividend rate for each series, the terms and conditions of any voting and
conversion rights for each series, the amounts payable on each series on
redemption or return of capital and the preference and relative rights among
each series of First Preference Shares. At present, 7,500,000 First Preference
Shares have been designated as Series A First Preference Shares and are reserved
for issue upon exercise of the Rights under the Tyco Shareholder Rights Plan.
For a description of the Tyco Shareholder Rights Plan, see "Comparison of
Shareholder Rights--Shareholder Rights Plan."
STOCK EXCHANGE LISTING
The Tyco Common Shares are listed on the NYSE, the London Stock Exchange and
the Bermuda Stock Exchange. It is a condition to the Merger that the Tyco Common
Shares issuable in the Merger be approved for listing on the NYSE at or prior to
the Effective Time, subject to official notice of issuance. Application will
also be made to list such shares on the London Stock Exchange and the Bermuda
Stock Exchange.
53
<PAGE>
COMPARISON OF SHAREHOLDER RIGHTS
The rights of Tyco shareholders are governed by Bermuda law, the Tyco
Memorandum and the Tyco Bye-Laws. The rights of INBRAND shareholders are
governed by Georgia law, the INBRAND Articles of Incorporation (the "INBRAND
Articles") and the INBRAND Bylaws (the "INBRAND Bylaws"). Upon consummation of
the Merger, the rights of INBRAND shareholders who become shareholders of Tyco
in the Merger will be governed by Bermuda law, the Tyco Memorandum and the Tyco
Bye-laws. The following is a summary of the principal differences between the
current rights of INBRAND shareholders and those of Tyco shareholders following
the Merger.
The following discussions are not intended to be complete and are qualified
by reference to Bermuda law, Georgia law and the Tyco Memorandum, the Tyco
Bye-Laws, the INBRAND Articles and the INBRAND Bylaws. Copies of the Tyco
Memorandum, the Tyco Bye-Laws, the INBRAND Articles and the INBRAND Bylaws will
be sent to holders of INBRAND Common Stock upon request. See "Where To Find More
Information."
QUORUM. The INBRAND Bylaws provide that holders of a majority of shares
entitled to vote generally in the election of directors constitutes a quorum.
Pursuant to the Tyco Bye-Laws, the presence, either in person or by proxy, of
two holders of Tyco Common Shares at any general meeting constitutes a quorum.
VOTING RIGHTS. Georgia law provides that shareholders entitled to vote
shall have one vote for each share of stock owned by them. Pursuant to the
INBRAND Bylaws, when a quorum is present, any matter brought before a
shareholder meeting shall be decided by the vote of a majority of the votes
entitled to be cast and which are present, either in person or by proxy, at such
meeting, except where a larger vote is otherwise required by law or the INBRAND
Articles. Neither Georgia law nor the INBRAND Articles or Bylaws contain a
provision that allows shareholder voting by a show of hands.
Under Bermuda law, questions proposed for consideration at a general meeting
shall be decided on a simple majority of votes or by such majority as the
bye-laws of a company may prescribe except where a larger majority is required
by law. Any question proposed for consideration at a general meeting may be
decided on a show of hands in which each shareholder present in person or by
proxy is entitled to one vote and casts such vote by raising his or her hand
unless, before or on the declaration of the result of a show of hands, a poll is
demanded by (i) the Chairman of the meeting, (ii) at least three shareholders
present in person or represented by proxy, (iii) any shareholder or shareholders
present in person or represented by proxy holding between them 10% of the total
voting rights of all the shareholders entitled to vote at such meeting, or (iv)
a shareholder or shareholders present in person or represented by proxy holding
shares in such company entitled to vote at such meeting and on which an
aggregate sum has been paid up equal to at least 10% of the total sum paid up on
all such shares entitled to vote. Where a poll has been demanded, every
shareholder present in person or by proxy is entitled to one vote for each share
held by him.
The Tyco Bye-Laws provide that a Tyco shareholder is not entitled (except as
a proxy for another shareholder) to be present or vote at any meeting if such
shareholder has been served, and failed to comply, with a notice under the Tyco
Bye-Laws stating that such shareholder must make an offer in accordance with the
City Code (as defined below), as applied by the Tyco Bye-Laws (as described
below), or, as the case may be, in accordance with the Tyco Bye-Laws. A
shareholder of Tyco also loses the right to vote for a period of 180 days if
such shareholder acquires three percent or more of the issued share capital of
any class of Tyco shares, either alone or with others, and fails to notify Tyco
of such acquisition within two days or, already possessing three percent or
more, the shareholder fails to notify Tyco of a change in the shareholder's
interests amounting to one percent or more of the share capital of any class and
such shareholder is so notified by the Tyco Board of Directors of such loss of
right. In addition, the Tyco Bye-Laws provide that any person who is known or
believed by Tyco to be interested in Tyco Common Shares and has failed to comply
with a notice from Tyco requesting specified information regarding such person's
54
<PAGE>
interests in shares in Tyco shall lose the right to vote for the period during
which such person fails to comply with the notice plus an additional ninety
days.
Georgia law allows cumulative voting provided that the company's articles of
incorporation allow for cumulative voting. The INBRAND Articles do not provide
for such cumulative voting. Under cumulative voting, each shareholder casts as
many votes for directors as he has shares of stock multiplied by the number of
directors to be elected. Bermuda law allows, but does not require, cumulative
voting for the election of directors. Tyco shareholders do not have cumulative
voting rights for the election of directors, either under Bermuda law or under
the Tyco Bye-Laws.
SHAREHOLDER PROPOSALS. Under the INBRAND Bylaws, shareholder proposals or
nominations of persons for election to the INBRAND Board to be submitted at a
shareholders meeting require advance notice. To be timely, a shareholder's
notice must be delivered to, or mailed and received at, the principal executive
offices of INBRAND (i) in the case of an annual meeting that is called for a
date that is within 30 days before or after the anniversary date of the
immediately preceding annual meeting of shareholders, not less than 30 days nor
more than 90 days prior to such anniversary date and in the case of an annual
meeting that is called for a date that is not within 30 days before or after the
anniversary date of the immediately preceding annual meeting, or in the case of
a special meeting of shareholders, not later than the close of business on the
tenth day following the day on which notice of the date of the meeting was
mailed or public disclosure of the date of the meeting was made, whichever
occurs first.
Under Bermuda law, a shareholder wishing to move a resolution at an annual
general meeting of a company must give notice to the company of the resolution
at least six weeks before the meeting. If after notice has been given an annual
general meeting is called for a date less than six weeks after the giving of
that notice, the notice shall be deemed to have been given in time. Only
shareholders who represent not less than one-twentieth of the total voting
rights of members having a right to vote at the meeting or who are one hundred
or more in number may requisition a resolution at an annual general meeting. The
Tyco Bye-Laws provide that other than a director retiring at a general meeting
of shareholders or unless recommended by the Tyco Board of Directors, advance
written notice to the Secretary of Tyco of shareholder nominations of persons
for election to the Tyco Board of Directors is required. To be timely, such
notice must be received by the Secretary of Tyco not less than six and not more
than twenty-eight clear days before the day appointed for the meeting at which
such election is to be held. Such notice must be given by a shareholder (not
being the person to be proposed) entitled to attend and vote at the meeting for
which such notice is given and must also include notice in writing signed by the
person to be proposed of such person's willingness to be elected.
SPECIAL MEETING OF SHAREHOLDERS. Georgia law provides that special meetings
of shareholders of a company may be called by a company's board of directors,
the person or persons authorized to do so by the articles of incorporation or
bylaws or by the holders of at least 25% (unless a greater or lesser amount is
specified in the company's articles of incorporation or bylaws) of all the votes
entitled to be cast on the proposed issue. The INBRAND Articles provide that a
special meeting of shareholders may be called by the Board of Directors pursuant
to a resolution adopted by a majority of the entire Board of Directors, the
chairman of the Board of Directors or the President of INBRAND. If a special
meeting is called by shareholders, they must send one or more written demand to
the Secretary of the company which specifies the issue to be considered. The
Tyco Bye-Laws provide that the directors of Tyco are authorized to call a
special general meeting at any time on not less than five days' notice. Pursuant
to Bermuda law and the Tyco Bye-Laws, the Tyco Board of Directors is also
required, on the written request of Tyco shareholders holding at least 10% of
the paid-up capital of Tyco entitled to vote at a general meeting, to convene a
special general meeting of Tyco. If the directors do not convene a meeting
within twenty-one days from the date of the request, the requesting
shareholders, or any of them representing more than one-half of the total voting
rights of all of them, may themselves convene a meeting, but any meeting so
convened may not be held later than three months from the date of the request.
55
<PAGE>
INSPECTION RIGHTS. Under Georgia law, a company's shareholders have the
right, upon five business days and with prior written notice, to inspect the
company's articles of organization, bylaws, records of all meetings of
incorporators and shareholders, certain resolutions of the board of directors,
all general written communications to shareholders within the past three years,
a list of names and business addresses of current directors and officers and the
most recent annual registration delivered to the Georgia Secretary of State. If
a shareholder makes (i) a good faith demand; (ii) for a proper purpose that is
reasonably related to his legitimate interests as a shareholder; (iii) describes
with reasonable particularity his purpose and the records he wishes to inspect;
(iv) the records are directly connected with his purpose; and (v) the records
are to be used only for the stated purpose, then, a shareholder may inspect
certain additional resolutions of the board of directors and committees thereof,
accounting records of the company and the records of shareholders. The
inspection right under Georgia law may not be abolished but it may be limited by
the company's articles of incorporation and bylaws to shareholders owning 2% or
more of the outstanding shares of a company. INBRAND has not adopted this
limitation.
Under Bermuda law, members of the general public have the right to inspect
the public documents (which include the Memorandum of Association (including its
objects and powers) and any amendments thereto and documents relating to any
increase or reduction of authorized capital) of a Bermuda company at the office
of the Registrar of Companies in Bermuda. The shareholders of a Bermuda company
have the additional right to receive a copy of the company's bye-laws and its
audited financial statements and the right to inspect minutes of general
meetings. The register of shareholders of a Bermuda company is also open for
inspection by shareholders without charge, and to members of the general public
for a minimal fee. A Bermuda company must also keep at its registered office a
register of directors and officers which is open for inspection by members of
the public without charge. Bermuda law does not provide a general right for
shareholders to inspect or obtain copies of any other corporate records.
DIVIDENDS. Under Georgia law, the payment of dividends is generally
permissible unless (i) payment of such dividends would make the company unable
to pay its debts as they become due in the ordinary course of business; or (ii)
the company's total assets would be less than the sum of its total liabilities
plus the amount that would be needed if the company were to be dissolved at the
time of the distribution to satisfy the preferential rights upon dissolution of
shareholders whose preferential rights are superior to those receiving the
distribution; or (iii) prohibited by the company's articles of incorporation or
bylaws. Under Bermuda law, a dividend cannot be declared or paid if there are
reasonable grounds for believing that the company is, or after such payment
would be, unable to pay its liabilities as they became due or if the realizable
value of the company's assets would thereby be less than the aggregate of its
liabilities and its issued share capital and share premium accounts. Under the
Tyco Bye-Laws, dividends may only be paid out of profits available for the
purpose, and a shareholder's right to receive dividends is suspended during such
time as he is disqualified from voting, as stated above under "Voting Rights."
DERIVATIVE ACTIONS. Under Georgia law, a shareholder may institute a
derivative suit in the right of the company against the shareholders, officers
or directors of a company if he or she was a shareholder at the time of the act
complained of or received his or her shares by operation of law from one who was
a shareholder at such time and such shareholder fairly and adequately represents
the interests of the company in enforcing the rights of the company. Under
Bermuda law, subject to certain limited exceptions, minority shareholders are
not permitted to bring derivative actions for wrongs done to their company.
BOARD OF DIRECTORS. Georgia law provides that the number of directors shall
be not less than one. The INBRAND Bylaws provided that the INBRAND Board of
Directors shall be not less than 3 nor more than 15. The INBRAND Board of
Directors currently consists of 7 members. Under the INBRAND Bylaws the number
of directors may be increased by vote of a majority of the directors then in
office. The Tyco Bye-Laws provide that the number of directors shall be such
number, not less than two, as the shareholders at a general meeting may from
time to time determine.
56
<PAGE>
CLASSIFICATION OF THE BOARD OF DIRECTORS. Georgia law allows that the
directors of a company may be classified into three classes, with the effect
that directors are elected and serve for staggered terms. The INBRAND Articles
provide for a classified board which is to consist of three classes. The three
classes are as nearly equal in size as possible and each director is elected for
a three year term. The Tyco Board is not classified, and the Tyco Bye-Laws do
not contemplate a classified board. Under Bermuda law, the election of directors
of a company may be regulated by its bye-laws or otherwise determined by the
company in general meeting. The Tyco Bye-laws do not prescribe any particular
term of office for a director, except one appointed to fill a casual vacancy.
REMOVAL OF DIRECTORS; VACANCIES ON THE BOARD OF DIRECTORS. Pursuant to
Georgia law and subject to the provisions of the immediately preceding
paragraph, a director may be removed from office with or without cause by the
holders of a majority of votes entitled to vote generally in the election of
directors, and with cause by a vote of the majority of directors then in office,
unless otherwise specified in the articles of incorporation or by bylaws. The
INBRAND Articles provide that a director may only be removed for cause. The
INBRAND Articles define cause as (i) final conviction of a felony; (ii)
declaration of unsound mind by a court; (iii) adjudication of bankruptcy; or
(iv) conduct prejudicial to the interest of INBRAND. Any removal of a director
for cause requires adherence to certain due process requirements. Under Georgia
law and the INBRAND Articles and INBRAND Bylaws, vacancies on the board of
directors and newly created directorships resulting from any increase in the
authorized number of directors are filled by the remaining directors.
Bermuda law provides that, subject to its bye-laws, the shareholders of a
company may, at a special general meeting called for the purpose, remove a
director, subject to statutory due process requirements. The Tyco Bye-Laws
provide that any director may at any time be removed from office as a director
either by resolution of the Tyco shareholders to that effect or upon a written
resolution signed by all the other directors of Tyco. The remaining Tyco
directors have the power to appoint any qualified person to fill a casual
vacancy in the Tyco Board who shall hold office until the next following annual
general meeting, and the existing directors may act notwithstanding any vacancy
in the board of directors.
EXCULPATION OF DIRECTORS. Georgia law permits a company to eliminate or
limit the personal liability of a director to the company and its shareholders
for monetary damages for breaches of fiduciary duty, except where such
exculpation is expressly prohibited. The circumstances under which such
exculpation is prohibited include breaches of a director's duty of loyalty,
actions undertaken not in good faith or involving intentional misconduct or
knowing violations of law, certain actions relating to unauthorized
distributions and transactions from which the director derived an improper
personal benefit. The INBRAND Articles provide for exculpation for directors.
Bermuda law permits a company to exempt a director from liability with
respect to any negligence, default, breach of duty or breach of trust of which a
director may be guilty in relation to the company or any of its subsidiaries
except from any liability resulting from fraud or dishonesty. The Tyco Bye-Laws
provide for such exculpation for directors except in relation to the director's
own willful negligence, willful default, fraud or dishonesty.
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS. Georgia law permits
indemnification of directors and officers for expenses incurred by them by
reason of their position with the company, if the director or officer has acted
in good faith and, in the case of conduct with respect to his official capacity,
with the reasonable belief that his conduct was in the best interest of the
company, and in all other cases, that such conduct was at least not opposed to
the best interest of the company. The INBRAND Articles provide for the
indemnification of each director of INBRAND and any other person who serves in
any other office filled by election or appointment by INBRAND shareholders or
the INBRAND Board of Directors against all expenses, including any judgments,
amounts 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 INBRAND's request as a
57
<PAGE>
director, officer, employee or other agent of any other organization. No
indemnification is available with respect to any matter as to which there shall
have been an adjudication that the person seeking indemnification did not act in
accordance with the applicable standard of care required. Georgia law provides
that a corporation may not indemnify a director in an action brought by or in
the right of a corporation, except for such director's reasonable expenses
incurred in connection with a proceeding and only if it is determined that the
director has met the relevant standard of conduct.
Bermuda law permits a company to indemnify its officers and employees with
respect to any loss arising or liability attaching to such persons by virtue of
any rule of law concerning any negligence, default, breach of duty or breach of
trust of which the officer or employee may be guilty in relation to the company
or any subsidiary thereof; PROVIDED, HOWEVER, that the company shall not
indemnify an officer or employee against any liability arising out of any fraud
or dishonesty of which such person may be guilty. The Tyco Bye-Laws provide that
every director, secretary and other officer of Tyco shall be indemnified by Tyco
against all costs, losses and expenses which any such officer may be liable for
by reason of any contract entered into, or any act or thing done by such officer
in the discharge of such officer's duties, provided that the indemnity contained
in the Tyco Bye-Laws shall not extend to any matter which would render such
indemnification void under applicable Bermuda law.
INTERESTED DIRECTOR TRANSACTIONS. Georgia law states that a director has a
conflicting interest with respect to a transaction effected or proposed by the
company (or any entity in which the company has a controlling interest) if (i)
whether or not the transaction is brought before the board of directors for
action, to the knowledge of the director at the "time of commitment" (as defined
in the GBCC) the director or a related person (as defined in the GBCC) is a
party to the transaction or has a beneficial financial interest in or is so
closely linked to the transaction and of such financial significance to the
director or a related person that it would reasonably be expected to exert an
influence on the director's judgment if he or she were called upon to vote on
the transaction; or (ii) the transaction is brought (or is of such character and
significance to the company that it would in the normal course be brought)
before the board of directors for action, and to the knowledge of the director
at the time of commitment any of the following persons is either a party to the
transaction or has a beneficial financial interest so closely linked to the
transaction and of such a financial significance to such person that it would
reasonably be expected to exert an influence on the director's judgment if he or
she were called upon to vote on the transaction: (a) an entity (other than the
company) of which the director is a director, general partner, agent or
employee; (b) a person that controls one or more of the entities specified in
subparagraph (a) above or an entity that is controlled by, or is under common
control with, one or more of the entities specified in subparagraph (a) above;
or (c) an individual who is a general partner, principal or employer of the
director.
A director's conflicting interest transaction may not be enjoined, set
aside, or give rise to an award of damages or other sanctions, in any action by
a shareholder or by or in their right of the company, on the ground of an
interest in the transaction of such director or any other person with whom such
director has a personal, economic or other association, if (i) the transaction
receives the affirmative vote of a majority (but not less than two) of the
disinterested directors or a committee thereof who voted on the transaction
after required disclosure to them to the extent the information is not known by
them; (ii) a majority of the votes entitled to be cast by disinterested
shareholders were cast in favor of the transaction after (a) notice to the
shareholders describing the conflicting interest transaction, (b) disclosure by
such director, prior to the shareholder's vote, to the Secretary of the
corporation of the number, and the identity of the persons holding or
controlling the vote, of all shares that, to the knowledge of the director, are
beneficially owned (or the voting of which is controlled) by such director or by
a related person of the director, or both, and (c) required disclosure to the
shareholders who voted on the transaction to the extent the required information
was not known by them; or (iii) the transaction, judged in the circumstances at
the time of commitment, is established to have been fair to the corporation. The
provisions of the GBCC that are applicable to directors also apply to officers.
58
<PAGE>
The INBRAND Bylaws provide that transactions with directors or entities
controlled by directors may be void or voidable. Interested directors may be
counted in determining the presence of a quorum at a meeting of the INBRAND
board of directors or any committee of the board that authorizes any such
transaction.
Under the Tyco Bye-Laws, no director is disqualified from contracting with
Tyco and no contract will be avoided by reason of such director holding that
office or of the fiduciary relationship thereby established if the requisite
disclosure by the interested director is made. A director who to his knowledge
is in any way, whether directly or indirectly, interested in a contract or
arrangement with Tyco shall declare the nature of his interest at the meeting of
the directors at which the question of entering into the contract or arrangement
is first taken into consideration, if he knows his interest then exists, or in
any other case at the first meeting of the directors after he knows that he is
or has become so interested. Subject to certain exceptions, an interested
director shall not be counted towards a quorum, nor vote, with respect to the
board of directors' authorization of such contract. Failure to make a
declaration of interest constitutes a breach of duty of a director under Bermuda
law.
AMENDMENTS TO CONSTITUTIONAL DOCUMENTS. Under Georgia law, certain
amendments to a company's articles of organization relating to certain changes
in the corporate name, deleting the names of the incorporators and a limited
number of other matters can be done by the board of directors without a vote of
shareholders. Amendments relating to other matters require a vote of at least a
majority of each class outstanding and entitled to vote thereon or, if the
articles of organization so provide, a greater of the outstanding shares of each
class. Under Georgia 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. The INBRAND Bylaws provide that the
affirmative vote of 75% of the outstanding voting stock of INBRAND (excluding
the holdings of any Interested Shareholder) is required to amend the INBRAND
Bylaw provisions adopting the Business Combination Statute and the Fair Price
Statute, each of which is described below.
Bermuda law provides that a company may, with the consent of the Minister of
Finance, by resolution passed at a general meeting of members of which due
notice has been given, alter the provisions of its memorandum of association.
Holders of at least 20% of any class of the company's share capital may apply to
the Bermuda Supreme Court to annul an alteration and, if such application is
made, the alteration shall not have effect except insofar as it is confirmed by
the Court. In addition, under Bermuda law a company may alter the conditions of
its memorandum of association, if so authorized by a general meeting and by its
bye-laws, so as to increase its share capital, divide its shares into several
classes, consolidate and divide its share capital into shares of a larger par
value, sub-divide its shares into shares of a smaller par value, change the
currency denomination of its share capital and cancel any shares which have not
been taken or agreed to be taken by any person and diminish the amount of its
share capital by the amount so canceled. The Tyco Bye-Laws include such
authority (except as to changing the currency denomination of its share
capital).
Bermuda law also permits a company or any of its subsidiaries to purchase
shares in the company. In the case of purchase by the company itself, purchases
may only be made if the company is so authorized by its memorandum of
association or bye-laws and if its issued share capital is not thereby reduced
below the minimum capital specified in its memorandum. The Tyco Bye-Laws contain
such authority in respect of such amount of share capital as is authorized by
the shareholders in general meeting from time to time. The Tyco Bye-Laws provide
that the rights attached to any class of shares (unless otherwise provided by
the terms of such class) may be varied either by the consent in writing of the
holders of three-fourths of the issued shares of the class or by a resolution
passed at a separate meeting of the holders of such class of shares by the
holders of three-fourths of the shares of such class voting at such separate
meeting. The rules of a Tyco general shareholder meeting shall apply, mutatis
mutandis, to such separate meeting, except that (i) the quorum required at such
separate meeting shall be three or more persons holding or representing by proxy
not less than one-third of the issued shares of the class, except that at any
adjourned
59
<PAGE>
meeting, two holders of the shares of the class present in person or by proxy
(whatever the number of shares held by them) shall constitute a quorum; (ii)
every holder of shares of the class shall be entitled on a poll to one vote for
every share of such class held; and (iii) any holder of shares of the class
present in person or by proxy may demand a poll. Pursuant to Bermuda law,
holders of at least 10% of the class of shares may apply to the Bermuda Supreme
Court to cancel a variation otherwise approved by the requisite vote. Upon such
application, the variation shall not have effect unless and until it is
confirmed by the Court.
Under Georgia law, the power to make, amend or repeal bylaws lies with the
board of directors and shareholders. Pursuant to Bermuda law and the Tyco
Bye-Laws, the Tyco Board may amend the Tyco By-Laws, provided that no such
amendment will be operative unless and until it is confirmed by the Tyco
shareholders at a general meeting of the Tyco shareholders.
SALE, LEASE OR EXCHANGE OF ASSETS AND MERGERS. Georgia law provides that a
vote of a majority 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 company's property and assets or a merger or
consolidation of the company into any other company, except that the articles of
organization may provide that the vote of a greater proportion is required.
Under Georgia law, a merger or consolidation also requires the separate vote of
any class of stock, the rights of which would be adversely affected by the
transaction.
Under Bermuda law, there is no requirement for a company's shareholders to
approve a sale, lease or exchange of any of its property and assets. Under
Bermuda law, a company may enter into a compromise or arrangement in connection
with a scheme for the reconstruction of the company on terms which include,
among other things, the transfer of all or part of the undertaking or assets of
the company to another company. Any such compromise or arrangement requires the
approval of a majority in number representing three-fourths in value of each
class of shareholders of the company and the sanction of the Bermuda Supreme
Court.
Pursuant to Bermuda law, unless the company's bye-laws provide otherwise, an
amalgamation requires the approval of the holders of at least three-fourths of
those voting at a meeting of shareholders at which a requisite quorum is
present. For purposes of approval of an amalgamation, all shares, whether or not
otherwise entitled to vote, carry the right to vote. A separate vote of a class
of shares is required if the rights of such class would be altered by virtue of
the amalgamation.
PROVISIONS CONCERNING CERTAIN BUSINESS COMBINATIONS. Georgia law contains
certain restrictions with respect to transactions with "Interested
Shareholders." These laws do not apply to a Georgia company unless it has
affirmatively elected in its bylaws to be governed by them. INBRAND has elected
to be covered by these laws. These provisions require certain super-majority
votes for transactions with any "Interested Shareholders" (generally defined as
any person, other than the company or any subsidiary, beneficially owning at
least 10% of the voting stock of the company). Repeal or amendment of such a
bylaw must be approved by at least two-thirds of the directors who are not
affiliates of the Interested Shareholder and by a majority of the votes entitled
to be cast by the holders of shares not beneficially owned by the Interested
Shareholder.
The GBCC generally prohibits Georgia companies from entering into certain
Business Combination transactions with any Interested Shareholder for a period
of five years following the time such shareholder becomes an Interested
Shareholder unless: (i) prior to such time, the company's board of directors
approves the business combination or the transaction resulting in the
shareholder becoming an interested shareholder; (ii) the interested shareholder
acquires 90% or more of the outstanding voting stock of the company (excluding
"affiliated shares" held by affiliates, subsidiaries or benefit plans) as part
of the transaction in which it becomes an Interested Shareholder; or (iii)
subsequent to becoming an Interested Shareholder, such shareholder acquires 90%
or more of the outstanding voting stock of the company (excluding affiliated
shares) and a majority of the remaining outstanding voting stock (excluding
affiliated shares) approve the business combination.
60
<PAGE>
The GBCC contains fair price provisions that will apply to any company
electing to be governed by such provisions. Under the fair price provisions, the
GBCC requires any business combination (i) to be unanimously approved by the
continuing directors, as long as the continuing directors constitute three
members of the board of directors at the time of the approval, or (ii) to be
recommended by at least two-thirds of the continuing directors and approved by a
majority of the votes entitled to be cast.
Such a vote is not required for a business combination under certain
conditions. First, the aggregate value of cash and non-cash consideration to be
received by shareholders per share must be equal to the highest of the
following: (i) the fair market value (as defined in the GBCC) per share; (ii)
the highest price paid per share by an Interested Stockholder prior to the
business combination in question; or (iii) if non-common shares are involved,
the highest preferential amount to which holders are entitled. Second, the
consideration for the business combination must be in cash (or in the same form
as the Interested Shareholder previously paid for shares of the same class).
Third, after an Interested Shareholder became an Interested Shareholder, but
prior to the consummation of the business combination, unless approved by a
majority of the continuing directors, there shall have been: (i) no failure to
pay dividends; (ii) no reduction in the rate of dividends paid; (iii) no
increase in the annual rate of dividends to reflect a reclassification and (iv)
no increase in the percentage ownership of the Interested Shareholder by more
than one percent in a twelve-month period. Finally, the Interested Shareholder
must not have received a benefit of financial assistance or tax credits in
connection with the business combination. INBRAND, through its bylaws,
explicitly elects to be governed by such provisions.
Pursuant to Tyco Bye-Law 104(1)(A), if any person, whether as a result of
one transaction or a series of transactions, would be obligated to make an offer
to the Tyco security holders pursuant to the Rules of the City Code on
Take-overs and Mergers of the United Kingdom of Great Britain and Northern
Ireland (the "City Code"), the Tyco Board may require such person to make such
an offer as if the City Code applied to Tyco. The City Code provides that when
any person (and persons acting in concert with such person) acquires shares
which carry 30% or more of the voting rights of a company, such person must make
an offer for all shares of any class of equity share capital (whether voting or
non-voting) and also any voting non-equity share capital in which any such
person or persons hold shares. The offer must be for cash or offer a cash
alternative, in each case at not less than the highest price paid (in cash or
otherwise) for shares of the same class by the offeror, or anyone acting in
concert with the offeror, during the offer period and within the 12 months prior
to commencement of the offer.
Bye-Law 104(3) further provides that where any person is interested, whether
as a result of a series of transactions over a period of time or not, in 30% or
more of the outstanding shares, the Tyco Board of Directors may serve a notice
requiring that person to make an offer for all of the outstanding securities of
Tyco if the Tyco Board of Directors determines that an offer pursuant to Bye-Law
104(1)(A) of the Tyco Bye-Laws is not expedient or if a person required to make
such an offer fails to do so. Such offer must be made within 30 days of the
demand on terms that payment in full therefor will be made within 21 days of
such offer becoming unconditional in all respects. If the Tyco Board of
Directors serves a notice under this provision, the Tyco Board of Directors may
also require that the offeror offer to purchase securities of Tyco convertible
into voting or non-voting shares of Tyco on terms considered "fair and
reasonable" by the Tyco Board of Directors in its sole discretion. Unless the
Tyco Board of Directors otherwise agrees, such an offer must be for cash or must
offer a cash alternative at not less than the highest price paid by the offeror
or any person acting in concert with it for shares of such class within the
preceding 12 months or, if unavailable or inappropriate, at a price fixed by the
directors. Any such offer must remain open for at least 14 days after the date
on which it becomes unconditional as to acceptances.
Bye-Law 104(1)(B) provides that when any person has acquired, is in the
process of acquiring, or appears to the Tyco Board of Directors likely to
acquire an interest in the capital stock of Tyco in circumstances in which such
person would be subject to the Rules Governing Substantial Acquisitions of
Shares ("SARs"), the Tyco Board of Directors may give notice requiring such
person to comply with the SARs, and if such person fails to comply, give further
notice requiring such person to dispose or to procure
61
<PAGE>
the disposal by any person with whom such person has acted in concert of any
interest in shares acquired within 28 days of the date of such notice. The SARs
provide that a person may not, in any period of seven days, acquire shares
representing 10% or more of the voting rights in a company if such shares,
aggregated with shares already held by the purchaser, would carry 15% or more
but less than 30% of the voting rights of such company. The SARs do not apply to
an acquisition from a single shareholder if such acquisition is the only
acquisition within a seven-day period. The SARs also do not apply to a person
who acquires 30% or more of the voting rights in a company.
Under the Tyco Bye-Laws, any person who acquires an interest in three per
cent or more of the issued share capital of any class of Tyco is required to
notify the company of that interest and, on any change in that person's interest
amounting to one per cent or more of the issued capital of any class, of such
change. Any such notification must be made within two days (Saturdays and
Sundays excluded) after the relevant event. In determining the percentage
interest of any person for these purposes, interests of persons acting in
concert for the purposes of Bye-Law 104 may be aggregated. Neither Georgia law
nor the INBRAND Bylaws include any corresponding requirement.
REQUIRED PURCHASE AND SALE OF SHARES. Pursuant to Bermuda law, where the
transfer of shares or any class of shares in a company (the "transferor
company") to another company (the "transferee company") has, within four months
after the making of the offer, been approved by the holders of not less than 90%
in value of the shares or class of shares for which the offer was made, subject
to the satisfaction of certain conditions, the transferee company may, within
two months after the expiration of the four month period, give notice to any
dissenting shareholder that it desires to acquire his or her shares, and then
such transferee company shall be entitled and bound to acquire such shares on
the terms on which shareholders that approved such scheme or contract
transferred their shares, unless the Bermuda Supreme Court orders otherwise upon
application by the dissenting shareholder. "Dissenting shareholder" includes a
shareholder that has not assented to a scheme or contract and any shareholder
that has failed or refused to transfer shares to the transferee company.
Within one month of the transfer of 90% in value of the transferor company's
shares or class of shares to the transferee company, or to its nominee or
subsidiary, the transferee company shall notify the holders of the remaining
shares of such transfer. Within three months of the giving of notice, any such
remaining holder of shares may require the transferee company to acquire his
shares, and the transferee company shall be required to acquire such shares on
the same terms as provided for in the scheme or contract or upon such terms as
may be agreed or upon such terms as the Bermuda Supreme Court may determine upon
application of the transferee company or the shareholder.
SHORT FORM MERGER. Under Georgia law, where 90% of the outstanding shares
of each class of stock of a company is owned by another company, the parent
company may merge such other company into itself by vote of the parent company's
directors only. In certain circumstances, appraisal rights may be available to
shareholders of the merged company.
Bermuda law provides for short form mergers between companies and their
wholly-owned subsidiaries. Under Bermuda law, a holder or holders of not less
than 95% of the shares of any class of shares in a Bermuda company may give
notice to the remaining shareholders or class of shareholders of the intention
to acquire their shares on the terms set out in the notice. Bermuda law provides
that when such notice is given, the acquiring holder or holders shall be
entitled and bound to acquire the shares of the remaining shareholders on the
terms set out in the notice unless the remaining shareholders exercise statutory
appraisal rights. Bermuda law additionally provides a right of appraisal in
respect of the situation in which a holder of not less than 95% of the shares of
any class of shares in the company proposes to acquire the remaining shares.
APPRAISAL RIGHTS. Georgia law grants shareholders the right to dissent and
receive payment of the fair value of their shares in the event of: (i)
amendments to the articles of incorporation materially and
62
<PAGE>
adversely affecting their rights or interests as shareholders; (ii) sales of all
or substantially all of the company's assets (unless the sale is pursuant to a
court order and the proceeds are distributed to the shareholders within one year
after the sale); or (iii) mergers or share exchanges on which the shareholders
are entitled to vote. This right is not available when the affected shares are
listed on a national securities exchange (as defined under Georgia law) or held
of record by more than 2,000 shareholders, unless (i) the articles of
incorporation or a resolution of the board of directors approving the
transaction provides otherwise or (ii) in a plan of merger or share exchange,
the holders of such shares are required to accept anything other than shares of
the surviving company or another publicly-held company listed on a national
securities exchange or held of record by more than 2,000 shareholders (except
for cash in lieu of fractional shares).
Under Bermuda law, a properly dissenting shareholder who did not vote in
favor of an amalgamation and who is not satisfied that he has been offered fair
value for his shares is entitled to receive the appraised value of his shares.
SHAREHOLDER RIGHTS PLAN. INBRAND does not have a shareholder rights plan.
In 1996, Tyco adopted a Shareholders Rights Plan (the "Tyco Shareholder Rights
Plan"). The Tyco Shareholders Rights Plan provides that unless certain actions
are taken by the Tyco Board of Directors, upon the Distribution Date (as defined
therein) each Right (as defined therein), other than those Rights owned by an
Acquiring Person (as defined therein) will become exercisable. Each Right
entitles its holder, among other things, to purchase Tyco Common Shares from
Tyco at a 50% discount from the market price of Tyco Common Shares on the
Distribution Date.
63
<PAGE>
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
INBRAND proxy to vote the proxy in accordance with the discretion of the persons
named in such proxy.
LEGAL MATTERS
The validity of the Tyco Common Shares to be issued to INBRAND shareholders
pursuant to the Merger will be passed upon by Appleby, Spurling & Kempe,
Hamilton, Bermuda, special counsel to Tyco. Certain other legal matters in
connection with the Merger will be passed upon for Tyco by Kramer, Levin,
Naftalis & Frankel, New York, New York, and by Appleby, Spurling & Kempe. Joshua
M. Berman, a director and vice president of Tyco, is counsel to Kramer, Levin,
Naftalis & Frankel and owns 36,000 Tyco Common Shares. Certain legal matters in
connection with the Merger will be passed upon for INBRAND by Miller & Martin,
Chattanooga, Tennessee.
EXPERTS
The supplemental consolidated financial statements of Tyco as of December
31, 1996 and 1995 and for each of the three years in the period ended December
31, 1996 included in Tyco's Current Report on Form 8-K and incorporated by
reference in this Proxy Statement/Prospectus give retroactive effect to the
merger between ADT Limited and Tyco International Ltd. (now Tyco International
(US) Inc.) and have been examined by Coopers & Lybrand. The consolidated
financial statements of ADT Limited as of December 31, 1996 and 1995 and for
each of the three years in the period ended December 31, 1996 (not separately
presented, but incorporated herein) have been audited by Coopers & Lybrand. The
consolidated financial statements of Tyco International Ltd. (now Tyco
International (US) Inc.) as of December 31, 1996 and for the year then ended
(not separately presented or incorporated herein) and as of June 30, 1996 and
1995 and for each of the three years in the period ended June 30, 1996 (not
separately presented, but incorporated herein) have been audited by Coopers &
Lybrand L.L.P. Such reports are incorporated by reference herein in reliance on
the authority of said firms as experts in accounting and auditing.
The consolidated financial statements incorporated in this Proxy
Statement/Prospectus by reference to the Annual Report on Form 10-K of INBRAND
for the year ended June 29, 1996, have been so incorporated in reliance on the
report of Joseph Decosimo and Company, LLP, certified independent public
accountants, given on the authority of said firm as experts in auditing and
accounting.
SHAREHOLDER PROPOSALS
Any INBRAND shareholder who wishes to submit a proposal for presentation to
INBRAND's 1998 Annual Meeting of Shareholders (if the Merger has not been
consummated prior to the date such meeting is to be held) must submit the
proposal to INBRAND, 1169 Canton Road, Marietta, GA 30066, Attention: James R.
Johnson. Such proposal must be received not later than July 22, 1998 for
inclusion, if appropriate, in INBRAND's proxy statement and form of proxy
relating to its 1998 Annual Meeting.
WHERE TO FIND MORE INFORMATION
Tyco and INBRAND file annual, quarterly and special reports, proxy
statements and other information with the Commission. You may read and copy any
reports, statements or other information filed by Tyco and INBRAND at the
Commission's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the Commission at 1-800-SEC-0330 for further
information on the public reference rooms. The filings of Tyco and INBRAND with
the Commission are also available to the public from commercial document
retrieval services and at the web site maintained by the Commission at
"http://www.sec.gov."
64
<PAGE>
Tyco filed a Registration Statement on Form S-4 to register with the
Commission the Tyco Common Shares to be issued to INBRAND shareholders in the
Merger. This Proxy Statement/Prospectus is a part of that Registration Statement
and constitutes a prospectus of Tyco in addition to being a proxy statement of
INBRAND. As allowed by Commission rules, this Proxy Statement/Prospectus does
not contain all the information you can find in the Registration Statement or
the exhibits to the Registration Statement.
The Commission allows Tyco and INBRAND to "incorporate by reference"
information into this Proxy Statement/Prospectus, which means that they can
disclose important information to you by referring you to another document filed
separately with the Commission. The information incorporated by reference is
deemed to be part of this Proxy Statement/Prospectus, except for any information
superseded by information in this Proxy Statement/Prospectus. This Proxy
Statement/Prospectus incorporates by reference the documents set forth below
that Tyco and INBRAND have previously filed with the Commission. These documents
contain important information about Tyco and INBRAND and their finances.
<TABLE>
<CAPTION>
TYCO COMMISSION FILINGS (FILE NO. 0-16979) PERIOD
- --------------------------------------------------- ------------------------------------------------------------
<S> <C>
Annual Report on Form 10-K Year Ended December 31, 1996
Quarterly Report on Form 10-Q Quarter Ended March 31, 1997
Current Reports on Form 8-K Filed on March 25, 1997 and July 10, 1997
OLD TYCO COMMISSION FILINGS (FILE NO. 1-5482) PERIOD
- --------------------------------------------------- ------------------------------------------------------------
Annual Report on Form 10-K Fiscal Year Ended June 30, 1996
Quarterly Reports on Form 10-Q Quarters Ended September 30, 1996, December 31, 1996 and
March 31, 1997
Current Reports on Form 8-K Filed on October 29, 1996, March 4, 1997, March 25, 1997 and
March 28, 1997
INBRAND COMMISSION FILINGS (FILE NO. 0-22144) PERIOD
- --------------------------------------------------- ------------------------------------------------------------
Annual Report on Form 10-K Fiscal Year Ended June 29, 1996
Quarterly Reports on Form 10-Q Quarters Ended September 28, 1996, December 28, 1996 and
March 29, 1997
Amended Annual Report on Form 10-K/A Filed December 9, 1996
Current Report on Form 8-K Filed on May 16, 1997
</TABLE>
Tyco and INBRAND are also incorporating by reference additional documents
that they file with the Commission between the date of this Proxy
Statement/Prospectus and the date of the Special Meeting.
Tyco has supplied all information contained or incorporated by reference in
this Proxy Statement/ Prospectus relating to Tyco, and INBRAND has supplied all
such information relating to INBRAND.
If you are a shareholder, Tyco and INBRAND may have sent you some of the
documents incorporated by reference, but you can obtain any of them through
Tyco, INBRAND or the Commission. Documents incorporated by reference are
available from Tyco and INBRAND without charge. Exhibits to the documents will
not be sent, however, unless those exhibits have specifically been incorporated
by reference as exhibits in this Proxy Statement/Prospectus. Shareholders may
obtain documents incorporated by
65
<PAGE>
reference in this Proxy Statement/Prospectus by requesting them in writing or by
telephone from the appropriate party at the following address:
<TABLE>
<S> <C>
Tyco International Ltd. INBRAND Corporation
Cedar House 1169 Canton Road
41 Cedar Avenue Marietta, Georgia 30066
Hamilton HM12, USA
Bermuda (770) 422-3036
(441) 292-2033
</TABLE>
If you would like to request documents from Tyco or INBRAND, please do so by
August 15, 1997 to receive them before the Special Meeting.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROXY STATEMENT/PROSPECTUS TO VOTE ON THE MERGER. NEITHER TYCO
NOR INBRAND HAS AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS
DIFFERENT FROM WHAT IS CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS. THIS PROXY
STATEMENT/PROSPECTUS IS DATED JULY 23, 1997. YOU SHOULD NOT ASSUME THAT THE
INFORMATION CONTAINED IN THE PROXY STATEMENT/PROSPECTUS IS ACCURATE AS OF ANY
DATE OTHER THAN SUCH DATE, AND NEITHER THE MAILING OF THIS PROXY
STATEMENT/PROSPECTUS TO SHAREHOLDERS NOR THE ISSUANCE OF TYCO COMMON SHARES IN
THE MERGER SHALL CREATE ANY IMPLICATION TO THE CONTRARY.
66
<PAGE>
LIST OF DEFINED TERMS
<TABLE>
<CAPTION>
DEFINED TERM PAGE NO.
- -------------------------------------------------------------------------------------------------------- -------------
<S> <C>
5% Shareholder.......................................................................................... 21
Acquiror Case........................................................................................... 17
Acquisition Proposals................................................................................... 30
ADT..................................................................................................... 2
ADT Merger.............................................................................................. 2
affiliates.............................................................................................. 24
Antitrust Division...................................................................................... 24
Armin................................................................................................... 40
Base Case............................................................................................... 17
Carlisle................................................................................................ 40
Certificate of Merger................................................................................... 13
City Code............................................................................................... 61
Closing Price........................................................................................... 27
Code.................................................................................................... 20
Commission.............................................................................................. 6
Composite Index......................................................................................... 17
Conservative Case....................................................................................... 17
Convertible Preference Shares........................................................................... 52
DCF..................................................................................................... 17
Earth Tech.............................................................................................. 45
EBITDA.................................................................................................. 17
Effective Time.......................................................................................... 13
Exchangeable Preference Shares.......................................................................... 52
Exchange Act............................................................................................ 24
Exchange Agent.......................................................................................... 27
Exchange Ratio.......................................................................................... 13
Fee..................................................................................................... 25
First Preference Shares................................................................................. 52
fiscal 1996............................................................................................. 10
fiscal 1997............................................................................................. 10
FTC..................................................................................................... 23
GBCC.................................................................................................... 25
Grinnell................................................................................................ 43
HSR Act................................................................................................. 23
INBRAND................................................................................................. 2
INBRAND Articles........................................................................................ 54
INBRAND Bylaws.......................................................................................... 54
INBRAND Common Stock.................................................................................... 12
INBRAND France.......................................................................................... 48
IRS..................................................................................................... 21
Kendall................................................................................................. 40
Keystone................................................................................................ 47
LTM..................................................................................................... 17
Material Adverse Effect................................................................................. 28
Merger.................................................................................................. 11
Merger Agreement........................................................................................ 11
Merger Consideration.................................................................................... 27
</TABLE>
67
<PAGE>
<TABLE>
<CAPTION>
DEFINED TERM PAGE NO.
- -------------------------------------------------------------------------------------------------------- -------------
<S> <C>
Merger Sub.............................................................................................. 11
Nasdaq/NMS.............................................................................................. 39
NYSE.................................................................................................... 25
Old Tyco................................................................................................ 12
Old Tyco Stock.......................................................................................... 14
Opposing Proposal....................................................................................... 37
Preference Shares....................................................................................... 52
Publication Time........................................................................................ 37
Record Date............................................................................................. 11
Related Transaction..................................................................................... 37
Sale.................................................................................................... 37
Salomon................................................................................................. 14
SARs.................................................................................................... 61
S&P 500 Index........................................................................................... 17
Selected Public Companies............................................................................... 18
Securities Act.......................................................................................... 24
SFAS 121................................................................................................ 6
Shareholders............................................................................................ 37
Shareholder Agreements.................................................................................. 37
Special Meeting......................................................................................... 11
Standalone Case......................................................................................... 17
Stock Option............................................................................................ 23
Surviving Corporation................................................................................... 26
T5...................................................................................................... 11
Terminating Breach...................................................................................... 35
Terminating Misrepresentation........................................................................... 35
TIN..................................................................................................... 22
Thorn................................................................................................... 43
TSS..................................................................................................... 46
transferor company...................................................................................... 62
transferee company...................................................................................... 62
Tyco.................................................................................................... 2
ADT Merger.............................................................................................. 2
Tyco Bye-laws........................................................................................... 52
Tyco Common Shares...................................................................................... 12
Tyco Memorandum......................................................................................... 52
Tyco Shareholder Rights Plan............................................................................ 63
Tyco Stock.............................................................................................. 39
United States Holder.................................................................................... 22
WACCs................................................................................................... 17
Wormald................................................................................................. 43
</TABLE>
68
<PAGE>
ANNEX A
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
TYCO INTERNATIONAL LTD.,
T5 ACQUISITION CORP.
AND
INBRAND CORPORATION
DATED AS OF MAY 12, 1997
<PAGE>
TABLE OF CONTENTS
ARTICLE I
THE MERGER
<TABLE>
<S> <C> <C>
SECTION 1.01. The Merger........................................................... A-1
SECTION 1.02. Effective Time....................................................... A-1
SECTION 1.03. Effect of the Merger................................................. A-2
SECTION 1.04. Articles of Incorporation; By-Laws................................... A-2
SECTION 1.05. Directors and Officers............................................... A-2
SECTION 1.06. Effect on Capital Stock.............................................. A-2
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-5
SECTION 1.11. Tax and Accounting Consequences...................................... A-5
SECTION 1.12. Taking of Necessary Action; Further Action........................... A-5
SECTION 1.13. Material Adverse Effect.............................................. A-5
SECTION 1.14. Termination of ADT Merger............................................ A-6
</TABLE>
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
<TABLE>
<S> <C> <C>
SECTION 2.01. Organization and Qualification; Subsidiaries......................... A-6
SECTION 2.02. Articles of Incorporation and By-Laws................................ A-6
SECTION 2.03. Capitalization....................................................... A-6
SECTION 2.04. Authority Relative to this Agreement................................. A-7
SECTION 2.05. No Conflict; Required Filings and Consents........................... A-7
SECTION 2.06. Compliance; Permits.................................................. A-8
SECTION 2.07. SEC Filings; Financial Statements.................................... A-8
SECTION 2.08. Absence of Certain Changes or Events................................. A-9
SECTION 2.09. No Undisclosed Liabilities........................................... A-9
SECTION 2.10. Absence of Litigation................................................ A-9
SECTION 2.11. Employee Benefit Plans; Employment Agreements........................ A-9
SECTION 2.12. Labor Matters........................................................ A-12
SECTION 2.13. Registration Statement; Proxy Statement/Prospectus................... A-12
SECTION 2.14. Restrictions on Business Activities.................................. A-13
SECTION 2.15. Title to Property.................................................... A-13
SECTION 2.16. Taxes................................................................ A-13
SECTION 2.17. Environmental Matters................................................ A-14
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-16
SECTION 2.25. Opinion of Financial Advisor......................................... A-16
SECTION 2.26. Pooling Matters...................................................... A-16
</TABLE>
<PAGE>
<TABLE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
<S> <C> <C>
SECTION 3.01. Organization and Qualification; Subsidiaries......................... A-17
SECTION 3.02. Articles of Organization and By-Laws................................. A-17
SECTION 3.03. Capitalization....................................................... A-17
SECTION 3.04. Authority Relative to this Agreement................................. A-18
SECTION 3.05. No Conflict; Required Filings and Consents........................... A-18
SECTION 3.06. Compliance; Permits.................................................. A-19
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-20
SECTION 3.10. Absence of Litigation................................................ A-20
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-24
SECTION 3.16. Taxes................................................................ A-24
SECTION 3.17. Environmental Matters................................................ A-25
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-26
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-27
SECTION 3.26. Pooling Matters...................................................... A-27
</TABLE>
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
<TABLE>
<S> <C> <C>
SECTION 4.01. Conduct of Business by the Company Pending the Merger................ A-27
SECTION 4.02. No Solicitation...................................................... A-29
SECTION 4.03. Conduct of Business by Parent Pending the Merger..................... A-30
</TABLE>
ARTICLE V
ADDITIONAL AGREEMENTS
<TABLE>
<S> <C> <C>
SECTION 5.01. Proxy Statement/Prospectus; Registration Statement................... A-30
SECTION 5.02. Company Shareholders Meeting......................................... A-30
SECTION 5.03. Access to Information; Confidentiality............................... A-31
SECTION 5.04. Consents; Approvals.................................................. A-31
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-33
SECTION 5.10. Listing of Parent Shares............................................. A-33
SECTION 5.11. Conveyance Taxes..................................................... A-33
SECTION 5.12. Accountant's Letters................................................. A-33
SECTION 5.13. Pooling Accounting Treatment......................................... A-33
</TABLE>
<PAGE>
<TABLE>
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-35
</TABLE>
ARTICLE VII
TERMINATION
<TABLE>
<S> <C> <C>
SECTION 7.01. Termination.......................................................... A-36
SECTION 7.02. Effect of Termination................................................ A-37
SECTION 7.03. Fees and Expenses.................................................... A-37
</TABLE>
ARTICLE VIII
GENERAL PROVISIONS
<TABLE>
<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-40
SECTION 8.05. Waiver............................................................... A-40
SEC7ION 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-41
SECTION 8.11. Failure or Indulgence Not Waiver; Remedies Cumulative................ A-41
SECTION 8.12. Governing Law; Jurisdiction.......................................... A-41
SECTION 8.13. Counterparts......................................................... A-41
SECTION 8.14. WAIVER OF JURY TRIAL................................................. A-41
</TABLE>
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 12, 1997 (this "Agreement"),
among TYCO INTERNATIONAL LTD., a Massachusetts corporation ("Parent"), T5
ACQUISITION CORP., a Georgia corporation and a direct, wholly-owned subsidiary
of Parent ("Merger Sub"), and INBRAND CORPORATION, a Georgia 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 shareholders 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 Georgia Business Corporation Code (the "GBCC"), 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 of the Internal Revenue Code of 1986, as
amended (the "Code"), and the regulations promulgated thereunder;
WHEREAS, Parent, Merger Sub and the Company intend that the Merger be
accounted for as a pooling-of-interests for financial reporting purposes; and
WHEREAS, pursuant to the Merger, each outstanding share (a "Share") of the
Company's Common Stock, par value $.10 per share (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:
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 GBCC, 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 articles of merger as
contemplated by the GBCC (the "Articles of Merger"), together with any required
related certificates, with the Secretary of State of the State of Georgia, in
such form as required by, and
A-1
<PAGE>
executed in accordance with the relevant provisions of, the GBCC (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 Articles of Merger and the
applicable provisions of the GBCC. 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. ARTICLES OF INCORPORATION; BY-LAWS. (a) ARTICLES 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 Articles of
Incorporation of the Surviving Corporation until thereafter amended as provided
by the GBCC and such Articles of Incorporation; PROVIDED, HOWEVER, that Article
2 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 GBCC, the Articles 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.
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 New
Tyco Common Stock in the ratio (the "Exchange Ratio") of .43 a share of New Tyco
Common Stock for each such issued and outstanding Share. "New Tyco Common Stock"
means the common shares of ADT Limited, a Bermuda corporation ("ADT"), par value
$.10 per share, outstanding following the merger (the "ADT Merger") of Limited
Apache ("Apache"), a Massachusetts corporation and a wholly-owned subsidiary of
ADT, with and into Parent, pursuant to the terms of a Merger Agreement, dated
March 17, 1997, among ADT, Apache and Parent (the "ADT Merger Agreement"). The
ADT Merger Agreement provides, among other things, that (i) Apache will be
merged with Parent, with Parent being the surviving company in such merger, (ii)
each share of common stock of Parent, par value $.50 per share ("Parent Common
Stock"), will be exchanged in the ADT Merger for one share of New Tyco Common
Stock (the ratio of such exchange being referred to as the "ADT/Tyco Exchange
Ratio"), (iii) each common share of ADT, par value $.20 per share, outstanding
prior to the ADT Merger, as a result of a reverse stock split to occur
immediately prior to the ADT Merger, will be exchanged for 0.48133 shares of New
Tyco Common Stock (the ratio of such reverse stock split being referred to as
the "ADT Reverse Stock Split Ratio"), and (iv) the name of ADT will changed to
Tyco International Ltd. (ADT, following consummation of the ADT Merger, being
referred to as "New Tyco").
(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
A-2
<PAGE>
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 Company Common Stock (a "Stock Option")
granted under (i) the Inbrand Corporation Stock Incentive Plan (the "Company
Stock Option Plan"), or (ii) any other stock plan or agreement of the Company,
which by its terms is not extinguished in the Merger, shall be deemed assumed by
Parent and deemed to constitute an option to acquire, on the same terms and
conditions MUTATIS MUTANDIS as were applicable under such Stock Option prior to
the Effective Time, the number of shares of New 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 (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 shares of New Tyco Common Stock deemed purchasable pursuant
to such Stock Option; PROVIDED, HOWEVER, that the number of shares of New 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 New 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 New Tyco Common Stock on the
New York Stock Exchange ("NYSE").
As soon as practicable after the Effective Time, Parent shall cause to be
delivered 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.
Parent shall cause to be taken all corporate action necessary to reserve for
issuance a sufficient number of shares of New Tyco 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 New Tyco 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-8, as the case may be (or any successor or
other appropriate forms), and shall use its best efforts to cause the
effectiveness of such registration statement or registration statements (and the
current status of the prospectus or prospectuses contained therein) to be
maintained for so long as the Stock Options remain outstanding.
(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 appropriately
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
consummation of the ADT Merger and any such change with respect to the New Tyco
Common Stock occurring after the consummation of the ADT Merger and prior to the
Effective Time or any change in the ADT/Tyco Exchange Ratio or the ADT Reverse
Stock Split Ratio.
(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
share of New Tyco Common Stock upon surrender of Certificates for exchange shall
be paid upon such surrender cash (without interest) in an
A-3
<PAGE>
amount equal to such fraction multiplied by the closing price per share of New
Tyco Common Stock on the NYSE on the date of the Effective Time.
SECTION 1.07. EXCHANGE OF CERTIFICATES. (a) EXCHANGE AGENT. Parent shall
cause to be supplied, to or for such 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
shares of New Tyco Common Stock 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 shares of New Tyco Common Stock. 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 shares of New Tyco Common Stock 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 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 shares of New
Tyco Common Stock 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, shares of New Tyco Common Stock,
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 shares of New Tyco Common Stock,
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 SHARES. No dividends or other
distributions declared or made after the Effective Time with respect to shares
of New Tyco Common Stock with a record date after the Effective Time shall be
paid to the holder of any unsurrendered Certificate with respect to the shares
of New Tyco Common Stock 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 shares of New Tyco Common Stock
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 shares of New Tyco
Common Stock.
(d) TRANSFERS OF OWNERSHIP. If any certificate for shares of New Tyco Common
Stock 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 New Tyco or any agent designated by it any transfer
or other taxes required by reason of the issuance of a certificate for shares of
New Tyco Common Stock in any name other than that of the registered holder of
the certificate surrendered, or established to the satisfaction of New Tyco or
any agent designated by it that such tax has been paid or is not payable.
A-4
<PAGE>
(e) NO LIABILITY. Neither Parent, Merger Sub, the Company nor New Tyco 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. New Tyco 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 New Tyco 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 New Tyco 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 New Tyco 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 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 shares of New
Tyco Common Stock 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) subject to applicable accounting standards,
qualify for accounting treatment as a pooling of interests. 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, Parent or any of its subsidiaries or New
Tyco 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, Parent and its subsidiaries,
or New Tyco and its subsidiaries as the case may be, in each case taken as a
whole.
A-5
<PAGE>
SECTION 1.14 TERMINATION OF THE ADT MERGER. In the event that the ADT Merger
Agreement is terminated such that the consummation of the ADT Merger shall cease
to be a condition to the consummation of the Merger as provided in Section
6.01(h), all references in this Agreement to ADT or New Tyco (other than in the
second and third sentences of Section 1.06(a)) shall be deemed references to
Parent and all references to New Tyco Common Stock (other than in the second and
third sentences of Section 1.06(a)) shall be deemed references to Parent Common
Stock.
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. ARTICLES OF INCORPORATION AND BY-LAWS. The Company has
heretofore furnished to Parent a complete and correct copy of its Articles of
Incorporation and By-Laws as most recently restated and subsequently amended to
date, and has furnished or made available to Parent the Articles of
Incorporation and By-Laws (or equivalent organizational documents) of each of
its subsidiaries (the "Subsidiary Documents"). Such Articles 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 49,000,000 shares of Company Common Stock and 1,000,000 shares of
Preferred Stock, par value $.01 (the "Company Preferred Stock"). As of May 1,
1997, (i) 11,766,323 shares of Company 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) no shares of Company Preferred Stock were
outstanding or held in treasury, (iii) no shares of Company Common Stock or
Company Preferred Stock were held by subsidiaries of the Company, and (iv)
1,750,000 shares of Company Common Stock were reserved for existing and future
grants pursuant to the Company Stock Option Plan. No material change in such
capitalization has occurred between May 1,
A-6
<PAGE>
1997 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 GBCC and the Company's Articles 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 shareholders 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
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;
and (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").
(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
A-7
<PAGE>
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 would 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 GBCC, 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 would 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 would 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 July 1,
1993 and has made available to Parent (i) its Annual Reports on Form 10-K for
the fiscal years ended July 2, 1994, July 1, 1995 and June 29, 1996, (ii) its
Quarterly Report on Form 10-Q for the quarterly periods ended September 28, 1996
and December 28, 1996, and, (iii) all proxy statements relating to the Company's
meetings of shareholders (whether annual or special) held since July 1, 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 July 1, 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
A-8
<PAGE>
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 1996 Annual Report to Shareholders 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
statements for January 1997 through March 1997 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 June 28, 1996, 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 Articles 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 sale of a material amount of property of
the Company, except in the ordinary course of business, or (vii) 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.
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 June 29, 1996 included in the Company's 1996
Annual Report to Shareholders (the "1996 Balance Sheet"), (b) incurred in the
ordinary course of business and not required under GAAP to be reflected on the
1996 Balance Sheet, (c) incurred since June 29, 1996 in the ordinary course of
business consistent with past practice, (d) incurred in connection with this
Agreement, or (e) which would not reasonably be expected to have a Material
Adverse Effect.
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 would 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 benefit
plans (as defined in Section 3(2) of the Employee
A-9
<PAGE>
Retirement Income Security Act of 1974, as amended ("ERISA")), all employee
welfare benefit 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 Sections 414(b), (c), (m)
or (o) of the Code or Section 4001(a) (14) or (b) 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 Title IV of ERISA or Section 412 of the
Code (together for the purposes of this Section 2.11, the "Employee Plans").
Prior to the date of this Agreement, the Company has provided to Parent copies
of (i) each such written Employee Plan (or a written description of any Employee
Plan which is not written) 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) the most recent favorable determination letters issued for
each Employee Plan and related trust which is subject to Parts 1, 2 and 4 of the
Subtitle B of Title I of ERISA (and, if an application for such determination is
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 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 which is subject to Parts 1, 2 and 4
of Subtitle B of ERISA 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;
A-10
<PAGE>
(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) or any event described in Section 4062, 4063 or 4041 of ERISA has
occurred for which there is any material outstanding liability to the Company or
any ERISA Affiliate nor would the consummation of the transaction contemplated
hereby (including the execution of this agreement) constitute a reportable event
for which the 30-day requirement has not been waived; 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; (ii) any shares of
Company Common Stock that are restricted; and (iii) any other right, directly or
indirectly, to receive 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 any such ISOs and any
such nonqualified options and other such rights.
(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 agreements with respect
to the services of independent contractors or leased employees whether or not
they participate in any of the Employee Plans; (iv) 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; (v) 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
plans, programs, agreements and other arrangements of Company 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 Employee Benefit Plan that is subject to Title IV
of ERISA (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 any Defined Benefit
Plan which would give rise to a lien on the assets of the Company under Section
4068 of ERISA or otherwise. All the assets of the Defined Benefit Plans are
readily marketable securities or insurance contracts.
(f) Except as provided in Schedule 2.11(f) of the Company Disclosure
Schedule, (i) the Company has never maintained an employee stock ownership plan
(within the meaning of Section 4975(e)(7) of the Code) or any other Employee
Plan that invests in Company stock; (ii) the Company has not proposed nor agreed
to any increase in benefits under any Employee Plan (or the creation of new
benefits) or change in employee coverage which would increase the expense of
maintaining any Employee Plan; (iii) the
A-11
<PAGE>
consummation of the transactions contemplated by this Agreement will not result
in an increase in the amount of compensation or benefits or accelerate the
vesting or timing of payment of any benefits or compensation payable in respect
of any employee; (iv) no person will be entitled to any severance benefits under
the terms of any Employee Plan solely by reason of the consummation of this
transaction contemplated by this Agreement. All actions required to be taken by
a fiduciary of any Employee Plan in order to effectuate the transaction
contemplated by this Agreement shall comply with the terms of such Plan, ERISA
and other applicable laws. All actions required to be taken by a trustee of any
Employee Plan that owns Company stock shall have been duly authorized by the
appropriate fiduciaries of such Plan, and shall comply with the terms of such
Plan, ERISA and other applicable laws.
(g) Each Employee Plan covering non-U.S. employees (an "International Plan")
has been maintained in substantial compliance with its terms and with the
requirements prescribed by any and all applicable Laws (including any special
provisions relating to registered or qualified plans where such International
Plan was intended to so qualify) and has been maintained in good standing with
applicable regulatory authorities. The fair market value of the assets of each
funded International Plan (or the liability of each funded International Plan
funded through insurance) is sufficient to procure or provide for the benefits
accrued thereunder through the Closing Date according to the actuarial
assumptions and valuations most recently used to determine employer
contributions to the International Plan.
(h) 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 would 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 would
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 shareholders of the Company
in connection with the meeting of the shareholders of the Company to consider
the Merger (the "Company Shareholders 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 shareholders, at
the time of the Company Shareholders 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 Shareholders 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
A-12
<PAGE>
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 would 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 would not reasonably be
expected to have a Material Adverse Effect.
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) The Company on behalf of itself and all of its subsidiaries hereby
represents that, 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 timely and accurately completed and 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 timely 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 unless the failure to do so would 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 would
reasonably be expected to have a Material Adverse
A-13
<PAGE>
Effect, (i) there are no tax liens on any assets of the Company or any
subsidiary thereof; (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; (iii) no unpaid (or
unreserved) deficiencies for Taxes have been claimed, proposed or assessed by
any taxing or other governmental authority with respect to the Company or any of
its subsidiaries; (iv) there are no pending or threatened audits, investigations
or claims for or relating to any liability in respect of Taxes of the Company or
any of its subsidiaries; and (v) neither the Company nor any of its subsidiaries
has requested any extension of time within which to file any currently unfiled
returns in respect of any Taxes. The accruals and reserves for Taxes (including
deferred taxes) reflected in the 1996 Balance Sheet are in all material respects
adequate to cover all Taxes accruable through the date thereof (including 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 would not reasonably be expected to have a
Material Adverse Effect: (i) 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; (ii) 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) during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code; (iii) 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; (iv) neither the Company nor any of its subsidiaries has filed or been
included in a combined, consolidated or unitary return (or substantial
equivalent thereof) of any Person other than the Company and its subsidiaries;
(v) neither the Company nor any of its subsidiaries is liable for Taxes of any
Person other than the Company and its subsidiaries, or currently under any
contractual obligation to indemnify any Person with respect to Taxes, or a party
to any tax sharing agreement or any other agreement providing for payments by
the Company or any of its subsidiaries with respect to Taxes; (vi) neither the
Company nor any of its subsidiaries is a party to any joint venture, partnership
or other arrangement or contract which could be treated as a partnership for
United States federal income tax purposes; (vii) neither the Company nor any of
its subsidiaries is a party to any agreement, contract, arrangement or plan that
would result (taking into account the transactions contemplated by this
Agreement), separately or in the aggregate, in the payment of any "excess
parachute payments" within the meaning of Section 280G of the Code; (viii) the
prices for any property or services (or for the use of property) provided by the
Company or any of its subsidiaries to any other subsidiary or to the Company
have been arm's length prices determined using a method permitted by the
Treasury Regulations under Section 482 of the Code; (ix) neither the Company nor
any of its subsidiaries is a "consenting corporation" under Section 341 (f) of
the Code or any corresponding provision of state, local or foreign law; and (x)
neither the Company nor any of its subsidiaries has made an election or is
required to treat any of its assets as owned by another Person for federal
income tax purposes or as tax-exempt bond financed property or tax-exempt use
property within the meaning of Section 168 of the Code (or any corresponding
provision of state, local or foreign law).
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 would 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,
A-14
<PAGE>
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
Salomon Brothers Inc, 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
Salomon Brothers Inc pursuant to which such firm 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 would not reasonably be expected to have a Material Adverse
Effect.
(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;
A-15
<PAGE>
(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 September 25, 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. Except as disclosed in Section 2.22 of the Company
Disclosure Schedule, 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 would reasonably be expected to have a Material Adverse Effect.
(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 would 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 material amounts of 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, Salomon Brothers Inc, to the effect that in its opinion,
as of the date hereof, the Exchange Ratio is fair from a financial point of view
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.
A-16
<PAGE>
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 of Parent Disclosure
Schedule. 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 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 500,000,000 shares of Parent Common Stock and 2,000,000 shares of
Preferred Stock, $1 par value ("Parent Preferred Stock"). As of April 25, 1997,
(i) 168,341,585 shares of Parent Common Stock were issued and outstanding, all
of which are validly issued, fully paid and non-assessable, and 12,992,640
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) 1,606,065
shares of Parent Common Stock were reserved for future issuance under Parent's
1994 Restricted Stock Ownership Plan, (v) 210,178 shares of Parent Common Stock
were reserved for issuance upon exercise of Warrants issued by Kendall
International, Inc. and assumed by Parent, (vi) 7,983,727 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) 26,084
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 25, 1997 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
A-17
<PAGE>
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 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 New Tyco 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. (a) 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 best interest of Parent's shareholders 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.
(b) At or prior to the filing of the Registration Statement of which the
Proxy Statement/Prospectus forms a part, ADT or New Tyco will have duly and
validly authorized the issuance of the New Tyco Common Stock in the Merger in
accordance with the terms of this Agreement.
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 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 $10,000,000 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 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
A-18
<PAGE>
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 would not reasonably be
expected to have a Material Adverse Effect and except possibly with respect to
the ADT Merger Agreement, as to which any necessary consents have heretofore
been obtained by Parent.
(c) Except as set forth in Section 3.05(c) of the Parent Disclosure
Schedule, the execution and delivery of this Agreement by Parent will not, and
the performance of this Agreement by Parent will not, at the Effective Time (i)
conflict with or violate the Memorandum of Association or Bye-Laws of New Tyco,
(ii) conflict with or violate any law, rule, regulation, order, judgment or
decree applicable to New Tyco 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 New Tyco'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 New Tyco 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 New Tyco or any of its
subsidiaries is a party or by which New Tyco 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 would not reasonably be expected to have a Material Adverse Effect.
(d) 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 GBCC, 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.
SECTION 3.06. COMPLIANCE; PERMITS. (a) Except as disclosed in Section
3.06(a) 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 would not reasonably
be expected to have a Material Adverse Effect.
(b) Except as disclosed in Section 3.06(b) 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 would not reasonably be expected to have a Material Adverse Effect.
A-19
<PAGE>
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,
1994, and has heretofore delivered to the Company, in the form filed with the
SEC, (i) its Annual Reports on Form 10-K for the fiscal years ended June 30,
1994, 1995 and 1996, (ii) its Quarterly Reports on Form 10-Q for the quarterly
periods ending September 30, 1996 and December 31, 1996, (iii) all proxy
statements relating to Parent's meetings of shareholders (whether annual or
special) held since June 30, 1994, (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, 1993, 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, 1996, 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 sale of a material
amount of assets of Parent, except in the ordinary course of business, or (vii)
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 Agreement.
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, 1996
included in Parent's Annual Report on Form 10-K for the fiscal year ended June
30, 1996 (the "June 1996 Balance Sheet"), (b) incurred in the ordinary course of
business and not required under GAAP to be reflected on the June 1996 Balance
Sheet, (c) incurred since June 30, 1996 in the ordinary course of business and
consistent with past practice, (d) incurred in connection with this Agreement,
or (e) which would 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 would
reasonably be expected to have a Material Adverse Effect.
A-20
<PAGE>
SECTION 3.11. EMPLOYEE BENEFIT PLANS; EMPLOYMENT AGREEMENTS. (a) Section
3.11(a) of the Parent Disclosure Schedule lists all employee pension benefit
plans (as defined in Section 3(2) of ERISA), all employee welfare benefit 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 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(b),
(c), (m) or (o) of the Code or Section 4001(a) (14) or (b) 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 Title IV of ERISA or Section 412 of
the Code (together for the purposes of this Section 5.11, the "Employee Plans").
Prior to the date of this Agreement, the Parent has provided to the Company
copies of (i) each such written Employee Plan or a written description of any
Employee Plan which is not written 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, and (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 a filing and (v) the most recent favorable determination
letters issued for each Employee Plan and related trust that is subject to Parts
1, 2, and 4 of Subtitle B of Title I of ERISA (and, if an application for such
determination is pending, a copy of the application). 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 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
may by their terms be amended and/or terminated at any time subject to
applicable law 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; (v) each
Employee Plan which is subject to Parts 1, 2 and 4 of Subtitle B of ERISA 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
A-21
<PAGE>
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) or any event described in Section 4062, 4063 or 4041 of ERISA has
occurred for which there is any material outstanding liability to the Parent or
any ERISA Affiliates; nor would the consummation of the transaction contemplated
hereby (including the execution of this agreement) constitute a reportable event
for which the 30-day requirement has not been waived; and (viii) neither Parent
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 PBGC 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 shares of Parent
stock that are restricted (iii) any other right, directly or indirectly, to
receive 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 any such ISOs and any, 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 agreements with respect to the services
of independent contractors or leased employees whether or not they participate
in any of the Employee Plans; (iv) all officers of Parent or any of its
subsidiaries who have executed a non-competition agreement with Parent or any of
its subsidiaries; (v) 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, excluding programs and policies
required to be maintained by law; and (vi) 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(e) 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 Employee Plan that is subject to Title IV of ERISA (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. As of June 30, 1996,
the funded ratio of the Defined Benefit Plans was approximately 100%. This
funded ratio was determined based on the Accumulated Benefit Obligation
(utilizing disclosure assumptions used by Parent in its consolidated financial
statements) and the fair market value of the Defined Benefit Plans' assets as of
June 30, 1996. 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 any Defined Benefit Plan which would give rise to a lien
on the assets of Parent under Section 4068 of ERISA or otherwise. All the assets
of the Defined Benefit Plans are readily marketable securities or insurance
contracts.
(f) Except as provided in Schedule 3.11(f) of the Parent Disclosure
Schedule, the Parent has never maintained an employee stock ownership plan
(within the meaning of Section 4975(e)(7) of the Code) or any other Employee
Plan that invests in Parent stock. All actions required to be taken by a
fiduciary of any Employee Plan in order to effectuate the transaction
contemplated by this Agreement shall comply with the terms of such Plan, ERISA
and other applicable laws. All actions required to be taken by a trustee of
A-22
<PAGE>
any Employee Plan that owns Parent stock shall have been duly authorized by the
appropriate fiduciaries of such Plan, and shall comply with the terms of such
Plan, ERISA and other applicable laws.
(g) Each Employee Plan covering non-U.S. employees (an "International Plan")
has been maintained in substantial compliance with its terms and with the
requirements prescribed by any and all applicable Laws (including any special
provisions relating to registered or qualified plans where such International
Plan was intended to so qualify) and has been maintained in good standing with
applicable regulatory authorities. The benefit liabilities of the International
Plans are adequately provided for on the consolidated financial statements of
Parent.
(h) 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 would 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 would 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 New
Tyco 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 shareholders, at the time of the Company
Shareholders 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 Shareholders 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 would 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
A-23
<PAGE>
or as proposed to be conducted by Parent, except for any prohibition or
impairment as would 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
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 would 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
timely and accurately completed and 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 timely 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 unless the failure to do so would not reasonably be
expected to have a Material Adverse Effect. Except as does not involve or would
not result in liability to Parent that would reasonably be expected to have a
Material Adverse Effect, (i) there are no tax liens on any assets of Parent or
any subsidiary thereof; (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; (iii) no unpaid (or
unreserved) deficiencies for Taxes have been claimed, proposed or assessed by
any taxing or other governmental authority with respect to Parent or any of its
subsidiaries; (iv) there are no pending or threatened audits, investigations or
claims for or relating to any liability in respect of Taxes of Parent or any of
its subsidiaries; and (v) neither Parent nor any of its subsidiaries has
requested any extension of time within which to file any currently unfiled
returns in respect of any Taxes. The accruals and reserves for taxes (including
deferred taxes) reflected in the June 1996 Balance Sheet are in all material
respects adequate to cover all Taxes accruable through the date thereof
(including 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: (i) 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; (ii) neither Parent nor any of its subsidiaries has filed or been
included in a combined, consolidated or unitary return (or substantial
equivalent thereof) of any Person other than Parent and its subsidiaries; (iii)
neither Parent nor any of its subsidiaries is liable for Taxes of any Person nor
any of its subsidiaries; (iv) neither Parent nor any of its subsidiaries is
liable for Taxes of any Person other than Parent and its subsidiaries, or
currently under any contractual obligation to indemnify any Person with respect
to Taxes, or a party to any tax sharing agreement or any other agreement
providing for payments by Parent or any of its subsidiaries with respect to
Taxes; (v) neither Parent nor any of its subsidiaries is a party to any joint
venture, partnership or other arrangement or contract which could be treated as
a partnership for United States federal income tax purposes; (vi) neither Parent
nor any of its subsidiaries is
A-24
<PAGE>
a party to any agreement, contract, arrangement or plan that would result
(taking into account the transactions contemplated by this Agreement),
separately or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code; (vii) the prices for
any property or services (or for the use of property) provided by Parent or any
of its subsidiaries to any other subsidiary or to Parent have been arm's length
prices determined using a method permitted by the Treasury Regulations under
Section 482 of the Code; (viii) neither Parent nor any of its subsidiaries is a
"consenting corporation" under Section 341(f) of the Code or any corresponding
provision of state, local or foreign law; and (ix) neither Parent nor any of its
subsidiaries has made an election or is required to treat any of its assets as
owned by another Person for federal income tax purposes or as tax-exempt bond
financed property or tax-exempt use property within the meaning of Section 168
of the Code (or any corresponding provision of state, local or foreign law).
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 would 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 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 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 would 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
A-25
<PAGE>
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 or 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 20, 1996, 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 3.22. INSURANCE. Except as disclosed in Section 3.22 of the Parent
Disclosure Schedule, 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(a) 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 would
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 would 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.
A-26
<PAGE>
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 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 Articles 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 the Company Stock Option Plan, 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);
A-27
<PAGE>
(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, except
for borrowings and reborrowing under the Company's existing credit
facilities 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) authorize any capital expenditures or purchase of fixed
assets which are, in the aggregate, in 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 (iv) 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, in excess of $100,000 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, agreement, Employee
Plan (within the meaning of Section 2.11 of this Agreement), trust, fund,
policy or arrangement for the benefit of any current or former directors,
officers or employees or any of their beneficiaries, 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.
A-28
<PAGE>
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 shareholders of the Company a bona fide
Acquisition Proposal not solicited in violation of this Agreement, (ii) taking
and disclosing to its shareholders a position contemplated by Exchange Act Rule
14e-2 or (iii) making any disclosure to its shareholders; 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 made, an Acquisition Proposal.
Such notice to Parent shall be made orally and in writing, and shall indicate
the identity of the person making the Acquisition Proposal or intending to make
an Acquisition Proposal or requesting non-public information or access to the
books and records of Parent, the terms of any such Acquisition Proposal or
modification or amendment to an Acquisition Proposal, and 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.
(d) Anything to the contrary in this Section or elsewhere in this Agreement
notwithstanding, the Board of Directors of the Company shall not (i) withdraw or
modify, or propose to withdraw or modify, in a manner adverse to Parent, the
approval or recommendation by such Board of Directors of the matters set forth
in Section 5.02, (ii) approve or recommend, or propose to approve or recommend,
any Acquisition Proposal or (iii) cause the Company to enter into any agreement
with respect to any Acquisition Proposal, except (x) upon the advice of
independent counsel that it is required to cause the Company to act as provided
in this Section 4.02(d) in order for the Board of Directors to act in a manner
consistent with its fiduciary duties and (y) with respect to the approval or
recommendation of any Acquisition Proposal or entering into any agreement with
respect to any Acquisition Proposal, after the third business day following
Parent's receipt of written notice of the information with respect to such
Acquisition Proposal, and, if applicable, the second business day after Parent's
receipt of written notice of the information with respect to all material
amendments or modifications thereto, in each case as contemplated by Section
4.02(b) above.
(e) 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.
A-29
<PAGE>
(f) 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 Disclosure Schedule or as
contemplated by the ADT Merger Agreement 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 $0.05 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.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT. As
promptly as practicable after the execution of this Agreement, the Company shall
prepare and file with the SEC preliminary proxy materials which shall constitute
the Proxy Statement/Prospectus. 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 shall file and
Parent shall cause ADT or New Tyco to 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 shareholders 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 SHAREHOLDERS MEETING. The Company shall call the
Company Shareholders 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 Shareholders 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 shareholders proxies in favor of adoption of this Agreement and
approval of
A-30
<PAGE>
the transactions contemplated thereby, and shall take all other action necessary
or advisable to secure the vote or consent of shareholders 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 March 21, 1996 (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.
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 Shareholders
Meeting, "affiliates" of the Company for purposes of Rule 145 under the
Securities Act ("Rule 145"), or the rules and regulations of the SEC relating to
pooling of interests accounting treatment for merger transactions (the "Pooling
Rules") . 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, no
less than 35 days prior to the date of the Company Shareholders Meeting a
written agreement (an "Affiliate Agreement") in connection with restrictions on
affiliates under Rule 145 and, pooling of interests accounting treatment, in
form mutually agreeable to the Company and Parent.
SECTION 5.06. INDEMNIFICATION AND INSURANCE. (a) The By-Laws and Articles of
Incorporation of the Surviving Corporation shall contain the provisions with
respect to indemnification set forth in the By-Laws and Articles of
Incorporation 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 as of the Effective
Time 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 Surviving Corporation shall, to the fullest extent permitted under
applicable law or under the Surviving Corporation's Articles 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
A-31
<PAGE>
omissions occurring at or prior to the Effective Time, to the same extent as
provided in the Company's Articles 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 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 5.07. 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
A-32
<PAGE>
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 or The Nasdaq Stock Market, 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 shares of New 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.
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,
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 Joseph Decosimo and Company LLC
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. Parent and the Company each
agrees not to take any action that would reasonably be expected to adversely
affect the ability of Parent or New Tyco to account for the business combination
to be effected by the Merger as a pooling of interests, and Parent and the
Company each agrees to use its best efforts to take such action as may be
reasonably required to negate the impact of any past actions by Parent, the
Company or their respective affiliates which would reasonably be expected to
adversely impact the ability of Parent or New Tyco to treat the Merger as a
pooling of interests. The taking by Parent or the Company of any action
prohibited by the previous sentence, or the failure of Parent or the Company to
take any action required by the previous sentence, if the Merger is not able to
be accounted for as a pooling of interests because of such action or failure to
take action, shall constitute a breach of this Agreement by such party for the
purposes of Section 7.01(i).
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-33
<PAGE>
(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) SHAREHOLDER APPROVAL. This Agreement and the Merger shall have been
approved and adopted by the requisite vote of the shareholders of the
Company;
(c) LISTING. The shares of New Tyco 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 prevent consummation of the Merger, (ii) prohibiting or seeking
to prohibit or limiting or seeking to limit, Parent (which for the purposes
of this Section 6.01(e) shall also be deemed to refer to New Tyco) 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;
(g) TAX OPINIONS. The Company shall have received a written opinion of
Miller and Martin, 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 all reasonable representations and covenants in connection
with the rendering of such opinions; and
(h) ADT MERGER. The ADT Merger shall have been consummated or the ADT
Merger Agreement shall have been terminated in accordance with its terms.
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
A-34
<PAGE>
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;
(d) OPINION OF ACCOUNTANT. Parent shall have received an opinion of
Coopers & Lybrand, independent certified public accountants, to the effect
that the Merger, to the best of their knowledge after due inquiry, qualifies
for pooling of interests accounting treatment if consummated in accordance
with this Agreement and Company shall have received an opinion of Joseph
Decosimo and Company, LLP, independent certified public accountants, to the
effect that the Merger, to the best of their knowledge after due inquiry,
qualifies for pooling of interests accounting treatment if consummated in
accordance with this Agreement. Such opinions shall be in form and substance
satisfactory to Parent; and
(e) 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:
(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 changes resulting from
consummation of the ADT Merger in accordance with the terms of the ADT
Merger Agreement, (iii) 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 (iv)), and (iv) 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 or any Vice-President 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 or any Vice-President 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, Merger Sub or New Tyco 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, Merger Sub or New Tyco, 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;
A-35
<PAGE>
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
shareholders 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 15, 1997 (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 shareholders of the Company
shall not have been obtained by October 15, 1997; 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
shareholders 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 Stock is commenced (other than by
Parent or an affiliate of Parent) and the Board of Directors of the Company
recommends that the shareholders 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, in
each case in compliance with the provisions of Section 4.02; 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 15, 1997 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 15, 1997 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
A-36
<PAGE>
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 15, 1997 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).
(j) Notwithstanding any other provision of this Agreement, if the ADT
Merger is not either consummated or terminated in accordance with its terms,
the Company shall have the one-time right to terminate this Agreement
effective September 16, 1997; PROVIDED THAT, the Company has given Parent
written notice of such election prior to the close of business on September
15, 1997. Notwithstanding any other provision in this Agreement the Company
or Parent shall have the right to terminate this Agreement on October 15,
1997 if the ADT Merger is not either consummated or terminated in accordance
with its terms.
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, 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.
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 shareholders 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 $9,000,000 (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", as applicable to Parent or Company),
but in no event more than $600,000, upon the first to occur of any of the
following events:
A-37
<PAGE>
(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 shareholders of the Company
by October 15, 1997; 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 $600,000.
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 $600,000.
Upon termination of this Agreement by either Parent or the Company pursuant to
Section 7.01(j) Parent shall pay to the Company the Expenses of the Company.
(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.
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
A-38
<PAGE>
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:
Inbrand Corporation
1169 Canton Road
Marietta, GA 30066
Telecopier No.: (770) 419-1191
Telephone No.: (770) 422-3036
Attention: Chairman
With a copy to:
Miller & Martin
1000 Volunteer Bldg.
832 Georgia Avenue
Chattanooga, TN 37402
Telecopier No.: (423) 785-8426
Telephone No.: (615 ) 756-6600
Attention: W. Scott McGinness, Jr.
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
A-39
<PAGE>
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 shareholders of the Company, no amendment may be made which by law
requires further approval by such shareholders 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 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
or New Tyco provided that no such assignment shall relieve the assigning party
of its obligations hereunder. Merger Sub's rights under this Agreement shall be
assigned to
A-40
<PAGE>
a direct, wholly-owned subsidiary of New Tyco, if such assignment is required in
order that the Merger will constitute a tax-free reorganization within the
meaning of Section 368 of the Code. 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.
(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.
<TABLE>
<S> <C> <C>
TYCO INTERNATIONAL LTD.
By: /s/ MARK H. SWARTZ
-------------------------------------------
Name: Mark H. Swartz
Title: VICE PRESIDENT--CHIEF FINANCIAL
OFFICER
By: /s/ L. DENNIS KOZLOWSKI
-------------------------------------------
Name: L. Dennis Kozlowski
Title: CHAIRMAN AND CHIEF EXECUTIVE OFFICER
T5 ACQUISITION CORP.
By: /s/ MARK H. SWARTZ
-------------------------------------------
Name: Mark H. Swartz
Title: VICE PRESIDENT
By: /s/ L. DENNIS KOZLOWSKI
-------------------------------------------
Name: L. Dennis Kozlowski
Title: PRESIDENT
INBRAND CORPORATION
By: /s/ GARNETT A. SMITH
-------------------------------------------
Name: Garnett A. Smith
Title: CHAIRMAN
By: /s/ H. SCOTT SIGLER
-------------------------------------------
Name: H. Scott Sigler
Title: PRESIDENT AND CHIEF OPERATING
OFFICER
</TABLE>
A-42
<PAGE>
ANNEX B
[LOGO]
July 23, 1997
Board of Directors
Inbrand Corporation
1169 Canton Road
Marietta, Georgia 30066
Members of the Board:
You have requested our opinion as to the fairness, from a financial point of
view, to the holders of common stock, par value $.10 per share ("Company Common
Stock"), of Inbrand Corporation (the "Company"), of the consideration to be
received by such holders in connection with the proposed merger (the "Inbrand
Merger") of T7 Acquisition Corp. ("Sub"), a wholly owned subsidiary of Tyco
International Ltd., a Bermuda company (formerly ADT Limited; "Tyco"), with and
into the Company, pursuant to an Agreement and Plan of Merger, dated as of May
12, 1997 (the "Inbrand Merger Agreement"), among Tyco International (US) Inc., a
Massachussetts corporation (formerly Tyco International Ltd.; "Old Tyco"), T5
Acquisition Corp., a Georgia corporation and a wholly-owned subsidiary of Old
Tyco ("T5"), and the Company. T5 has assigned its rights under the Inbrand
Merger Agreement to Sub. Upon the effectiveness of the Inbrand Merger, each
issued and outstanding share of Company Common Stock (other than shares held in
the treasury of the Company, shares owned by Old Tyco, Sub or any direct or
indirect wholly owned subsidiary of the Company or Old Tyco) will be converted
into and represent the right to receive 0.43 (as adjusted pursuant to the
Inbrand Merger Agreement, the "Exchange Ratio") common shares of Tyco, par value
$.20 per share ("Tyco Common Shares"). We understand that the Inbrand Merger
will qualify as a tax-free reorganization for federal income tax purposes and
will be accounted for as a pooling-of-interests in accordance with generally
accepted accounting principles as described in Accounting Principles Board
Opinion Number 16.
In connection with rendering our opinion, we have reviewed certain publicly
available information concerning the Company, Tyco and Old Tyco and certain
other financial information concerning the Company, Tyco and Old Tyco (including
after giving effect to the merger of a wholly-owned subsidiary of ADT Limited
(now known as Tyco) with and into Old Tyco), including financial forecasts, that
were provided to us by the Company, Tyco and Old Tyco. We have discussed the
past and current business operations, financial condition and prospects of the
Company, Tyco and Old Tyco with certain officers and employees of the Company,
Tyco and Old Tyco, respectively. We have also considered such other information,
financial studies, analyses, investigations and financial, economic, market and
trading criteria that we deemed relevant.
In our review and analysis and in arriving at our opinion, we have assumed
and relied upon the accuracy and completeness of the information reviewed by us
for the purpose of this opinion and we have not assumed any responsibility for
independent verification of such information. With respect to the financial
forecasts of the Company, Tyco and Old Tyco, we have assumed that they have been
reasonably prepared on bases reflecting the best currently available estimates
and judgements of the respective managements of the Company, Tyco and Old Tyco,
and we express no opinion with respect to such forecasts or the assumptions on
which they are based. We have not assumed any responsibility for any independent
evaluation or appraisal of any of the assets (including properties and
facilities) or liabilities of the Company, Tyco and Old Tyco. We were not asked
to, and did not, solicit other proposals to acquire the Company.
B-1
<PAGE>
[LOGO]
Our opinion is necessarily based upon conditions as they exist and can be
evaluated on the date hereof. Our opinion as expressed below does not imply any
conclusion as to the likely trading range for Tyco Common Shares following the
consummation of the Inbrand Merger, which may vary depending upon, among other
factors, changes in interest rates, dividend rates, market conditions, general
economic conditions and other factors that generally influence the price of
securities. Our opinion does not address the Company's underlying business
decision to effect the Inbrand Merger, and we express no view on the effect on
the Company of the Inbrand Merger and the related transactions. Our opinion is
directed only to the fairness, from a financial point of view, of the Exchange
Ratio to holders of Company Common Stock and does not constitute a
recommendation concerning how holders of Company Common Stock should vote with
respect to the Inbrand Merger Agreement or the Inbrand Merger.
We have acted as financial advisor to the Board of Directors of the Company
in connection with the Inbrand Merger and will receive a fee for our services, a
portion of which was payable upon the execution of the engagement letter between
us and the Company and the remainder of which is contingent upon consummation of
the Inbrand Merger or other transactions involving the Company. In the ordinary
course of business, we may actively trade the securities of the Company and Tyco
for our own account and for the accounts of customers and, accordingly, may at
any time hold a long or short position in such securities.
Based upon and subject to the foregoing, it is our opinion that, as of the
date hereof, the Exchange Ratio is fair to the holders of Company Common Stock
from a financial point of view.
Very truly yours,
/s/ Salomon Brothers Inc
SALOMON BROTHERS INC
B-2
<PAGE>
INBRAND CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of INBRAND CORPORATION hereby appoints Garnett
A. Smith and James R. Johnson, or either of them, proxies, with full power of
substitution, to vote at the Special Meeting of Shareholders to be held at the
offices of the Company at 1169 Canton Road, Marietta, Georgia 30066, at 10:00
a.m., Eastern time, August 27, 1997, and any adjournment or adjournments
thereof, the shares of Common Stock of INBRAND CORPORATION which the undersigned
is entitled to vote, on all matters that may properly come before the Special
Meeting.
1. To approve the merger of INBRAND with T7 Acquisition Corp., a
wholly-owned subsidiary of Tyco International Ltd., a Bermuda company limited by
shares (the "Merger"), and to approve the Agreement and Plan of Merger (the
"Merger Agreement") relating thereto.
______ FOR the approval of the Merger and the Merger Agreement.
______ AGAINST the approval of the Merger and the Merger Agreement.
______ ABSTAIN
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Special Meeting.
You are urged to cast your vote by marking the appropriate box. PLEASE NOTE
THAT UNLESS A CONTRARY INTENTION IS INDICATED, THIS PROXY WILL BE VOTED FOR ITEM
1. Proxies marked as abstentions will not be counted as votes cast. Proxies
marked as abstentions, however, will be treated as shares present for purposes
of determining whether a quorum is present. In addition, shares held in street
name which have been designated by brokers on proxy cards as not voted will not
be counted as present or as votes cast.
<TABLE>
<S> <C>
- --------------------------------------------
(Signature)
- --------------------------------------------
(Signature)
</TABLE>
Dated: , 1997
IMPORTANT: Please sign your name or names exactly as shown hereon and date
your proxy in the blank space provided above. For joint accounts, each joint
owner must sign. When signing as attorney, executor, administrator, trustee, or
guardian, please give your full title as such. If the signer is a corporation,
please sign full corporate name by duly authorized officer.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Bye-Law 102 of the Tyco Bye-Laws provides, in part, that Tyco shall
indemnify its directors and other officers for all costs, losses and expenses
which they may incur in the performance of their duties as director or officer,
provided that such indemnification is not otherwise prohibited under the
Companies Act 1981 (as amended) of Bermuda. Section 98 of the Companies Act 1981
(as amended) prohibits such indemnification against any liability arising out of
the fraud or dishonesty of the director or officer. However, such section
permits Tyco to indemnify a director or officer against any liability incurred
by him in defending any proceedings, whether civil or criminal, in which
judgment is given in his favor or in which he is acquitted or when other similar
relief is granted to him.
The Registrant maintains $75,000,000 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.
ITEM 21. EXHIBITS
<TABLE>
<S> <C>
2(a) --Agreement and Plan of Merger, dated as of May 12, 1997, by and among Old Tyco, T5
Acquisition Corp. and INBRAND Corporation (included as Annex A to the Proxy
Statement/ Prospectus which forms a part of this Registration Statement)
2(b) --Assignment Agreement, dated July 21, 1997, between T5 Acquisition Corp. and T7
Acquisition Corp.*
3(a) --Memorandum of Association of Registrant (previously filed as an Exhibit to
Registrant's Annual Report on Form 10-K for the Year Ended December 31, 1996)
3(b) --Certificate of Incorporation on Change of Name (previously filed as an Exhibit to
Registrant's Current Report on Form 8-K filed July 10, 1997 (the "July 10, 1997
8-K"))
3(c) --Bye-Laws of the Registrant (previously filed as an Exhibit to the July 10, 1997
8-K)
4(a) --Rights Agreement between Registrant and Citibank, N.A. dated as of November 6,
1996 (previously filed as an Exhibit to Registrant's Form 8-A dated November 12,
1996)
4(b) --First Amendment between Registrant and Citibank, N.A. dated as of March 3, 1997 to
Rights Agreement between Registrant and Citibank, N.A. dated as of November 6, 1996
(previously filed as an Exhibit to Registrant's Form 8-A/A dated March 3, 1997)
4(c) --Second Amendment between Registrant and Citibank, N.A. dated as of July 2, 1997 to
Rights Agreement between Registrant and Citibank N.A. dated as of November 6, 1996
(previously filed as an Exhibit to Registrant's Form 8-A/A dated July 2, 1997)
5 --Opinion of Appleby, Spurling & Kempe regarding the validity of the Tyco Common
Shares to be issued to the INBRAND Shareholders*
8(a) --Tax Opinion of Kramer, Levin, Naftalis & Frankel*
8(b) --Tax Opinion of Miller & Martin*
</TABLE>
II-1
<PAGE>
<TABLE>
<S> <C>
8(c) --Tax Opinion of Appleby, Spurling & Kempe*
10(a) --Shareholder Agreement, dated as of May 12, 1997, between Garnett A. Smith and Old
Tyco**
10(b) --Shareholder Agreement, dated as of May 12, 1997, between Howard Holdings, Inc. and
Old Tyco**
10(c) --Shareholder Agreement, dated as of May 12, 1996, between The Navarre Investment
Company and Old Tyco**
10(d) --Shareholder Agreement, dated as of May 12, 1997, between The Chrysalis Foundation
and Old Tyco**
10(e) --Shareholder Agreement, dated as of May 12, 1997, between William Navarre Bailey
1993 Trust and Old Tyco**
10(f) --Shareholder Agreement, dated as of May 12, 1997, between Mary Navarre Moore and
Old Tyco**
10(g) --Shareholder Agreement, dated as of June 26, 1997, between Garnett A. Smith Family
Foundation, Inc. and Old Tyco**
23(a) --Consent of Coopers & Lybrand*
23(b) --Consent of Coopers & Lybrand L.L.P.*
23(c) --Consent of Joseph Decosimo and Company, LLP*
23(d) --Consent of Kramer, Levin, Naftalis & Frankel (contained in Exhibit 8(a))*
23(e) --Consent of Appleby, Spurling & Kempe (contained in Exhibit 5)*
23(f) --Consent of Miller & Martin (contained in Exhibit 8(b))*
24 --Power of Attorney**
</TABLE>
- ------------------------
* filed herewith
** Previously filed
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.
The Registrant undertakes that 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 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 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 1933 Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
II-2
<PAGE>
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 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-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this Amendment to the
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 23nd day
of July 1997.
<TABLE>
<S> <C> <C>
TYCO INTERNATIONAL LTD.
By: /s/ MARK H. SWARTZ
--------------------------------------------------
Mark H. Swartz
Executive Vice President--Chief Financial Officer
(Principal Financial and Accounting Officer)
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed by the following persons on July
23, 1997 in the capacities indicated below.
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------------------------
<C> <S>
* Chairman of the Board, President, Chief Executive
------------------------------------------- Officer and Director (Principal Executive Officer)
L. Dennis Kozlowski
* Director
-------------------------------------------
Michael A. Ashcroft
* Director and Vice President
-------------------------------------------
Joshua M. Berman
* Director
-------------------------------------------
Richard S. Bodman
* Director
-------------------------------------------
John F. Fort
* Director
-------------------------------------------
Stephen W. Foss
* Director
-------------------------------------------
Richard A. Gilleland
* Director
-------------------------------------------
Philip M. Hampton
* Director
-------------------------------------------
James S. Pasman, Jr.
* Director
-------------------------------------------
W. Peter Slusser
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------------------------
<C> <S>
/s/ MARK H. SWARTZ Executive Vice President--Chief Financial Officer
------------------------------------------- (Principal Financial and Accounting Officer)
Mark H. Swartz
* Director
-------------------------------------------
Frank E. Walsh, Jr.
</TABLE>
*By: /s/ MARK H. SWARTZ
-------------------------
Mark H. Swartz
ATTORNEY-IN-FACT
II-5
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ----------- -------------------------------------------------------------------------------------------- ---------------
<S> <C> <C>
2(a) -- Agreement and Plan of Merger, dated as of May 12, 1997, by and among Old Tyco, T5
Acquisition Corp. and INBRAND Corporation (included as Annex A to the
ProxyStatement/Prospectus which forms a part of this Registration Statement)
2(b) -- Assignment Agreement, dated July 21, 1997, between T5 Acquisition Corp. and T7
Acquisition Corp.*
3(a) -- Memorandum of Association of Registrant (previously filed as an Exhibit to Registrant's
Annual Report on Form 10-K for the Year Ended December 31, 1996)
3(b) -- Certificate of Incorporation on Change of Name (previously filed as an Exhibit to the
Registrant's Current Report on Form 8-K filed July 10, 1997 (the "July 10, 1997 8-K"))
3(c) -- Bye-Laws of the Registrant (previously filed as an Exhibit to the July 10, 1997 8-K)
4(a) -- Rights Agreement between Registrant and Citibank, N.A. dated as of November 6, 1996
(previously filed as an Exhibit to Registrant's Form 8-A dated November 12, 1996)
4(b) -- First Amendment between Registrant and Citibank, N.A. dated as of March 3, 1997 to Rights
Agreement between Registrant and Citibank, N.A. dated as of November 6, 1996 (previously
filed as an Exhibit to Registrant's Form 8-A/A dated March 3, 1997)
4(c) -- Second Amendment between Registrant and Citibank, N.A. dated as of July 2, 1997 to Rights
Agreement between Registrant and Citibank N.A. dated as of November 6, 1996 (previously
filed as an Exhibit to Registrant's Form 8-A/A dated July 2, 1997)
5 -- Opinion of Appleby, Spurling & Kempe regarding the validity of the Tyco Common Shares to
be issued to the INBRAND Shareholders*
8(a) -- Tax Opinion of Kramer, Levin, Naftalis & Frankel*
8(b) -- Tax Opinion of Miller & Martin*
8(c) -- Tax Opinion of Appleby, Spurling & Kempe*
10(a) -- Shareholder Agreement, dated as of May 12, 1997, between Garnett A. Smith and Old Tyco**
10(b) -- Shareholder Agreement, dated as of May 12, 1997, between Howard Holdings, Inc. and Old
Tyco**
10(c) -- Shareholder Agreement, dated as of May 12, 1996, between The Navarre Investment Company
and Old Tyco**
10(d) -- Shareholder Agreement, dated as of May 12, 1997, between The Chrysalis Foundation and Old
Tyco**
10(e) -- Shareholder Agreement, dated as of May 12, 1997, between William Navarre Bailey 1993
Trust and Old Tyco**
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- ----------- -------------------------------------------------------------------------------------------- ---------------
<S> <C> <C>
10(f) -- Shareholder Agreement, dated as of May 12, 1997, between Mary Navarre Moore and Old
Tyco**
10(g) -- Shareholder Agreement, dated as of June 26, 1997, between Garnett A. Smith Family
Foundation, Inc. and Old Tyco**
23(a) -- Consent of Coopers & Lybrand*
23(b) -- Consent of Coopers & Lybrand L.L.P.*
23(c) -- Consent of Joseph Decosimo and Company, LLP*
23(d) -- Consent of Kramer, Levin, Naftalis & Frankel (contained in Exhibit 8(a))*
23(e) -- Consent of Appleby, Spurling & Kempe (contained in Exhibit 5)*
23(f) -- Consent of Miller & Martin (contained in Exhibit 8(b))*
24 -- Power of Attorney **
</TABLE>
- ------------------------
* filed herewith
** previously filed
<PAGE>
Exhibit 2(b)
ASSIGNMENT AGREEMENT
--------------------
ASSIGNMENT AGREEMENT, dated as of July 21, 1997 (this "Agreement"),
between T5 ACQUISITION CORP. ("T5"), a Georgia corporation and a direct,
wholly-owned subsidiary of Tyco International (US) Inc. (formerly Tyco
International Ltd.), a Massachusetts corporation ("Old Tyco"), and T7
ACQUISITION CORP. ("T7"), a Georgia corporation and a direct, wholly-owned
subsidiary of Tyco International Ltd., a Bermuda company limited by shares
("Tyco").
1. Old Tyco, T5 and INBRAND CORPORATION, a Georgia corporation, are
parties to that certain Agreement and Plan of Merger dated as of May 12, 1997
(the "Merger Agreement");
2. Pursuant to Section 8.09 of the Merger Agreement, all or any of the
rights of T5 may be assigned to any direct, wholly-owned subsidiary of Old Tyco
or Tyco provided that no such assignment shall relieve T5 of its obligations
under the Merger Agreement. T5's rights under the Merger Agreement shall be
assigned to a direct, wholly-owned subsidiary of Tyco if such assignment is
required in order that the merger contemplated by the Merger Agreement
constitute a tax-free reorganization within the meaning of Section 368 of the
Internal Revenue Code of 1986, as amended; and
3. T5 desires to assign, and T7 desires to assume, all of the rights
and obligations of T5 under the Merger Agreement.
NOW, THEREFORE, in consideration of the foregoing and for such other
good and valuable consideration, the receipt of which is hereby acknowledged, T5
and T7 agree that all of the rights and obligations of T5 under the Merger
Agreement are hereby assigned to, and assumed by, T7 .
IN WITNESS WHEREOF, T5 and T7 have caused this Agreement to be
executed by their respective, duly authorized officers as of the date first
written above.
T5 ACQUISITION CORP.
By: /s/ Mark H. Swartz
----------------------------
Name: Mark H. Swartz
Title: Vice President
T7 ACQUISITION CORP.
By: /s/ Mark H. Swartz
----------------------------
Name: Mark H. Swartz
Title: Vice President
<PAGE>
Exhibit 5
23 July, 1997
Tyco International Ltd.
Cedar House
41 Cedar Avenue
Hamilton HM 12
Bermuda
Re: Registration Statement on Form S-4
Registration No. 333-31227
----------------------------------
Ladies and Gentlemen:
We have acted as attorneys in Bermuda for Tyco International Ltd., a
Bermuda limited liability company ("Tyco"), in connection with the proposed
merger of INBRAND Corporation ("INBRAND") with T7 Acquisition Corp., a wholly
owned subsidiary of Tyco ("Merger Subsidiary") pursuant to the Agreement and
Plan of Merger dated as of May 12, 1997 among Tyco, INBRAND and T5
Acquisition Corp., which has assigned its rights to Merger Subsidiary (the
"Merger Agreement"). We understand that following the Merger and pursuant to
the laws by which the Merger is governed, INBRAND will continue as the
surviving entity and as a wholly-owned subsidiary of Tyco.
This opinion is based upon and confined to the laws of Bermuda presently
in force as currently applied by the Courts of Bermuda. We have made no
investigation of, nor do we express any opinion as to, the laws of any
jurisdiction other than Bermuda.
In order to render this opinion, we have been supplied with and have
reviewed and relied upon the following documents:
(a) the Certificate of Incorporation, Memorandum of Association and
Bye-laws of Tyco;
(b) a copy, of the resolutions adopted by the Board of Directors of Tyco as
at 2nd July, 1997 (the "Board Resolution");
(c) a copy of resolutions adopted by the Shareholders of Tyco as at 2nd
July, 1997 (the "Shareholders Resolution");
(d) a copy of the Proxy Statement/Prospectus (the "Proxy
Statement/Prospectus") that is part of Amendment No. 1 to the Registration
Statement on Form S-4 (Registration No. 333-31227) (the "Registration
Statement") as filed with the Securities and Exchange Commission on
July 23, 1997;
<PAGE>
(e) a copy of the pages of the Registration Statement signed by all of the
Directors of Tyco (the "Signature Pages");
(f) a facsimile copy sent on 22nd July, 1997 of the resolutions
(approving, ratifying and confirming the issue of the Tyco Common Shares
in connection with the INBRAND merger transaction) to be passed by the
Board of Directors of Tyco at a Board Meeting scheduled to take place on
31st July, 1997 (the "Resolutions"); and
(g) a copy of the permission given by the Bermuda Monetary Authority under
the Exchange Control Act (1972) and related regulations for the issue of
Tyco Common Shares.
We have also relied upon our searches of documents of public record
maintained by the Registrar of Companies in Bermuda and of the Causes Book of
the Supreme Court of Bermuda made on 22nd July, 1997 (the "Searches").
We have assumed:
(i) that there is no provision of the law, regulation or public policy of
any jurisdiction, other than Bermuda, which might have a material effect on
any of the opinions herein expressed;
(ii) that all matters of fact appearing in the Board Resolution and the
Proxy Statement/Prospectus are true and complete in all material respects;
(iii) the genuineness of all signatures on each of the documents examined
by us;
(iv) the conformity to original documents, of all documents produced to us
as copies and the authenticity of all original documents which, or copies
of which, have been submitted to us;
(v) that the Resolutions of the Board of Directors of Tyco approving,
ratifying and confirming the issue of the Tyco Common Shares in connection
with the INBRAND merger transaction will be passed at a meeting validly
convened and held in a form that will not differ in any material respect
from the text examined by us;
(vi) that the information disclosed by our Searches has not been
materially altered and that the Searches did not fail to disclose any
material information which had been delivered for filing or registration,
but was not disclosed or did not appear on the public file at the time of
the Searches; and
(vii) the Signature Pages evidence the Knowledge and consent to the
merger with INBRAND by the directors of Tyco.
Unless otherwise defined herein, terms defined in the Proxy
Statement/Prospectus have the same meanings when used in this opinion.
Based on and subject to the foregoing, subject to the reservations set out
below, and to any matters not disclosed to us, we are of the opinion that:
(1) Tyco has been duly incorporated as a limited liability company and is
validly existing and in good standing under the laws of Bermuda and has all
requisite corporate power and authority to issue the Tyco Common Shares.
(2) All necessary action required pursuant to Bermuda law, subject to
paragraph (v) above, has been taken by or on behalf of Tyco and all the
necessary authorizations and approvals of Governmental authorities in
- 2 -
<PAGE>
Bermuda have been duly obtained for the issue of the Tyco Common Shares.
(3) When issued in accordance with the Merger, the Tyco Common Shares will be
duly issued and will be outstanding as fully paid and non-assessable shares
of the Company.
(4) The issuance of the Tyco Common Shares to INBRAND shareholders in the
Merger will not breach or conflict with and will not constitute a default
or violation of any of the terms or provisions of Tyco's Memorandum of
Association, Certificate of Incorporation or Bye-laws.
(5) There are no taxes, duties or other charges payable to or chargeable by the
Government of Bermuda, or any authority or agency thereof, in respect of
the issue of the Tyco Common Shares in accordance with the Merger.
Our reservations are:
A. Any reference in this opinion to shares being "non-assessable" shall
mean, in relation to fully paid shares of Tyco and subject to any contrary
provision in any agreement in writing between such company and the holder of
such shares, that no shareholder shall be bound by an alteration to the
Memorandum of Association or Bye-laws of Tyco after the date on which he
became a shareholder, if and so far as the alteration requires him to take,
or subscribe for additional shares, or in any way increases his liability to
contribute to the share capital of, or otherwise to pay money to, Tyco.
B. We express no opinion as to any other law other than Bermuda law and none
of the opinions expressed herein relates to compliance with or matters
governed by the laws of any jurisdiction except Bermuda.
This opinion is addressed to you in connection with the registration of
Tyco Common Shares with the Securities and Exchange Commission and is not to
be made available to, or relied on by any other person or entity, or for any
other purpose, without our prior written consent.
We hereby consent to the inclusion of this opinion as an exhibit to the
Registration Statement. We also consent to the
- 3 -
<PAGE>
reference to our Firm under the captions "Legal Matters" and "Bermuda Tax
Consequences" in the Proxy Statement/ Prospectus.
This opinion is to be governed by and construed in accordance with the
laws of Bermuda and shall not give rise to legal proceedings in any
jurisdiction other than Bermuda.
Yours faithfully,
Appleby, Spurling & Kempe
- 4 -
<PAGE>
Exhibit 8(a)
Kramer, Levin, Naftalis & Frankel
919 THIRD AVENUE
NEW YORK, N.Y. 10022 - 3852
(212) 715 - 9100
July 23, 1997
Tyco International Ltd.
Cedar House
41 Cedar Avenue
Hamilton HM12, Bermuda
Ladies and Gentlemen:
We have acted as counsel to Tyco International Ltd., a Bermuda company
("Tyco"), in connection with the planned merger (the "Merger") into INBRAND
Corporation, a Georgia corporation (the "Company"), of T7 Acquisition Corp., a
Georgia corporation and a wholly owned subsidiary of Tyco ("Merger Sub"),
pursuant to an Agreement and Plan of Merger dated as of May 12, 1997 by and
among Tyco International (US) Inc. (formerly Tyco International Ltd. ("Old
Tyco")), a Massachusetts corporation and a wholly-owned subsidiary of Tyco, T5
Acquisition Corp., a Georgia corporation and a wholly-owned subsidiary of Old
Tyco ("T5"), and the Company (the "Merger Agreement"). T5 has assigned its
rights under the Merger Agreement to Merger Sub.
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 Tyco 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, Tyco and certain
shareholders of INBRAND (the "Certified Representations") and certain statements
and representations contained in the Merger Agreement and the Proxy
Statement/Prospectus, which we have neither investigated nor
<PAGE>
KRAMER, LEVIN, NAFTALIS & FRANKEL
Tyco International Ltd.
July 23, 1997
Page 2
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 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 Georgia; (iii) each
of the Company, Tyco, 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 own, at the Effective Time
(as defined in the Merger Agreement), more than 5% of the outstanding Company
Common Stock, other than those shareholders that have made the Certified
Representations. 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, Tyco, or
Merger Sub as to the federal income tax consequences of any aspect of the
Merger. The opinion expressed herein is not binding on the IRS or any court, and
there can be no assurance that the IRS or a court of competent jurisdiction will
not disagree with such opinion.
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) the statements contained in numbered paragraphs 4
and 5 of the section of the Proxy Statement/Prospectus entitled "The Merger --
Certain United States Federal Income Tax and Bermuda Tax Consequences -- United
States Federal Tax Consequences," are 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
<PAGE>
KRAMER, LEVIN, NAFTALIS & FRANKEL
Tyco International Ltd.
July 23, 1997
Page 3
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 asked 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 "The Merger -- Certain United States Federal Income Tax and Bermuda
Tax Consequences -- United States Federal Tax Consequences" and "Legal Matters"
in the Registration Statement and the 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
<PAGE>
Exhibit 8(b)
July 23, 1997
INBRAND Corporation
1169 Canton Road
Marietta, Georgia 30066
Ladies and Gentlemen:
We have acted as special counsel to INBRAND Corporation, a corporation
organized under the laws of Georgia ("INBRAND"), in connection with the planned
acquisition of INBRAND by Tyco International Ltd., a company organized under the
laws of Bermuda ("Parent"), accomplished by means of a merger of a subsidiary
of Parent, T7 Acquisition Corp., a Georgia corporation ("Merger Sub"), with and
into INBRAND (herein referred to as the "Merger"), pursuant to the Agreement and
Plan of Merger, dated as of the 12th day of May, 1997, by and among INBRAND,
Tyco International (U.S.), Inc. (formerly Tyco International Ltd.) and T5
Acquisition Corp., a Georgia corporation, which assigned its rights to Merger
Sub (the "Merger Agreement"). Capitalized terms used but not defined herein
shall have the meanings specified in the Proxy Statement-Prospectus pertaining
to the Merger.
We have assumed with your consent that:
(a) the Merger will be effected in accordance with the Merger Agreement,
(b) all signatures and documents (whether originals or certified or
photostatic copies) are authentic and genuine,
(c) all participants in the transaction possess adequate legal capacity,
(d) the representations contained in the letters of representation from
Parent and INBRAND and the shareholders of INBRAND to us dated July 22,
<PAGE>
July 23, 1997
Page 2
1997 are true and correct, and
(e) each of INBRAND, 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.
On the basis of the foregoing and our consideration of such other
matters of fact and law as we have deemed necessary or appropriate, and subject
to the conditions and exceptions expressed herein, it is our opinion for
United States federal income tax purposes that:
(i) The Merger will constitute a reorganization within the
meaning of Sections 368 (a)(1)(A) and (a)(2)(E) of the Code; and
(ii) The statements contained in numbered paragraphs 1, 2
and 3 of the section of the Proxy Statement / Prospectus entitled "The
Merger -- Certain United States Federal Income Tax and Bermuda Tax
Consequences -- United States Federal Tax Consequences," are correct.
<PAGE>
July 23, 1997
Page 3
Please note that the tax consequences described above may not be
applicable to INBRAND shareholders that (i) acquired their INBRAND stock
pursuant to the exercise of an employee stock option or right or otherwise as
compensation, (ii) hold INBRAND Stock as part of a "straddle" or "conversion
transaction" or (iii) are insurance companies, securities dealers, financial
institutions or foreign persons.
The foregoing opinion addresses only certain consequences of a corporate
reorganization for federal income tax purposes. We have not considered the
effect on this transaction, if any, of foreign, state and local taxes, sales and
use taxes, or any other taxes. Moreover, the discussion of United States federal
income tax consequences set forth above is based upon the Code, the Treasury
Regulations promulgated thereunder and administrative rulings and court
decisions effective as of the date hereof. All of the foregoing authorities are
subject to change, possibly with retroactive effect, and any such change could
affect the validity of the foregoing opinion.
The foregoing opinion is intended for and may be relied upon solely by
the addressee and the shareholders of INBRAND.
We hereby consent to the reference to us under the heading "The Merger
- -- Certain United States Federal Income Tax and Bermuda Tax Consequences" in the
Proxy Statement-Prospectus pertaining to the Merger and to the filing of this
opinion as an exhibit to the related Registration Statement on Form S-4 filed
with the Securities and Exchange Commission. In giving this consent, we do not
hereby admit that we are within the category of persons whose consent is
required under Section 7 of the Securities Act
<PAGE>
July 23, 1997
Page 4
of 1933, as amended, or the rules and regulations of the Securities and Exchange
Commission thereunder.
Very truly yours,
MILLER & MARTIN
<PAGE>
Exhibit 8(c)
23 July, 1997
Tyco International Ltd.
Cedar House
41 Cedar Avenue
HAMILTON HM 12
Re: REGISTRATION STATEMENT ON
FORM S-4 REGISTRATION No. 333-31227
-----------------------------------
Dear Sirs:
We have acted as attorneys in Bermuda for Tyco International Ltd., a
Bermuda limited liability company ("Tyco"), in connection with the proposed
merger of INBRAND Corporation with T7 Acquisition Corp., a wholly owned
subsidiary of Tyco ("Merger Subsidiary"), pursuant to the Agreement and Plan
of Merger dated as of May 12, 1997 among Tyco International Ltd. (a
Massachusetts Corporation), INBRAND and T5 Acquisition Corp., which has
assigned its rights to Merger Subsidiary (the "Merger Agreement"). In
connection therewith, we have reviewed the discussion on the Bermuda tax
consequences of the proposed merger set forth under the caption "Bermuda Tax
Consequences" (the "Discussion") in the draft Proxy Statement/Prospectus (the
"Proxy Statement/Prospectus") that is to form part of Amendment No. 1 to the
Registration Statement on Form S-4 Registration No. 333-31227 (the
"Registration Statement") to be filed by Tyco with the Securities and
Exchange Commission.
In rendering our opinion, we have examined the Proxy
Statement/Prospectus, as filed with the Securities and Exchange Commission on
July 23, 1997 and originals or copies, certified or otherwise identified to
our satisfaction, of such corporate records of Tyco maintained at its
Registered Office in Bermuda as we have deemed necessary or appropriate in
connection with this opinion. Terms not otherwise defined herein have the
meanings assigned to them in the Proxy Statement/Prospectus. It is our
opinion that the Bermuda tax consequences for shareholders of Tyco as a
result of the exchange of Tyco Common Shares for INBRAND Shares contemplated
by the Merger Agreement are as set forth in the Discussion. Our opinion is
limited to such matters. We express no opinion as to the laws of any other
territory or jurisdiction. This opinion is to be governed by and construed in
accordance with the laws of Bermuda.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the captions
"Legal Matters" and "Bermuda Tax Consequences" in the Proxy
Statement/Prospectus.
Yours faithfully,
Appleby, Spurling & Kempe
<PAGE>
Exhibit 23(a)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Amendment No. 1
to the Registration Statement on Form S-4 (File No. 333-31227) of Tyco
International Ltd. (formerly named ADT Limited) of our report dated March
26, 1997, on our audits of the consolidated financial statements and
consolidated financial statement schedules of ADT Limited as at December 31,
1996 and 1995, and for the years ended December 31, 1996, 1995 and 1994,
which report is included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1996, and of our report dated July 10, 1997, on our
examination of the combination of the historical consolidated financial
statements and consolidated financial statement schedule of ADT Limited
and Tyco International Ltd. (prior to the merger) after restatement for the
pooling of interests as described in Note 1 to the supplemental consolidated
financial statements, which report is included in the Company's Current Report
on Form 8-K dated July 10, 1997. We also consent to the reference to our
firm under the caption "Experts."
COOPERS & LYBRAND
Hamilton, Bermuda
July 22, 1997
<PAGE>
Exhibit 23(b)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this Amendment No. 1 to the
Registration Statement on Form S-4 (File No. 333-31227) of our reports dated
July 25, 1996 on our audits of the consolidated financial statements and
financial statement schedule of Tyco International Ltd. as of June 30, 1996 and
1995 and for the three years in the period ended June 30, 1996, which report is
included in the Company's Annual Report on Form 10-K for the year ended June 30,
1996 and of our report dated July 10, 1997 which is included in the Company's
current report on Form 8-K on our audits of the consolidated financial
statements and the consolidated financial statement schedule of Tyco
International Ltd. as of December 31, 1996 and June 30, 1995 and for the years
ended December 31, 1996, June 30, 1995 and June 30, 1994 (not presented
separately therein). We also consent to the reference to our firm under the
caption "Experts."
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
July 22, 1997
<PAGE>
Exhibit 23(c)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the reference to our firm under the caption "Experts" in
this Registration Statement on Form S-4 and related Prospectus-Proxy Statement
of Tyco International Ltd. and to the incorporation by reference therein of our
report dated August 14, 1996, on the consolidated financial statements of
INBRAND Corporation and subsidiaries (the Company) appearing in the Company's
1996 Annual Report to Shareholders which is incorporated by reference in its
Annual Report on Form 10-K for the year ended June 29,1996, filed with the
Securities and Exchange Commission.
JOSEPH DECOSIMO AND COMPANY, LLP
Atlanta, Georgia
July 22, 1997
