<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 18, 2000
REGISTRATION NO. 333-
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
TYCO INTERNATIONAL LTD.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
BERMUDA 7382 NOT APPLICABLE
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>
--------------------------
THE ZURICH CENTRE, SECOND FLOOR
90 PITTS BAY ROAD
PEMBROKE HM 08, BERMUDA
(441) 292-8674*
(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 The Zurich Centre, Second Floor, 90 Pitts Bay Road, Pembroke
HM 08, Bermuda. The executive offices of Tyco's principal United States
subsidiaries are located at One Tyco Park, Exeter, New Hampshire 03833. The
telephone number there is (603) 778-9700.
------------------------------
Copies To:
<TABLE>
<S> <C> <C>
ABBE L. DIENSTAG, ESQ. FATI SADEGHI, ESQ. ALAN TALKINGTON, ESQ.
KRAMER LEVIN NAFTALIS & FRANKEL SENIOR CORPORATE COUNSEL ORRICK, HERRINGTON & SUTCLIFFE LLP
LLP TYCO INTERNATIONAL (US) INC. OLD FEDERAL RESERVE BANK BUILDING
919 THIRD AVENUE ONE TYCO PARK 400 SANSOME STREET
NEW YORK, NEW YORK 10022 EXETES, NEW HAMPSHIRE 03833 SAN FRANCISCO, CALIFORNIA 94111
(212) 715-9100 (603) 778-9700 (415) 392-1122
</TABLE>
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As promptly
as practicable after this Registration Statement becomes effective and upon
consummation of the transactions described in the enclosed prospectus.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. /X/
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box: /X/
--------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM
AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED REGISTERED(1) UNIT PRICE(2)
<S> <C> <C> <C>
Common Shares, par value $0.20 per share... 5,000,000 Not Applicable $185,185,604
<CAPTION>
PROPOSED MAXIMUM
AMOUNT OF REGISTRATION
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED FEE(3)
<S> <C>
Common Shares, par value $0.20 per share... $48,889
</TABLE>
(1) Represents the estimated maximum number of Tyco common shares issuable upon
consummation of the offer and the merger of InnerDyne, Inc. with a
subsidiary of the Registrant, assuming the exercise of all options and other
rights to purchase or acquire shares of InnerDyne common stock that may
become exercisable prior to April 30, 2001. Includes Tyco common shares that
may be issuable upon exercise of an InnerDyne warrant to be assumed by Tyco
following the merger.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 promulgated under the Securities Act of 1933, as
amended (the "Securities Act"), based on the product of (i) $6.96875, the
average of the high and low sales prices of InnerDyne common stock on the
Nasdaq National Market on October 16, 2000 and (ii) 26,573,719, the expected
maximum number of shares of InnerDyne common stock to be acquired in the
offer and the merger.
(3) .0264% of the Proposed Maximum Aggregate Offering Price.
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SECTION 8(A), MAY DETERMINE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
This registration statement registers common shares of Tyco International
Ltd. deliverable in the offer of Tyco Acquisition Corp. X a wholly-owned
subsidiary of Tyco, for shares of common stock of InnerDyne, Inc. and, if the
offer is consummated, the merger of VLMS, Inc., a wholly-owned subsidiary of
Tyco Acquisition with and into InnerDyne. The number of Tyco common shares that
may be deliverable in connection with the offer and the merger includes shares
that may be issued in respect of the 232,500 shares of InnerDyne common stock
issuable upon exercise of a warrant originally issued in May 1996 by InnerDyne
to Cruttenden Roth Incorporated and that expires on in May 14, 2001. As a result
of the merger, InnerDyne would become an indirect wholly-owned subsidiary of
Tyco, and any portion of the warrant to acquire shares of InnerDyne common stock
outstanding following the merger would become a warrant to acquire Tyco common
shares. See the section captioned "The Merger Agreement--Treatment of InnerDyne
Stock Options and Warrants" in the Prospectus that forms part of this
registration statement. This registration statement also registers pursuant to
Rule 415 under the Securities Act of 1933 Tyco common shares issuable upon
exercise of any portion of the InnerDyne warrant outstanding following the
merger.
<PAGE>
THE INFORMATION IN THIS PROSPECTUS MAY BE CHANGED. WE MAY NOT SELL THESE
SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE
SECURITIES AND WE ARE NOT SOLICITING OFFERS TO BUY THESE SECURITIES IN ANY STATE
WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
OFFER OF
[LOGO]
TYCO ACQUISITION CORP. X
TO EXCHANGE
COMMON SHARES
OF
TYCO INTERNATIONAL LTD.
HAVING A VALUE OF $7.50
(DETERMINED AS DESCRIBED IN THIS PROSPECTUS)
FOR
EACH OUTSTANDING SHARE
OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS TO
PURCHASE PREFERRED STOCK)
OF
INNERDYNE, INC.
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON TUESDAY, NOVEMBER 14, 2000 UNLESS EXTENDED.
On October 3, 2000, Tyco Acquisition Corp. X, a wholly-owned subsidiary of
Tyco International Ltd., entered into an Agreement and Plan of Merger with
InnerDyne. Tyco Acquisition is making this offer in accordance with the terms of
the merger agreement. The InnerDyne board of directors has approved and adopted
the merger agreement, determined that this offer is fair to, and in the best
interests of, InnerDyne stockholders and recommended that InnerDyne stockholders
accept this offer and tender their shares pursuant to this offer.
Tyco Acquisition is offering to exchange a fraction of a Tyco common share
having a value of $7.50 for each outstanding share of InnerDyne common stock,
including the associated rights to purchase preferred stock, that is validly
tendered and not properly withdrawn. The fraction of a Tyco common share to be
exchanged for each share of InnerDyne common stock will equal $7.50 divided by a
five trading day average of the daily volume-weighted selling prices per Tyco
common share on the New York Stock Exchange (as reported by Bloomberg Financial
Markets). This average will be calculated for the five consecutive trading days
ending on the second trading day before the expiration date preceding the first
acceptance of InnerDyne shares for exchange in the offer.
Our obligation to exchange Tyco common shares for InnerDyne common stock is
subject to the conditions listed under "Conditions of the Offer." Tyco's common
shares are listed on the New York Stock Exchange and the Bermuda Stock Exchange
under the symbol "TYC" and on the London Stock Exchange under the symbol "TYI."
InnerDyne's common stock is quoted on the Nasdaq National Market under the
symbol "IDYN."
SEE "RISK FACTORS" BEGINNING ON PAGE 12 FOR A DISCUSSION OF ISSUES WHICH
SHOULD BE CONSIDERED BY
STOCKHOLDERS WITH RESPECT TO THE OFFER AND MERGER.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved the Tyco common shares to be issued in
the offer or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
The date of this prospectus is October 18, 2000.
<PAGE>
THIS DOCUMENT INCORPORATES IMPORTANT BUSINESS AND FINANCIAL INFORMATION
ABOUT TYCO AND INNERDYNE FROM DOCUMENTS FILED WITH THE SEC THAT HAVE NOT BEEN
INCLUDED IN OR DELIVERED WITH THIS DOCUMENT. THIS INFORMATION IS AVAILABLE AT
THE WEB SITE THE SEC MAINTAINS AT WWW.SEC.GOV, AS WELL AS FROM OTHER SOURCES.
SEE "WHERE YOU CAN FIND MORE INFORMATION" BEGINNING ON PAGE 1.
YOU ALSO MAY REQUEST COPIES OF THESE DOCUMENTS FROM US, WITHOUT CHARGE, UPON
WRITTEN OR ORAL REQUEST TO OUR INFORMATION AGENT, MACKENZIE PARTNERS, INC.,
156 FIFTH AVENUE, NEW YORK, NY 10010, COLLECT AT 1-212-929-5500 OR TOLL-FREE AT
1-800-322-2885.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Where You Can Find More Information......................... 1
Questions and Answers About the Proposed Acquisition........ 3
Summary..................................................... 7
The Offer................................................. 7
Information About Tyco and InnerDyne...................... 7
The Offer................................................. 8
Approval of the Merger.................................... 10
Tax Treatment............................................. 11
Accounting Treatment...................................... 11
Risk Factors.............................................. 11
Risk Factors................................................ 12
Forward Looking Information................................. 15
Selected Financial Data of Tyco and InnerDyne............... 16
Selected Consolidated Historical Financial Data of Tyco..... 17
Selected Historical Financial Data of InnerDyne............. 20
Recent Developments of Tyco................................. 20
Comparative Per Share Information........................... 21
Comparative Market Value.................................... 22
Comparative Per Share Prices and Dividends.................. 23
Reasons of Tyco for the Offer and Merger.................... 25
Recommendation of the Board of Directors of InnerDyne;
Reasons of InnerDyne for the Offer and the Merger......... 25
Background of the Offer..................................... 25
Exchange of Financial Forecasts............................. 28
The Offer................................................... 29
Timing of the Offer....................................... 29
Extension, Termination and Amendment...................... 29
Exchange of InnerDyne Shares; Delivery of Tyco Common
Shares.................................................. 30
Cash Instead of Fractional Tyco Common Shares............. 31
Procedure for Tendering................................... 31
Withdrawal Rights......................................... 32
Guaranteed Delivery....................................... 33
General................................................... 33
Direct Registration System................................ 34
Material U.S. Federal Income Tax and Bermuda Tax
Consequences............................................ 35
Purpose of the Offer; the Merger; Appraisal Rights........ 39
Conditions of the Offer................................... 41
Regulatory Approvals...................................... 43
Certain Effects of the Offer.............................. 45
Relationships With InnerDyne.............................. 47
Accounting Treatment...................................... 48
Fees and Expenses......................................... 48
Stock Exchange Listing.................................... 48
The Merger Agreement........................................ 49
The Offer................................................. 49
The Merger................................................ 49
InnerDyne Board of Directors.............................. 50
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Treatment of InnerDyne Stock Options and Warrants......... 50
Representations and Warranties............................ 51
Conduct of Business Pending Merger........................ 51
Conduct of Business of Tyco............................... 53
No Solicitation........................................... 53
Certain Other Covenants................................... 54
Certain Employee Benefits................................. 56
Conditions to the Merger.................................. 57
Termination; Fees and Expenses............................ 57
Amendment and Waiver; Parties in Interest................. 60
Guarantee................................................. 60
Interests of Certain Persons................................ 61
Comparison of Rights of Stockholders of InnerDyne and
Stockholders of Tyco...................................... 62
Legal Matters............................................... 73
Experts..................................................... 73
Miscellaneous............................................... 73
</TABLE>
<TABLE>
<S> <C> <C>
Schedules
Schedule Certain Information Concerning the Directors and Executive
I: Officers of Tyco International Ltd.......................... I-1
Schedule Certain Information Concerning the Directors and Executive
II: Officers of Tyco Acquisition Corp. X........................ II-1
Schedule Certain Information Concerning the Directors and Executive
III: Officers of VLMS, Inc....................................... III-1
Annexes
Annex A: Agreement and Plan of Merger By and Among Tyco Acquisition
Corp. X, VLMS, Inc., and InnerDyne, Inc., Including
Guarantee of Tyco International Ltd., dated as of
October 3, 2000
Annex B: Section 262 of the Delaware General Corporation Law
</TABLE>
ii
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
Tyco and InnerDyne file annual, quarterly and special reports, proxy
statements and other information with the SEC under the Securities Exchange Act
of 1934. You may read and copy this information at the following locations of
the SEC:
<TABLE>
<S> <C> <C>
Public Reference Room North East Regional Office Midwest Regional Office
450 Fifth Street, N.W. 7 World Trade Center 500 West Madison Street
Room 1024 Suite 1300 Suite 1400
Washington, DC 20549 New York, New York 10048 Chicago, Illinois 60661
</TABLE>
You may also obtain copies of this information by mail from the Public
Reference Section of the SEC, 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, at prescribed rates.
The SEC also maintains a web site that contains reports, proxy statements
and other information about issuers, like Tyco and InnerDyne, who file
electronically with the SEC. The address of that site is www.sec.gov.
You can also inspect reports, proxy statements and other information about
Tyco at the offices of the New York Stock Exchange, 20 Broad Street, New York,
New York 10005.
Tyco filed a registration statement on Form S-4 to register with the SEC the
Tyco common shares to be issued pursuant to the offer and the merger. This
prospectus is a part of that registration statement. As allowed by SEC rules,
this prospectus does not contain all the information you can find in the
registration statement or the exhibits to the registration statement. In
addition, we also filed with the SEC a statement on Schedule TO pursuant to
Rule 14d-3 under the Exchange Act to furnish certain information about the
offer. You may obtain copies of the Form S-4 and the Schedule TO (and any
amendments to those documents) in the manner described above.
InnerDyne has filed with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 regarding the offer. You may obtain a copy of the Schedule 14D-9
(and any amendments to that document) in the manner described above.
The SEC allows us to "incorporate by reference" information into this
prospectus, which means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference is deemed to be part of this prospectus, except for
any information superseded by information contained directly in this prospectus.
This prospectus incorporates by reference the documents set forth below that
Tyco and InnerDyne have previously filed with the SEC. These documents contain
important information about Tyco and InnerDyne and their finances.
<TABLE>
<CAPTION>
TYCO SEC FILINGS (FILE NO. 001-13836) PERIOD
------------------------------------- ---------------------------------------------
<S> <C>
Annual Report on Forms 10-K and 10-K/A Fiscal year ended September 30, 1999
Quarterly Reports on Forms 10-Q and 10-Q/A Quarterly periods ended December 31, 1999,
March 31, 2000 and June 30, 2000
Current Reports on Form 8-K Filed on December 9, 1999, December 10, 1999,
January 20, 2000 and July 14, 2000
The description of Tyco common shares as set Filed on March 1, 1999
forth in its Registration Statement on Form
8-A/A
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
INNERDYNE SEC FILINGS (FILE NO. 000-19707) PERIOD
------------------------------------------ ---------------------------------------------
<S> <C>
Annual Report on Form 10-K Year ended December 31, 1999
Quarterly Reports on Forms 10-Q Quarterly periods ended March 31, 2000 and
June 30, 2000
Current Report on Form 8-K Filed on October 16, 2000
The description of InnerDyne common stock and Filed on September 22, 1997 and December 4,
preferred shares rights associated therewith 1991
as set forth in its Registration Statements
on Form 8-A, each as amended
</TABLE>
All documents filed by Tyco and InnerDyne with the SEC from the date of this
prospectus to the date that shares are accepted for exchange pursuant to our
offer (or the date that our offer is terminated) shall also be deemed to be
incorporated herein by reference.
Tyco has supplied all information contained or incorporated by reference in
this document relating to Tyco, and InnerDyne has supplied all such information
relating to InnerDyne.
Documents incorporated by reference are available from us without charge
upon request to our information agent, MacKenzie Partners, Inc., 156 Fifth
Avenue, New York, NY 10010, collect at 1-212-929-5500 or toll-free at
1-800-322-2885. If you request any incorporated documents from us, we will mail
them to you by first class mail, or another equally prompt means, within one
business day after we receive your request.
We have not authorized anyone to give any information or make any
representation about our offer that is different from, or in addition to, that
contained in this prospectus or in any of the materials that we have
incorporated by reference into this prospectus. Therefore, if anyone does give
you information of this sort, you should not rely on it. If you are in a
jurisdiction where offers to exchange or sell, or solicitations of offers to
exchange or purchase, the securities offered by this document are unlawful, or
if you are a person to whom it is unlawful to direct these types of activities,
then the offer presented in this document does not extend to you. The
information contained in this document speaks only as of the date of this
document unless the information specifically indicates that another date
applies.
2
<PAGE>
QUESTIONS AND ANSWERS ABOUT THE PROPOSED ACQUISITION
Q. WHAT ARE TYCO AND INNERDYNE PROPOSING?
A. Tyco Acquisition Corp. X, a subsidiary of Tyco International Ltd., has
entered into a merger agreement with InnerDyne, Inc. In accordance with this
agreement, Tyco Acquisition is offering to exchange a fraction of a Tyco
common share, determined as described in response to the next question, for
each outstanding share of InnerDyne common stock and the associated rights
to purchase preferred stock. After the offer is completed, VLMS, Inc., a
wholly owned subsidiary of Tyco Acquisition, will merge with InnerDyne. As a
result of the offer and the merger, InnerDyne will become a wholly owned
subsidiary of Tyco Acquisition and an indirect subsidiary of Tyco.
Q. WHAT WILL I RECEIVE IN EXCHANGE FOR MY INNERDYNE SHARES?
A. We are offering to exchange a fraction of a Tyco common share having a value
of $7.50 for each outstanding share of common stock of InnerDyne that is
validly tendered and not properly withdrawn. The fraction of a Tyco common
share which we will deliver for each share of InnerDyne common stock that we
exchange in the offer will equal $7.50 divided by a five trading day average
of the daily volume-weighted selling prices per Tyco common share on the New
York Stock Exchange, as reported by Bloomberg Financial Markets. This
average will be calculated for the five consecutive trading days ending on
the second trading day before the expiration date preceding the first
acceptance of InnerDyne shares for payment in the offer.
You will not receive any fractional Tyco common shares in the offer.
Instead, you will receive cash in an amount equal to the value, based upon
the average Tyco share price, of any fractional share you would otherwise
have been entitled to receive.
Q. HOW CAN I FIND OUT THE FINAL EXCHANGE RATIO?
A. Before the offer expires, we will notify you by issuing a press release
announcing the final exchange ratio. In addition, you can call MacKenzie
Partners, Inc., our information agent, collect at 1-212-929-5500 or toll
free at 1-800-322-2885 at any time beginning on October 25, 2000, after the
close of business, for the average Tyco common share price for the preceding
five trading days and the exchange ratio that would be in effect based on
that average share price. Once the actual Tyco average share price and the
exchange ratio are determined, you can obtain this information by calling
the MacKenzie telephone number.
Q. HOW LONG WILL IT TAKE TO COMPLETE THE OFFER AND THE MERGER?
A. We hope to complete the offer in the fourth calendar quarter of 2000. We
expect to complete the merger shortly after we complete the offer if we
acquire at least 90% of the InnerDyne shares in the offer. If less than 90%
of the shares are tendered in the offer, then the merger will require
InnerDyne stockholder approval, and we will complete the merger shortly
after the special meeting of InnerDyne stockholders to approve the merger.
We must also obtain regulatory clearance prior to completion of the offer
and the merger.
Q. WILL I HAVE TO PAY ANY FEES OR COMMISSIONS?
A. If you are the record owner of your InnerDyne shares and you tender your
InnerDyne shares directly to the exchange agent, you will not have to pay
brokerage fees or incur similar expenses. If you own your shares through a
broker or other nominee, and your broker tenders the shares on your behalf,
your broker may charge you a fee for doing so. You should consult your
broker or other nominee to determine whether any charges will apply.
3
<PAGE>
Q. DOES INNERDYNE SUPPORT THE OFFER AND THE MERGER?
A. Yes. InnerDyne's board of directors has unanimously recommended that
InnerDyne stockholders accept the offer and tender their shares pursuant to
the offer. InnerDyne's board of directors has also approved the merger
agreement and the merger. Information about the recommendation of
InnerDyne's board of directors is more fully set forth in InnerDyne's
Solicitation/Recommendation Statement on Schedule 14D-9, which is being
mailed to InnerDyne stockholders together with this prospectus.
Q. HAS INNERDYNE RECEIVED A FAIRNESS OPINION IN CONNECTION WITH THE OFFER AND
THE MERGER?
A. Yes. InnerDyne has received an opinion from U.S. Bancorp Piper
Jaffray, Inc. dated October 3, 2000 to the effect that, as of such date, the
consideration to be received by InnerDyne's stockholders (other than Tyco or
its affiliates) in the offer and the merger is fair from a financial point
of view to such stockholders. The full text of such opinion, which sets
forth assumptions made, matters considered and limitations on the review
undertaken in connection with the opinion, is attached as a schedule to
InnerDyne's Schedule 14D-9.
Q. WHAT PERCENTAGE OF TYCO COMMON SHARES WILL INNERDYNE STOCKHOLDERS OWN AFTER
THE OFFER AND THE MERGER?
A. After completion of the merger, former InnerDyne stockholders will own less
than 1% of the outstanding Tyco common shares.
Q. WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
A. The offer is subject to several conditions, including:
- at least a majority of the outstanding InnerDyne shares, on a fully
diluted basis, having been validly tendered and not properly withdrawn;
- waiting periods under applicable antitrust laws having expired or been
terminated;
- the registration statement of which this prospectus is a part having been
declared effective by the SEC;
- the shares of Tyco to be issued in the offer and merger having been
approved for listing on the NYSE;
- the tax opinions of PricewaterhouseCoopers LLP and Orrick, Herrington &
Sutcliffe LLP, which are filed as exhibits to the registration statement,
not being withdrawn;
- InnerDyne not having breached any covenant, representation or warranty in
a manner that would, individually or in the aggregate, have a material
adverse effect on InnerDyne;
- there not having occurred any other event that is reasonably likely to be
materially adverse to InnerDyne; and
- the merger agreement not being terminated.
These conditions and other conditions to the offer are discussed in this
prospectus under "Conditions of the Offer" beginning on page 41.
Q. HOW DO I PARTICIPATE IN YOUR OFFER?
A. To tender your shares, you should do the following:
- If you hold shares in your own name, complete and sign the enclosed letter
of transmittal and return it with your share certificates to ChaseMellon
Shareholder Services L.L.C., the exchange
4
<PAGE>
agent for the offer, at the appropriate address specified on the back
cover page of this prospectus before the expiration date of the offer.
- If you hold your shares in "street name" through a broker or other
nominee, instruct your nominee to tender your shares before the expiration
date.
For more information on the timing of the offer, extensions of the offer
period and your rights to withdraw your shares from the offer before the
expiration date, please refer to "The Offer" beginning on page 29.
Q. WILL I RECEIVE A PHYSICAL CERTIFICATE FOR THE TYCO SHARES THAT ARE DELIVERED
TO ME IN THE OFFER?
A. No. Your shares will be issued under Tyco's Direct Registration System. This
means your shares will be held in an account maintained by ChaseMellon
Shareholder Services, Tyco's transfer agent. If you want a physical
certificate, you can request one at any time.
Q. WILL I BE TAXED ON THE TYCO COMMON SHARES THAT I RECEIVE?
A. InnerDyne stockholders' receipt of Tyco common shares in the offer and the
merger generally will be tax-free for United States federal income tax
purposes (except for taxes resulting from the receipt of cash instead of any
fraction of a Tyco common share), if:
- the offer and the merger are completed under the current terms of the
merger agreement,
- the minimum tender condition for the offer is satisfied, and
- the merger is completed promptly after the offer.
For more information on the tax consequences of the offer, please refer to
"Material U.S. Federal Income Tax and Bermuda Tax Consequences" beginning on
page 35. We encourage you to consult your tax advisor on the consequences to
you of participation in the offer or the merger.
Q. DO THE STATEMENTS ON THE COVER PAGE REGARDING THIS PROSPECTUS BEING SUBJECT
TO CHANGE AND THE REGISTRATION STATEMENT FILED WITH THE SEC NOT YET BEING
EFFECTIVE MEAN THAT THE OFFER HAS NOT COMMENCED?
A. No. Effectiveness of the registration statement is not necessary for the
offer to commence. The SEC recently changed its rules to permit exchange
offers to begin before the related registration statement has become
effective, and we are taking advantage of the rule changes with the goal of
acquiring InnerDyne faster than similar acquisitions could previously have
been accomplished. We cannot, however, accept for exchange any shares
tendered in the offer until the registration statement is declared effective
by the SEC and the other conditions to our offer have been satisfied or,
where permissible, waived. The offer will commence when we first mail this
prospectus and the related letter of transmittal to InnerDyne stockholders.
Q. IS TYCO'S FINANCIAL CONDITION RELEVANT TO MY DECISION TO TENDER MY SHARES IN
THE OFFER?
A. Yes. Shares of InnerDyne accepted in the offer will be exchanged for Tyco
common shares and so you should consider Tyco's financial condition before
you decide to tender your shares in the offer. In considering Tyco's
financial condition, you should review the documents incorporated by
reference in this prospectus because they contain detailed business,
financial and other information about us.
Q. WHERE CAN I FIND OUT MORE INFORMATION ABOUT TYCO AND INNERDYNE?
A. You can find out information about Tyco and InnerDyne from various sources
described under "Where You Can Find More Information" beginning on page 1.
5
<PAGE>
Q. WILL INNERDYNE CONTINUE AS A PUBLIC COMPANY?
A. No. If the merger occurs, InnerDyne will no longer be publicly owned. Even
if the merger does not occur, if we purchase the tendered shares, there may
be so few remaining InnerDyne stockholders and publicly held InnerDyne
shares that the shares may no longer be eligible to be quoted on the Nasdaq
or other securities markets, there may not be a public trading market for
the shares and InnerDyne may cease making filings with the SEC or otherwise
cease being required to comply with SEC rules relating to publicly held
companies.
Q. IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES?
A. If you decide not to tender your shares in the offer and the merger occurs,
you will receive in the merger the same fraction of a Tyco share per
InnerDyne share you own as if you had tendered your shares in the offer,
without interest.
Q. WHO CAN I CALL WITH QUESTIONS ABOUT THE OFFER?
A. You can contact our information agent, MacKenzie Partners, Inc., collect at
1-212-929-5500 or toll-free at 1-800-322-2885.
6
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SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS DOCUMENT AND DOES NOT
CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU. TO BETTER UNDERSTAND
THE OFFER AND THE MERGER AND FOR A MORE COMPLETE DESCRIPTION OF THE LEGAL TERMS
OF THE OFFER AND THE MERGER, YOU SHOULD READ CAREFULLY THIS ENTIRE DOCUMENT AND
THE DOCUMENTS TO WHICH YOU HAVE BEEN REFERRED. SEE "WHERE YOU CAN FIND MORE
INFORMATION" BEGINNING ON PAGE 1. IN PARTICULAR, YOU SHOULD READ THE DOCUMENTS
ATTACHED TO THIS DOCUMENT, INCLUDING THE MERGER AGREEMENT, ATTACHED AS ANNEX A
HERETO.
THE OFFER (PAGE 29)
We propose to acquire InnerDyne. We are offering to exchange a fraction of a
Tyco common share having a value of $7.50, determined as described below, for
each share of InnerDyne common stock, including the associated rights to
purchase preferred stock, validly tendered and not properly withdrawn. The
fraction of a Tyco common share to be exchanged for each share of InnerDyne
common stock will equal $7.50 divided by a five trading day average of the daily
volume-weighted selling prices per Tyco common share on the New York Stock
Exchange, as reported by Bloomberg Financial Markets. This average will be
calculated for the five consecutive trading days ending on the second trading
day before the expiration date preceding the first acceptance of InnerDyne
shares for exchange in the offer.
We intend, promptly after completion of the offer, to merge VLMS, our wholly
owned subsidiary, with and into InnerDyne. Each share of InnerDyne common stock
which has not been exchanged or accepted for exchange in the offer would be
converted in the merger into the same fraction of a Tyco common share as is
exchanged in the offer.
INFORMATION ABOUT TYCO AND INNERDYNE
TYCO INTERNATIONAL LTD.
The Zurich Centre, Second Floor
90 Pitts Bay Road
Pembroke HM 08, Bermuda
(441) 292-8674
Tyco is a diversified manufacturing and service company that, through its
subsidiaries:
- designs, manufactures and distributes disposable medical supplies and
other specialty products;
- designs, manufactures and distributes electrical and electronic
components;
- designs, manufactures, installs and services fire detection and
suppression systems and installs, monitors and maintains electronic
security systems;
- designs, manufactures and distributes flow control products; and
- designs, manufactures, installs and services undersea cable communication
systems.
Tyco operates in more than 80 countries around the world and has expected
fiscal 2000 revenues in excess of $28 billion.
Tyco's strategy is to be the 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 and strong cash flows.
Tyco reviews acquisition opportunities in the ordinary course of business,
some of which may be material and some of which are currently under
investigation, discussion or negotiation. There can be no assurance that any of
such acquisitions will be consummated.
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Tyco's common shares are listed on the New York Stock Exchange and the
Bermuda Stock Exchange under the symbol "TYC" and on the London Stock Exchange
under the symbol "TYI".
Tyco's registered and principal executive offices are located at the above
address in Bermuda. The executive offices of Tyco's principal United States
subsidiaries are located at One Tyco Park, Exeter, New Hampshire 03833, and the
telephone number there is (603) 778-9700.
For additional information regarding the business of Tyco, please see Tyco's
Forms 10-K and 10-K/A and other filings of Tyco with the SEC which are
incorporated by reference into this document. See "Where You Can Find More
Information" beginning on page 1.
Following completion of the merger, InnerDyne will become an indirect
subsidiary of Tyco.
INNERDYNE, INC.
1244 Reamwood Ave.
Sunnyvale, CA 94089
InnerDyne is primarily focused upon the development and commercialization of
access products based on its proprietary radial dilation technology used to
perform minimally invasive surgical procedures. The key feature of this
proprietary technology is the capability to enter the body of a patient by
creating a small puncture wound which can subsequently be dilated, or increased
in size, to create a larger working channel. Employment of radial dilation
within an expandable sheath permits the dilation to be accomplished in a manner
that tends to minimize tissue trauma. Upon completion of a procedure, the
dilation sequence is reversed, resulting in a smaller residual wound than would
be experienced through the employment of similarly sized conventional access
devices. Potential benefits of radial dilation technology include reduced risk,
less patient trauma and reduced procedure time.
InnerDyne designs, develops, manufactures and commercializes minimally
invasive surgical access products incorporating its proprietary radial dilation
technology in the fields of general surgery, gynecology, pediatric laparoscopy,
urology and, through a distribution arrangement with Maxxim Medical, Inc.,
vascular procedures. InnerDyne also has proprietary technology in the areas of
biocompatible coatings, radiation delivery for the potential treatment of
restenosis and cancer, and drug attachment and diffusion.
THE OFFER (PAGE 29)
CONDITIONS OF THE OFFER
Our obligation to exchange Tyco common shares for InnerDyne shares pursuant
to the offer is subject to the satisfaction of several conditions including:
- at least a majority of the outstanding InnerDyne shares, on a fully
diluted basis, having been validly tendered and not properly withdrawn;
- waiting periods under applicable antitrust laws having expired or been
terminated;
- the registration statement of which this prospectus is a part having been
declared effective by the SEC;
- the shares of Tyco to be issued in the offer and merger having been
approved for listing on the NYSE;
- the tax opinions of PricewaterhouseCoopers LLP and Orrick, Herrington &
Sutcliffe LLP, filed as exhibits to the registration statement, not having
been withdrawn;
- InnerDyne not having breached any covenant, representation or warranty in
a manner that would, individually or in the aggregate, have a material
adverse effect on InnerDyne;
- there not having occurred any other event that is reasonably likely to be
materially adverse to InnerDyne; and
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<PAGE>
- the merger agreement not having been terminated.
There are also other conditions to the offer. For further details, see
"Conditions of the Offer" beginning on page 41.
TIMING OF THE OFFER
Our offer is currently scheduled to expire on Tuesday, November 14, 2000;
however, we may extend our offer from time to time as necessary until all the
conditions to the offer have been satisfied or, where permissible, waived. For
further details see "Extension, Termination And Amendment" beginning on page 29.
EXTENSION, TERMINATION AND AMENDMENT
If the conditions to the offer are not satisfied or waived on any scheduled
expiration date of the offer, we will extend the offer from time to time for
such amount of time as is reasonably necessary to permit such conditions to be
satisfied or waived; provided, that (a) no single extension shall exceed ten
business days and (b) we will not be required to extend the offer beyond
April 30, 2001. If we extend our offer, we will make an announcement to that
effect no later than 9:00 a.m., New York City time, on the next business day
after the previously scheduled expiration date. During any such extension, all
InnerDyne shares previously tendered and not properly withdrawn will remain
subject to the offer, subject to your right to withdraw your InnerDyne shares.
We reserve the right, in our sole discretion (subject to the provisions of
the merger agreement), at any time or from time to time:
- to extend the offer for any period required by any rule or regulation of
the SEC applicable to the offer, and
- if at least a majority but less than 90% of the outstanding shares shall
have been validly tendered pursuant to the offer as of the scheduled or
extended expiration date, to accept the shares tendered for exchange and
to extend the offer for an aggregate period of not more than 20 business
days beyond the expiration date that occured prior to the time we first
accepted shares for exchange in the offer.
We reserve the right to increase the exchange ratio or to make any other
changes in the terms and conditions of the offer; provided, however, that
without the prior written consent of InnerDyne:
- the minimum condition may not be amended or waived, and
- no change may be made that changes the form or amount of consideration to
be paid, decreases the number of shares sought in the offer, imposes
conditions to the offer in addition to those set forth in the merger
agreement, extends the expiration date of the offer beyond the initial
expiration date of the offer (except as described above) or makes any
other change that is adverse to the holders of the shares.
Any increase in the exchange ratio or other change, amendment, extention or
termination of the offer will be made by giving written or oral notice to the
exchange agent.
We will follow any change, amendment, extension or termination as promptly
as practicable, with a public announcement. In the case of an extension, any
such announcement will be issued no later than 9:00 a.m., New York City time, on
the next business day after the previously scheduled expiration date. Subject to
applicable law (including Rules 14d-4(c) and 14d-6(d) under the Exchange Act,
which require that any material change in the information published, sent or
given to stockholders in connection with the offer be promptly sent to
stockholders in a manner reasonably designed to inform stockholders of such
change) and without limiting the manner in which we may choose to make any
public announcement, we assume no obligation to publish, advertise or otherwise
communicate any such public announcement other than by making a release to the
Dow Jones News Service.
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<PAGE>
EXCHANGE OF SHARES; DELIVERY OF TYCO COMMON SHARES
Upon the terms and subject to the conditions of the offer (including, if the
offer is extended or amended, the terms and conditions of any extension or
amendment), we will accept for exchange, and will exchange, shares validly
tendered and not properly withdrawn as promptly as practicable after the
expiration date.
WITHDRAWAL RIGHTS
Your tender of InnerDyne shares pursuant to the offer is irrevocable, except
that InnerDyne shares tendered pursuant to the offer may be withdrawn at any
time prior to the expiration date, and, unless we previously accepted them
pursuant to the offer, may also be withdrawn at any time after December 18,
2000.
PROCEDURE FOR TENDERING SHARES
For you to validly tender InnerDyne shares pursuant to our offer, (a) a
properly completed and duly executed letter of transmittal (or manually executed
facsimile of that document), along with any required signature guarantees, or an
agent's message in connection with a book-entry transfer, which is explained
below, and any other required documents, must be transmitted to and received by
the exchange agent at one of its addresses set forth on the back cover of this
prospectus, and certificates for tendered InnerDyne shares must be received by
the exchange agent at such address, or those InnerDyne shares must be tendered
pursuant to the procedures for book-entry tender set forth in "The Offer" (and a
confirmation of receipt of such tender received), in each case before the
expiration date, or (b) you must comply with the guaranteed delivery procedures
set forth in "Guaranteed Delivery" beginning on page 33.
NO SOLICITATION PROVISIONS; TERMINATION FEE AND EXPENSES
InnerDyne has agreed that it will not solicit or encourage the initiation of
any inquiries or proposals regarding any alternative acquisition transactions
with third parties. InnerDyne may respond to unsolicited transaction proposals
if required by the InnerDyne Board's fiduciary duties. InnerDyne must promptly
notify Tyco if it receives proposals for any such alternative acquisition
transactions. For further details, see "No Solicitation" beginning on page 53.
If the merger is terminated under specified circumstances, generally
involving an alternative acquisition transaction, InnerDyne may be required to
pay a termination fee of $6 million to Tyco and pay reasonable out-of-pocket
expenses of up to $600,000 to Tyco and Tyco's subsidiary. Tyco's subsidiary may
be required to pay to InnerDyne up to $600,000 of InnerDyne's reasonable
out-of-pocket expenses if the merger is terminated under certain circumstances.
See "Termination; Fees and Expenses" beginning on page 57 for a discussion of
the circumstances in which the fee and expenses are payable.
The termination fee and the no-solicitation provisions may have the effect
of discouraging persons who might be interested in entering into an acquisition
transaction with InnerDyne from proposing an alternative acquisition
transaction.
APPROVAL OF THE MERGER (PAGE 39)
If at the end of the offer we have received between at least a majority and
less than 90% of the outstanding InnerDyne shares, we will effect a long-form
merger as permitted under Delaware law which would require notice to and
approval by InnerDyne stockholders. If at the end of the offer, we have received
90% or more of the outstanding InnerDyne shares, we will effect a short-form
merger as permitted under Delaware law, which would not require approval by any
other stockholders of InnerDyne.
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TAX TREATMENT (PAGE 35)
InnerDyne and Tyco have received opinions that the offer and the merger will
qualify as a tax-free reorganization for United States federal income tax
purposes, provided that:
- the offer and the merger are completed under the current terms of the
merger agreement,
- the minimum tender condition for the offer is satisfied, and
- the merger is completed promptly after the offer, taking into account the
requirement for stockholder approval, if necessary.
Provided that the offer and the merger qualify as a tax-free reorganization,
an InnerDyne stockholder's receipt of Tyco common shares in the offer or the
merger generally will be tax-free for United States federal income tax purposes
(except for taxes resulting from the receipt of cash, if any, instead of a
fraction of a Tyco common share). The above described tax treatment of the offer
and the merger to InnerDyne stockholders depends on, among other things, some
facts that will not be known until the completion of the merger.
To review tax consequences of the offer and the merger in greater detail,
see "Material U.S. Federal Income Tax and Bermuda Tax Consequences" beginning on
page 35.
ACCOUNTING TREATMENT (PAGE 48)
Tyco will account for the offer and the merger as a purchase for financial
reporting purposes. The acquisition of InnerDyne would not be considered
material to Tyco and, accordingly, Tyco is not required to include pro forma
financial information in this prospectus.
RISK FACTORS (PAGE 12)
In deciding whether to tender your shares pursuant to the offer, you should
read carefully this prospectus and the documents to which we refer you. You
should carefully take into account the following risk factors:
- InnerDyne stockholders could receive less than $7.50 in value of Tyco
common shares per share of InnerDyne common stock;
- failure to complete the offer and the merger could negatively impact
InnerDyne's stock price and future business and operations;
- the risks associated with integrating InnerDyne into Tyco, including the
risk that the anticipated benefits of the business combination may not be
fully realized;
- the receipt of Tyco shares in exchange for your InnerDyne shares may be
taxable to you;
- the price of Tyco common shares could depend upon factors different than
those affecting the price of InnerDyne common stock; the Tyco price could
decline following the offer and the merger;
- InnerDyne senior executive officers and directors have employment
agreements and/or benefit plans that provide them with interests in the
merger that may be considered different from, or in addition to, interests
of InnerDyne stockholders;
- the opinion obtained by InnerDyne from its financial advisor will not
reflect changes in circumstance that occur after the date that the opinion
was delivered; and
- the rights of shareholders of Tyco under Bermuda law in some ways are not
as favorable as the rights of stockholders of InnerDyne under Delaware
law.
See "Risk Factors" beginning on page 12 for a more complete discussion of
these factors.
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<PAGE>
RISK FACTORS
In deciding whether to tender your shares pursuant to the offer, you should
read carefully this prospectus, the accompanying Solicitation/Recommendation
Statement on Schedule 14D-9 of InnerDyne and the documents to which we refer
you. You should also carefully consider the following factors:
INNERDYNE STOCKHOLDERS COULD RECEIVE LESS THAN $7.50 IN VALUE OF TYCO COMMON
SHARES PER SHARE OF INNERDYNE COMMON STOCK
Although the offer and the merger is designed to give InnerDyne stockholders
$7.50 in value of Tyco common shares for each of their shares of InnerDyne
common stock, they could receive less in market value. The merger agreement
values the Tyco common shares that InnerDyne stockholders will receive based
upon the average share price of the Tyco common shares computed by taking the
average of the daily volume-weighted averages of the per share selling prices of
Tyco common shares, as reported by Bloomberg Financial Markets, over the five
consecutive trading days ending on the second trading day before the expiration
date preceding the first acceptance of InnerDyne shares for exchange in the
offer. At the time your shares are accepted for exchange and at the time of the
merger, the market price of a Tyco common share could be more or less than the
average share price used in calculating the exchange ratio. If it is less, the
value of the Tyco common shares that an InnerDyne stockholder receives in the
offer and the merger would be less than $7.50. The market value of Tyco shares
fluctuates based upon general market and economic conditions, Tyco's business
and prospects and other factors.
FAILURE TO COMPLETE THE OFFER AND THE MERGER COULD NEGATIVELY IMPACT INNERDYNE'S
STOCK PRICE AND FUTURE BUSINESS AND OPERATIONS
If the merger is not completed, InnerDyne may be subject to the following
material risks:
- InnerDyne may be required to pay Tyco a termination fee of $6 million,
plus up to $600,000 of expenses incurred by Tyco,
- the price of InnerDyne common stock may decline to the extent that the
current market price of InnerDyne common stock reflects a market
assumption that the offer and merger will be completed, and
- costs related to the offer and the merger, such as legal, accounting and
certain financial advisor fees, must be paid even if the offer and the
merger are not completed.
If the merger agreement is terminated and InnerDyne's Board of Directors
determines to seek another merger or business combination, there can be no
assurance that it will be able to find a partner willing to pay an equivalent or
more attractive price than that which would be paid in the merger. In addition,
while the merger agreement is in effect and subject to the limited exceptions
described on page 53, InnerDyne is prohibited from directly or indirectly
soliciting or encouraging the initiation of any inquiries or proposals regarding
certain extraordinary transactions, such as a merger, sale of assets or similar
transactions with any party other than Tyco.
BENEFITS OF THE COMBINATION MAY NOT BE REALIZED
If we complete the proposed merger, we will integrate two companies that
have previously operated independently. The consolidation of functions, the
integration of departments, systems and procedures, and relocation of staff may
present management challenges. We may not be able to integrate the operations of
InnerDyne with our operations without encountering difficulties. The integration
may not be completed as rapidly as we expect or achieve the anticipated benefits
of the merger. The successful integration of Tyco and InnerDyne will require,
among other things, integration
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<PAGE>
of Tyco's and InnerDyne's products and services, sales and marketing,
information and software systems, coordination of employee retention, hiring and
training, and coordination of ongoing and future research and development
efforts. The diversion of the attention of management to the integration effort
and any difficulties encountered in combining operations could adversely affect
the combined company's businesses.
THE RECEIPT OF TYCO SHARES MAY BE TAXABLE TO YOU
Before the consummation of the offer and the merger, it cannot be determined
whether the receipt of Tyco shares in exchange for your InnerDyne shares will be
tax free to you for U.S. federal income tax purposes, although we expect this
will be the case. Tax-free treatment depends upon facts and circumstances that
will not be known until the consummation of the offer and the merger,
particularly whether the merger will be consummated promptly after consummation
of the offer taking into account the requirement for stockholder approval of the
merger, if necessary.
You are urged to consult your tax advisor to determine the specific tax
consequences to you of the offer and the merger, including any U.S. federal,
state, local, non-U.S. or other tax consequences, and any tax return filing or
other reporting requirements. See "Material U.S. Federal Income Tax and Bermuda
Tax Consequences" on page 35.
THE TRADING PRICE OF TYCO COMMON SHARES MAY BE AFFECTED BY FACTORS DIFFERENT
FROM THOSE AFFECTING THE PRICE OF INNERDYNE COMMON STOCK; THE TYCO PRICE COULD
DECLINE FOLLOWING THE OFFER AND THE MERGER
Upon completion of the offer and the merger, holders of InnerDyne common
stock will become holders of Tyco common shares. Tyco's business differs from
that of InnerDyne, and Tyco's results of operations, as well as the trading
price of Tyco common shares, may be affected by factors different from those
affecting InnerDyne's results of operations and the price of InnerDyne common
stock. The price of Tyco common shares may decrease after shares are accepted
for payment in the offer or after the merger is consummated.
OFFICERS AND DIRECTORS OF INNERDYNE HAVE POTENTIAL CONFLICTS OF INTEREST IN THE
MERGER
InnerDyne stockholders should be aware of potential conflicts of interest
and the benefits available to InnerDyne directors when considering InnerDyne's
board of directors' recommendation to approve the merger. InnerDyne officers and
directors have employment agreements and/or benefit plans that provide them with
interests in the merger that may be considered different from, or in addition
to, interests of InnerDyne stockholders. See "Interests of Certain Persons" on
page 61.
THE OPINION OBTAINED BY INNERDYNE FROM ITS FINANCIAL ADVISOR DOES NOT REFLECT
CHANGES IN CIRCUMSTANCES THAT OCCUR AFTER THE DATE THE OPINION WAS DELIVERED
Changes in the operations and prospects of Tyco or InnerDyne, general market
and economic conditions and other factors which are beyond the control of Tyco,
InnerDyne, or U.S. Bancorp Piper Jaffray, InnerDyne's financial advisor, and on
which the opinion of U.S. Bancorp Piper Jaffray are based, may alter the value
of Tyco or InnerDyne or their respective stock prices by the time the offer and
the merger are completed. As a result of the foregoing, InnerDyne stockholders
should be aware that the opinion of U.S. Bancorp Piper Jaffray does not address
the fairness of the merger consideration at the time the offer or merger will be
completed.
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THE RIGHTS OF SHAREHOLDERS OF TYCO UNDER BERMUDA LAW IN SOME WAYS ARE NOT AS
FAVORABLE AS THE RIGHTS OF STOCKHOLDERS OF INNERDYNE UNDER DELAWARE LAW
- Shareholders may not be able to obtain jurisdiction over Tyco outside
Bermuda, so that certain remedies available to stockholders of InnerDyne,
such as class action lawsuits under United States federal and Delaware
law, might not be available to Tyco shareholders.
- The right to bring a derivative action in the name of a company for a
wrong to the company committed by present or former directors of the
company is more limited under Bermuda law than under Delaware law.
- Under Bermuda law and Tyco's bye-laws, only shareholders holding 5% or
more of the outstanding Tyco shares or numbering 100 or more are entitled
to propose a resolution at a Tyco general meeting. Tyco's Board of
Directors can waive these requirements, and the staff of the SEC has taken
the position that the SEC's proxy rules may require Tyco to include in its
proxy materials proposals of shareholders who do not satisfy such
requirements. InnerDyne stockholders do not have to satisfy such
requirements to propose a resolution at an InnerDyne stockholders meeting.
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FORWARD LOOKING INFORMATION
Certain statements contained in or incorporated by reference into this
document are "forward looking statements" within the meaning of the United
States Private Securities Litigation Reform Act of 1995. All forward looking
statements involve risks and uncertainties. In particular, any statements
regarding the benefits of the merger, as well as expectations with respect to
future sales, operating efficiencies and product expansion, are subject to known
and unknown risks, uncertainties and contingencies, many of which are beyond the
control of Tyco and InnerDyne, which may cause actual results, performance or
achievements to differ materially from anticipated results, performance or
achievements. Factors that might affect such forward looking statements include,
among other things:
- the ability to integrate InnerDyne into Tyco's operations,
- overall economic and business conditions,
- the demand for Tyco's and InnerDyne's goods and services,
- competitive factors in the industries in which Tyco and InnerDyne compete,
- changes in government regulation,
- changes in tax requirements, including tax rate changes, new tax laws and
revised tax law interpretations,
- results of litigation,
- interest rate fluctuations, foreign currency rate fluctuations and other
capital market conditions,
- economic and political conditions in international markets, including
governmental changes and restrictions on the ability to transfer capital
across borders,
- the ability to achieve anticipated synergies and other cost savings in
connection with acquisitions,
- the timing, impact and other uncertainties of future acquisitions by Tyco,
and
- the timing of construction and successful operation of the TyCom Global
Network of Tyco's majority owned Tycom Ltd. subsidiary.
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SELECTED FINANCIAL DATA OF TYCO AND INNERDYNE
The following information is being provided to assist you in analyzing the
financial aspects of the offer and the merger. The information for Tyco for the
nine months ended June 30, 2000 and 1999 was derived from the unaudited
Consolidated Financial Statements included in Tyco's Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 2000. The data presented for
Tyco for the nine months ended June 30, 2000 and 1999 are unaudited and, in the
opinion of Tyco's management, include all adjustments, consisting of normal
recurring adjustments, necessary for the fair presentation of such data. Tyco's
results for the nine months ended June 30, 2000 are not necessarily indicative
of the results to be expected for the fiscal year ending September 30, 2000. The
information for Tyco for the years ended September 30, 1999 and 1998 and the
nine months ended September 30, 1997 was derived from the audited Consolidated
Financial Statements included in Tyco's Annual Report on Form 10-K/A filed on
June 26, 2000. The selected financial information for the nine months ended
June 30, 1999 and the fiscal year ended September 30, 1999 have been restated to
reflect the revision discussed in Note 1 to the Consolidated Financial
Statements included in Tyco's Form 10-K/A filed on June 26, 2000. The
information for Tyco for the year ended December 31, 1996 was derived from the
audited Consolidated Financial Statements included in Tyco's Current Report on
Form 8-K filed on June 3, 1999.
The information for InnerDyne has been derived from the unaudited Condensed
Financial Statements included in InnerDyne's Quarterly Report on Form 10-Q for
the six months ended June 30, 2000 and from InnerDyne's audited Financial
Statements for the years ended December 31, 1995 through 1999. The data
presented for InnerDyne for the six months ended June 30, 2000 and 1999 are
unaudited but include all adjustments which InnerDyne's management considers
necessary for a fair presentation of the results of operations for the interim
periods presented. These adjustments are of a normal recurring nature. Interim
results are not necessarily indicative of the results to be expected for the
year ending December 31, 2000.
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 InnerDyne with the SEC. See "Where You Can Find More
Information" on page 1.
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SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF TYCO (1)
<TABLE>
<CAPTION>
(UNAUDITED) NINE MONTHS
NINE MONTHS ENDED YEAR ENDED ENDED YEAR ENDED
JUNE 30, SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31,
---------------------- ---------------------- ------------- -----------------------
2000(2) 1999(2) 1999(3) 1998(4) 1997(5)(6) 1996(7)(8) 1995(7)(9)
--------- ---------- ---------- --------- ------------- ---------- ----------
(RESTATED) (RESTATED)
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS
OF OPERATIONS DATA:
Net sales................ $21,126.5 $16,272.0 $22,496.5 $19,061.7 $12,742.5 $14,671.0 $13,152.1
Operating income......... 4,055.6 1,008.0 2,190.8 1,948.1 125.8 587.4 1,447.5
Income (loss) from
continuing
operations............. 2,610.0 286.9 1,067.7 1,168.6 (348.5) 49.4 755.5
Income (loss) from
continuing operations
per common share (10):
Basic.................... 1.55 0.18 0.65 0.74 (0.24) 0.02 0.55
Diluted.................. 1.52 0.17 0.64 0.72 (0.24) 0.02 0.54
Cash dividends per common
share (10)............. See (11) below.
CONSOLIDATED BALANCE
SHEET DATA:
Total assets............. $37,882.9 $32,344.3 $23,440.7 $16,960.8 $14,686.2 $13,143.8
Long-term debt........... 10,403.2 9,109.4 5,424.7 2,785.9 2,202.4 2,229.7
Shareholders' equity..... 15,381.7 12,369.3 9,901.8 7,478.7 7,022.6 6,792.1
</TABLE>
------------------------
(1) On July 2, 1997, Tyco, formerly called ADT Limited, merged with Tyco
International Ltd., a Massachusetts corporation ("Former Tyco"). On
August 27, 1997, August 29, 1997, October 1, 1998 and April 2, 1999, Tyco
merged with INBRAND Corporation, Keystone International, Inc., US Surgical
and AMP, respectively. These five combinations, which were accounted for
under the pooling of interests method, are more fully described in Notes 1
and 2 to the historical Consolidated Financial Statements contained in
Tyco's Annual Report on Form 10-K/A filed on June 26, 2000, which is
incorporated by reference in this document.
(2) Operating income in the nine months ended June 30, 2000 includes a net
credit of $81.3 million, consisting of a credit of $117.2 million
representing a revision of estimates for accrued merger, restructuring and
other non-recurring charges recorded in prior periods, offset by
restructuring and other non-recurring charges of $35.9 million, primarily
related to the exiting of US Surgical's interventional cardiology business,
charges associated with US Surgical's suture business and restructuring
activities in AMP's Brazilian operations. Operating income for this period
also includes a charge of $99.0 million for the impairment of long-lived
assets primarily related to the exiting of US Surgical's interventional
cardiology business. Operating income in the nine months ended June 30, 1999
includes net charges of $1,032.7 million, consisting of charges of
$693.3 million related to the merger with AMP and AMP's profit improvement
plan and charges of $417.4 million primarily related to the merger with US
Surgical, offset by a credit of $50.0 million related to a litigation
settlement with AlliedSignal, Inc. and a credit of $28.0 million
representing a revision of estimates related to Tyco's 1997 merger,
restructuring and other non-recurring accruals. Operating income for this
period also includes a charge of $507.5 million for the impairment of
long-lived assets related to the merger with AMP and AMP's profit
improvement plan and the merger with US Surgical. See Notes 6 and 7 to the
unaudited
17
<PAGE>
Consolidated Financial Statements contained in Tyco's Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 2000, which is
incorporated by reference in this document.
(3) Operating income in the fiscal year ended September 30, 1999 includes
charges of $1,035.2 million for merger, restructuring and other
non-recurring charges and charges of $507.5 million for the impairment of
long-lived assets primarily related to the mergers with US Surgical and AMP
and AMP's profit improvement plan. See Notes 12 and 16 to the Consolidated
Financial Statements contained in Tyco's Annual Report on Form 10-K/A filed
on June 26, 2000.
(4) Operating income in the fiscal year ended September 30, 1998 includes
charges of $80.5 million primarily related to costs to exit certain
businesses in US Surgical's operations and restructuring charges of
$12.0 million related to the operations of US Surgical. In addition, AMP
recorded restructuring charges of $185.8 million in connection with its
profit improvement plan and a credit of $21.4 million to restructuring
charges representing a revision of estimates related to its 1996
restructuring activities. See Note 16 to the Consolidated Financial
Statements contained in Tyco's Annual Report on Form 10-K/A filed on
June 26, 2000.
(5) In September 1997, Tyco changed its fiscal year end from December 31 to
September 30. Accordingly, the nine-month transition period ended
September 30, 1997 is presented.
(6) Operating income in the nine months ended September 30, 1997 includes
charges related to merger, restructuring and other non-recurring costs of
$917.8 million and impairment of long-lived assets of $148.4 million
primarily related to the mergers and integration of ADT, Former Tyco,
Keystone and INBRAND and charges of $24.3 million for litigation and other
related costs and $5.8 million for restructuring charges in US Surgical's
operations. See Notes 12 and 16 to the Consolidated Financial Statements
contained in Tyco's Annual Report on Form 10-K/A filed on June 26, 2000. The
results for the nine months ended September 30, 1997 also include a charge
of $361.0 million for the write-off of purchased in-process research and
development related to the acquisition of the submarine systems business of
AT&T Corp.
(7) Prior to their respective mergers, ADT, Keystone, US Surgical and AMP had
December 31 fiscal year ends and Former Tyco had a June 30 fiscal year end.
The selected consolidated financial data have been combined using a
December 31 fiscal year end for ADT, Keystone, Former Tyco, US Surgical and
AMP for the year ended December 31, 1996. For 1995, the results of
operations and financial position reflect the combination of ADT, Keystone,
US Surgical and AMP with a December 31 fiscal year end and Former Tyco with
a June 30 fiscal year end. Net sales and net income for Former Tyco for the
period July 1, 1995 through December 31, 1995, which results are not
included in the historical combined results, were $2,460.1 million and
$136.4 million, respectively.
(8) Operating income in 1996 includes non-recurring charges of $744.7 million
related to the adoption of Statement of Financial Accounting Standards
No. 121 "Accounting for the Impairment of Long-Lived Assets to be Disposed
Of," $237.3 million related principally to the restructuring of ADT's
electronic security services business in the United States and United
Kingdom, $98.0 million to exit various product lines and manufacturing
operations associated with AMP's operations and $8.8 million of fees and
expenses related to ADT's acquisition of Automated Security (Holdings) plc,
a United Kingdom company.
(9) Operating income in 1995 includes a loss of $65.8 million on the disposal of
the European auto auction business and a gain of $31.4 million from the
disposal of the European electronic article surveillance business. Operating
income also includes non-recurring charges of $97.1 million for
restructuring charges at ADT and Keystone and for the fees and expenses
related to the 1994 merger of Kendall International, Inc. and Former Tyco,
as well as a charge of $8.2 million relating to the divestiture of certain
assets by Keystone.
18
<PAGE>
(10) Per share amounts have been retroactively restated to give effect to the
mergers with Former Tyco, Keystone, INBRAND, US Surgical and AMP; a 0.48133
reverse stock split (1.92532 after giving effect to the subsequent stock
splits) effected on July 2, 1997; and two-for-one stock splits distributed
on October 22, 1997 and October 21, 1999, both of which were effected in the
form of a stock dividend.
(11) Tyco has paid a quarterly dividend of $0.0125 per common share since
July 2, 1997, the date of the Former Tyco/ADT merger. Prior to the merger
with ADT, Former Tyco paid a quarterly cash dividend of $0.0125 per share of
common stock since January 1992. ADT had not paid any dividends on its
common shares since 1992. US Surgical paid quarterly dividends of $0.04 per
share in the fiscal year ended September 30, 1998 and the nine months ended
September 30, 1997 and aggregate dividends of $0.08 per share in 1996 and
1995. AMP paid dividends of $0.27 per share in the first two quarters of the
year ended September 30, 1999, $0.26 per share in the first quarter and
$0.27 per share in the last three quarters of the year ended September 30,
1998, $0.26 per share in each of the three quarters of the nine months ended
September 30, 1997, aggregate dividends of $1.00 per share in 1996 and $0.92
per share in 1995. The payment of dividends by Tyco in the future will be
determined by Tyco's Board of Directors and will depend on business
conditions, Tyco's financial condition and earnings and other factors.
19
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA OF INNERDYNE
<TABLE>
<CAPTION>
(UNAUDITED)
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, DECEMBER 31,
------------------- ----------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
-------- -------- -------- -------- -------- -------- --------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Net sales............................... $ 11.6 $ 9.5 $ 20.4 $ 17.6 $ 15.7 $ 9.1 $ 5.3
Operating income (loss)................. 1.1 0.5 1.3 0.3 (1.1) (4.9) (5.8)
Income (loss) from continuing
operations.......................... 2.4 0.6 1.5 0.4 (0.9) (4.7) (5.6)
Income (loss) from continuing operations
per common share:
Basic............................... 0.11 0.03 0.07 0.02 (0.04) (0.23) (0.32)
Diluted............................. 0.10 0.02 0.06 0.02 (0.04) (0.23) (0.32)
Cash dividends per common share............. See (1) below.
CONSOLIDATED BALANCE SHEET DATA:
Total assets............................ $ 16.3 $ 13.1 $ 11.1 $ 11.3 $11.4 $ 5.4
Long-term debt.......................... 0.2 0.2 0.3 0.6 0.6 0.2
Stockholders' equity.................... 14.2 10.6 8.7 8.0 8.8 4.0
</TABLE>
------------------------
(1) InnerDyne has not historically paid cash dividends. InnerDyne currently
intends to retain all future earnings, if any, for use in its business and
does not anticipate paying dividends in the foreseeable future.
RECENT DEVELOPMENTS OF TYCO
On October 17, 2000, a subsidiary of Tyco consummated its acquisition of
Mallinckrodt Inc., a global healthcare company with products used primarily for
respiratory care, diagnostic imaging and pain relief. Mallinckrodt had sales of
approximately $2.7 billion in its fiscal year ended June 30, 2000. In the
acquisition, each share of Mallinckrodt common stock was exchanged for 0.9384
Tyco common shares. As of October 16, 2000, there were approximately
69.4 million shares of Mallinckrodt outstanding. The acquisition is being
accounted for under the purchase method of accounting.
On October 9, 2000, Tyco announced that it had completed the sale of its ADT
Automotive business. ADT Automotive is a wholesale automobile auction company
with 28 locations in the United States. Tyco sold this business to Manheim
Auctions, Inc., a wholly owned subsidiary of Cox Enterprises, Inc., for
approximately $1 billion in cash. The sale will generate a one-time pre-tax gain
to Tyco of approximately $300 million.
20
<PAGE>
COMPARATIVE PER SHARE INFORMATION
<TABLE>
<CAPTION>
TYCO AND INNERDYNE INNERDYNE
UNAUDITED EQUIVALENT
TYCO HISTORICAL INNERDYNE PRO FORMA UNAUDITED PRO
PER SHARE HISTORICAL COMBINED FORMA PER
DATA PER SHARE DATA(1) PER SHARE DATA(2) SHARE DATA(2)
--------------- ----------------- ------------------ -------------
<S> <C> <C> <C> <C>
NINE MONTHS ENDED JUNE 30, 2000
(UNAUDITED)
Income from continuing operations
per common share(3):
Basic......................... $1.55 $0.14 $1.54 $0.23
Diluted....................... 1.52 0.13 1.52 0.22
Cash dividends per common share... See (4) below.
Book value per common share....... 9.12 0.62 9.20 1.35
YEAR ENDED SEPTEMBER 30, 1999
Income from continuing operations
per common share(3):
Basic......................... $0.65 $0.07 $0.65 0.10
Diluted....................... 0.64 0.06 0.64 0.09
Cash dividends per common share... See (4) below.
Book value per common share....... 7.32 0.48 7.41 1.09
</TABLE>
------------------------
(1) Tyco has a September 30 fiscal year end. InnerDyne has a December 31 year
end. For purposes of the above comparative per share information, operating
results for the nine months ended June 30, 2000 have been combined using the
results of Tyco and InnerDyne for such period, and the operating results for
the fiscal year ended September 30, 1999 have been combined using the
results of Tyco for its fiscal year ended September 30, 1999 and the results
of InnerDyne for its year ended December 31, 1999. For the book value per
common share at June 30, 2000, the financial position at June 30, 2000 was
used for both Tyco and InnerDyne and at September 30, 1999, the financial
position at September 30, 1999 was used for Tyco and the financial position
at December 31, 1999 was used for InnerDyne.
(2) The InnerDyne unaudited pro forma combined income and book value per common
share are based on InnerDyne shareholders receiving 0.1472 Tyco common
shares for each share of InnerDyne common stock held, corresponding to a
Tyco average share price of $50.9375, which was the closing price per Tyco
common share on the New York Stock Exchange on October 3, 2000. The
InnerDyne equivalent pro forma per share data are calculated by multiplying
the unaudited pro forma combined per share data by 0.1472.
(3) See Notes (2) and (3) to "Selected Consolidated Historical Financial Data of
Tyco" beginning on page 17 for information on certain non-recurring items.
(4) See Note (11) to "Selected Consolidated Historical Financial Data of Tyco"
on page 17 and Note (1) to "Selected Historical Financial Data of InnerDyne"
on page 20 for information on cash dividends per common share.
21
<PAGE>
COMPARATIVE MARKET VALUE
The following table sets forth:
- the closing prices per share and aggregate market value of Tyco common
shares and of InnerDyne common stock on the New York Stock Exchange and on
the Nasdaq National Market, respectively, on October 3, 2000, the last
trading day prior to the public announcement of the proposed merger, and
on October 17, 2000, the most recent date for which prices were available
prior to printing this document; and
- the equivalent price per share and equivalent market value of InnerDyne
common stock, based on the exchange ratio that would apply if the Tyco
average share price during the pricing period were equal to the Tyco
closing price on the New York Stock Exchange on October 3, 2000 and
October 17, 2000.
<TABLE>
<CAPTION>
TYCO INNERDYNE INNERDYNE
HISTORICAL HISTORICAL EQUIVALENT(1)
--------------- ------------ -------------
<S> <C> <C> <C>
On October 3, 2000
Closing price per common share................. $ 50.9375 $ 7.1250 $ 7.5000
Market value of common shares(2) $85,806,534,980 $164,449,553 $173,104,793
On October 17, 2000..............................
Closing price per common share................. $ 46.9375 $ 6.9375 $ 7.5000
Market value of common shares(2)............... $79,001,265,323 $160,128,871 $173,112,293
</TABLE>
------------------------
(1) The InnerDyne equivalent data for October 3, 2000 corresponds to an exchange
ratio of 0.1472 and the InnerDyne equivalent data for October 17, 2000
corresponds to an exchange ratio of 0.1598.
(2) Market value based on 1,684,545,472 Tyco common shares and 23,080,639 shares
of InnerDyne common stock outstanding as of October 3, 2000, and
1,683,116,172 Tyco common shares (excluding shares issuable in the
Mallinckrodt transaction) and 23,081,639 shares of InnerDyne common stock
outstanding as of October 17, 2000 excluding shares held in treasury or by
subsidiaries.
Market values are likely to differ from values based on the average share
price. See the risk factor entitled "InnerDyne stockholders could receive
less than $7.50 in value of Tyco common shares per share of InnerDyne common
stock" on page 12.
22
<PAGE>
COMPARATIVE PER SHARE PRICES AND DIVIDENDS
TYCO
Tyco common shares are listed and traded on the New York Stock Exchange, the
London Stock Exchange and the Bermuda Stock Exchange. The following table sets
forth the high and low sales prices per Tyco common share, as reported on the
New York Stock Exchange Composite Transaction Tape, and the dividends paid on
such shares, for the quarterly periods presented below. The price and dividends
for the Tyco common shares have been restated to reflect the two-for-one stock
split effected in the form of a stock dividend which was distributed on
October 21, 1999. Although Tyco's fiscal year end is September 30, the
information is presented on a calendar year basis.
<TABLE>
<CAPTION>
TYCO COMMON SHARES DIVIDENDS
------------------- PER
HIGH LOW SHARE
-------- -------- ---------
<S> <C> <C> <C>
1998:
First Quarter............................................... $28.7188 $21.1875 $0.0125
Second Quarter.............................................. 31.5313 25.7188 0.0125
Third Quarter............................................... 34.5000 25.0000 0.0125
Fourth Quarter.............................................. 39.5938 20.1563 0.0125
1999:
First Quarter............................................... $39.9688 $33.7500 $0.0125
Second Quarter.............................................. 47.4063 35.1875 0.0125
Third Quarter............................................... 52.9375 47.1250 0.0125
Fourth Quarter.............................................. 53.8750 23.0625 0.0125
2000:
First Quarter............................................... $53.2500 $32.0000 $0.0125
Second Quarter.............................................. 51.3750 41.0000 0.0125
Third Quarter............................................... 59.1875 45.5625 0.0125
Fourth Quarter (through October 17, 2000)................... 54.8125 46.1875
</TABLE>
See "Comparative Market Value" on page 22 for recent Tyco common share price
information. Stockholders are urged to obtain current market quotations. See
also the risk factor entitled "InnerDyne stockholders could receive less than
$7.50 in value of Tyco common shares per share of InnerDyne common stock" on
page 12.
Under the terms of the merger agreement, other than its regularly scheduled
quarterly dividend of $0.0125 per Tyco common share, Tyco is not permitted to
declare, set aside, make or pay any dividend or 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 consummation of the merger. The
payment of dividends by Tyco in the future will be determined by Tyco's board of
directors and will depend on business conditions, Tyco's financial condition and
earnings and other factors.
23
<PAGE>
INNERDYNE
InnerDyne's common stock has been traded on the Nasdaq National Market under
the symbol IDYN since the merger in April 1994 with InnerDyne Medical, Inc. From
January 1992 to April 1994, InnerDyne's common stock traded on the Nasdaq
National Market under the symbol CRDS. The prices per share reflected in the
table below represent the range of low and high closing sale prices for
InnerDyne's common stock as reported on the Nasdaq National Market for the
quarters indicated. These prices reflect inter-dealer prices, without retail
mark-up, markdown or commission and may not represent actual transactions.
<TABLE>
<CAPTION>
INNERDYNE
COMMON SHARES
-------------------
HIGH LOW
-------- --------
<S> <C> <C>
1998:
First Quarter............................................... $3.500 $2.063
Second Quarter.............................................. 3.750 2.375
Third Quarter............................................... 2.875 0.875
Fourth Quarter.............................................. 1.688 0.969
1999:
First Quarter............................................... $4.000 $1.125
Second Quarter.............................................. 2.375 1.375
Third Quarter............................................... 3.750 1.875
Fourth Quarter.............................................. 4.250 2.750
2000:
First Quarter............................................... $9.938 $3.125
Second Quarter.............................................. 7.813 3.188
Third Quarter............................................... 8.000 5.500
Fourth Quarter (through October 17, 2000)................... 7.000 6.375
</TABLE>
See "Comparative Market Value" on page 22 for recent InnerDyne common stock
price information. Stockholders are urged to obtain current market quotations.
Under the terms of the merger agreements, InnerDyne is not permitted to
declare, set aside, make or pay any dividend or 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 consummation of the merger.
24
<PAGE>
REASONS OF TYCO FOR THE OFFER AND MERGER
At a meeting of Tyco's board of directors held on October 3, 2000, Tyco's
board determined that the acquisition of InnerDyne was in keeping with its
corporate strategy of complementing its internal growth with acquisitions that
are likely to benefit from cost reductions and synergies when combined with
Tyco's existing operations and that are expected to be accretive to earnings per
share.
In reaching its decision to adopt the merger agreement, Tyco's Board of
Directors considered the following material factors:
- the expectation that InnerDyne's business could be readily integrated with
Tyco's healthcare products business, enabling Tyco to broaden its line of
product offerings;
- the expectation that the acquisition of InnerDyne before restructuring and
similar charges and assuming the realization of certain of the cost
savings referred to below and other synergies would be immediately
accretive to Tyco's earnings per share;
- the belief of Tyco's management that there are prospects for reduction of
InnerDyne corporate costs, possible elimination of facilities of the
combined company and potential cost reductions for purchased materials and
services;
- the prospect of utilization of InnerDyne's business as a platform for
further growth in the markets served by InnerDyne; and
- Tyco's history of growth through acquisitions, including its substantial
experience integrating acquired businesses with existing operations and
thereby achieving synergies and cost savings.
RECOMMENDATION OF THE BOARD OF DIRECTORS OF INNERDYNE; REASONS OF INNERDYNE FOR
THE OFFER AND THE MERGER
At a meeting held on October 3, 2000, InnerDyne's board of directors, by the
unanimous vote of the directors present, approved the merger agreement and the
transactions contemplated thereby, including the offer and the merger, and
determined that the transactions contemplated by the merger agreement, including
the offer and the merger, were fair to and in the best interests of InnerDyne
and its stockholders. InnerDyne's board has unanimously recommended that
InnerDyne's stockholders accept the offer and tender their shares pursuant to
the offer.
Information about the recommendation of InnerDyne's board of directors is
more fully set forth in InnerDyne's Solicitation/Recommendation Statement on
Schedule 14D-9, which is being mailed to InnerDyne stockholders together with
this prospectus.
BACKGROUND OF THE OFFER
The following discussion presents background information concerning the
offer and the merger. Information on the actions of InnerDyne's management, the
meetings and deliberations of the InnerDyne board of directors and the
activities of InnerDyne's advisors has been furnished by InnerDyne.
From time to time over the past few years, InnerDyne has engaged in informal
discussions with participants in the minimally invasive surgical products
market, including U.S. Surgical Corporation, a subsidiary of Tyco International
Ltd. in its Tyco Healthcare division, concerning distribution rights for
InnerDyne's products. During these discussions, InnerDyne management indicated
that it would consider proposals for a partnership or merger that was sensible
from a business perspective and that would enhance value for InnerDyne
stockholders.
In the fall of 1999, U.S. Surgical contacted InnerDyne with an indication of
interest for a potential business combination. Following execution of a
non-disclosure agreement, representatives of the parties,
25
<PAGE>
including William Mavity, president and chief executive officer of InnerDyne,
met on October 20, 1999 to exchange background information concerning their
respective businesses and to discuss potential synergies. InnerDyne management
also shared its sense of the value that the InnerDyne board would require in
order to consider a business combination transaction. These discussions were
reported to the InnerDyne board at its meeting in November 1999.
After their October meeting, the parties exchanged information concerning
their respective businesses and operations. Representatives of U.S. Bancorp
Piper Jaffray, InnerDyne's financial advisor, prepared analyses for the
potential business combination, including a preliminary analysis concerning the
value of the InnerDyne businesses. These analyses were shared with Tyco
Healthcare. Subsequently, a representative of Tyco Healthcare conveyed to
InnerDyne management an interest in a business combination in a range of $4.00
to $4.50 per share of InnerDyne common stock. This expression of interest was
considered by the InnerDyne board of directors at a meeting on January 11, 2000.
The board concluded that the proposal did not reflect InnerDyne's value in light
of distribution and product development opportunities available to the company.
This position was relayed by Mr. Mavity to a representative of Tyco Healthcare.
The parties met again on February 1, 2000. At the meeting, U.S. Surgical
continued to express interest in a possible business combination, and
Mr. Mavity reviewed pending developments in InnerDyne's businesses, including
prospects for its vascular access products.
At a March 22, 2000 meeting of the InnerDyne board of directors, the board
discussed various strategic alternatives, including the discussions with U.S.
Surgical.
On May 17, 2000, representatives of InnerDyne and Tyco Healthcare met again
to consider a possible business combination transaction. The parties discussed
developments in the InnerDyne and U.S. Surgical businesses and the potential
value that the proposed transaction could bring to InnerDyne and Tyco
Healthcare. Following the meeting, Tyco Healthcare verbally conveyed to
InnerDyne its interest in proceeding with the proposed transaction at a
valuation of $6.50 to $7.00 per share of InnerDyne common stock, subject to due
diligence.
Mr. Mavity reviewed the verbal proposal with the InnerDyne board of
directors on May 31, 2000, and U.S. Bancorp Piper Jaffray prepared an updated
valuation analysis which it presented to the meeting. Following the meeting,
Mr. Mavity conveyed to Tyco Healthcare the sense of the board that the proposed
range was not reflective of the value of InnerDyne, in that it did not take into
account the positive effects of recent business developments. Mr. Mavity also
informed Tyco Healthcare that the board would give the Tyco proposal serious
consideration if the range of value was adjusted upward to better reflect these
developments.
Representatives of the parties met again on July 25, 2000. The Tyco
Healthcare representatives indicated that based upon their updated analysis,
reflecting business developments and diligence since the prior meeting of the
parties, Tyco would be prepared to make an offer for InnerDyne in the range of
$7.00 to $7.50 per share, subject to the completion of due diligence. Tyco
Healthcare confirmed these discussions in a non-binding indication of interest
dated July 27, 2000 and indicated its desire to continue with its diligence
investigation.
Mr. Mavity and a representative of U.S. Bancorp Piper Jaffray reviewed the
Tyco proposal with the InnerDyne board of directors in a meeting on July 31,
2000. At the meeting, U.S. Bancorp Piper Jaffray reviewed its preliminary
financial analysis of the proposed transaction consideration. Counsel to
InnerDyne reviewed with the board its fiduciary duties with respect to a
potential merger. The board then authorized management to countersign the
non-binding indication of interest and to proceed with due diligence.
Representatives of the parties met to exchange due diligence information
during the first week of August 2000, and the parties provided additional
information to each other over the next several weeks.
26
<PAGE>
On August 17, 2000, representatives of Tyco Healthcare contacted Mr. Mavity by
telephone to report that Tyco was prepared to offer $7.50 in value of Tyco
common shares for each share of InnerDyne common stock in a stock-for-stock
exchange offer, subject to customary conditions and approvals.
The offer value and proposed structure were considered by the InnerDyne
board of directors in telephonic meeting on August 21, 2000. At the meeting, the
board reviewed an updated financial analysis of the proposed transaction
consideration prepared by U.S. Bancorp Piper Jaffray. The board directed
management to continue discussions with Tyco and to commence negotiation of
merger documentation. Negotiation of the documentation began in late August and
continued until prior to the execution of the definitive merger agreement.
During this period, representatives of the two companies also communicated
concerning various business and financial issues.
On September 7, 2000, the InnerDyne board of directors met to discuss the
proposed transaction and related strategic issues. Management of InnerDyne
reviewed the background of the proposed transaction and the status of the
negotiations, including various issues relating to the draft merger agreement.
The board authorized management to continue negotiations with Tyco.
On September 25, 2000, the InnerDyne board of directors held a telephonic
meeting at which management briefed the board on the status of the negotiations
concerning the terms of the proposed transaction and representatives of U.S.
Bancorp Piper Jaffray reviewed financial aspects of the proposed transaction
consideration.
On October 3, 2000, at a regularly scheduled board meeting, the Tyco board
of directors approved the business combination with InnerDyne on the terms
contemplated by the merger agreement.
Also on October 3, 2000, the InnerDyne board of directors held a telephonic
board meeting to consider approval of the proposed transaction. Counsel for the
InnerDyne reviewed the terms of proposed exchange offer and merger as set forth
in the merger agreement and other transaction documents. U.S. Bancorp Piper
Jaffray delivered its oral opinion, which was subsequently confirmed in writing,
that, as of such date, the consideration proposed to be paid in the transaction
was fair from a financial point of view to the stockholders of InnerDyne.
Following discussion, the InnerDyne board unanimously approved the merger
agreement, the offer and the merger.
The merger agreement and related documents were executed later that evening.
On October 4, 2000, prior to the opening of the U.S. financial markets, Tyco
and InnerDyne jointly announced the execution of the merger agreement.
On October 18, 2000, Tyco Acquisition commenced the offer.
27
<PAGE>
EXCHANGE OF FINANCIAL FORECASTS
As part of its business planning cycles, management of InnerDyne from time
to time has prepared internal financial forecasts regarding its anticipated
future operations. In the course of the discussions described in "Background of
the Offer," InnerDyne provided certain of these internal forecasts to Tyco and
to InnerDyne's financial advisor.
The internal financial forecasts regarding InnerDyne prepared by InnerDyne's
management reflected the following forecasted information (in thousands, except
per share amounts):
<TABLE>
<CAPTION>
NET
CALENDAR YEAR SALES EBITDA INCOME* EPS
------------- -------- -------- --------- --------
<S> <C> <C> <C> <C>
2000..................... $28,088 $ 6,237 $ 5,863 $0.25
2001..................... 40,597 12,808 12,039 0.51
</TABLE>
------------------------
* Includes estimated impact of recognizing deferred tax assets.
InnerDyne's forecasts were prepared for internal budgeting and planning
purposes only and not with a view to public disclosure or compliance with
published guidelines of the SEC or the guidelines established by the American
Institute of Certified Public Accountants regarding projections or forecasts.
While presented with numerical specificity, the forecasts are based upon a
variety of assumptions relating to the business of the respective companies and
are inherently subject to significant uncertainties and contingencies that are
beyond the control of the management of InnerDyne or Tyco. These include the
impact of general economic and business conditions, the competitive environment
in which each operates and other factors. See "Forward Looking Information" on
page 15. Accordingly, actual results may differ materially from those
forecasted.
The inclusion of the forecasts herein should not be regarded as a
representation by InnerDyne or Tyco or any other person that such forecasts are
or will prove to be correct. As a matter of course, neither InnerDyne nor Tyco
makes public projections or forecasts of its anticipated financial position or
results of operations. Except to the extent required under applicable securities
laws, neither InnerDyne nor Tyco intends to make publicly available any update
or other revisions to any of the forecasts to reflect circumstances existing
after the date of preparation of such forecasts.
28
<PAGE>
THE OFFER
We are offering to exchange a fraction of a Tyco common share having a value
of $7.50, determined as described below, for each outstanding share of InnerDyne
common stock, including the associated rights to purchase preferred stock,
validly tendered and not properly withdrawn, subject to the terms and conditions
described in this prospectus and the related letter of transmittal.
The fraction of a Tyco common share for which each share of InnerDyne common
stock will be exchanged in the offer will be determined by dividing $7.50 by the
average of the daily volume-weighted selling prices per Tyco common share on the
New York Stock Exchange (as reported by Bloomberg Financial Markets) for each of
the five consecutive trading days in the period ending on the second trading day
before the expiration date preceding the first acceptance of InnerDyne shares
for exchange in the offer.
The term "expiration date" means 12:00 midnight, New York City time, on
Tuesday, November 14, 2000, unless we extend the period of time for which the
offer is open, in which case the term "expiration date" means the latest time
and date on which the offer, as so extended, expires. If we accept shares for
exchange and extend the offer in circumstances in which at least a majority but
less than 90% of the outstanding shares have been tendered, "expiration date"
refers to each time and date to which the offer is extended after which we
accept shares for exchange. See "Extension, Termination and Amendment" below.
You will not receive any fractional shares of Tyco common shares. Instead,
you will receive cash in an amount equal to the value, based on the Tyco average
share price referred to above, of any fractional shares you would otherwise have
been entitled to receive.
If you are the record owner of your shares and you tender your shares
directly to the exchange agent, you will not be obligated to pay any charges or
expenses of the exchange agent or any brokerage commissions. If you own your
shares through a broker or other nominee, and your broker tenders the shares on
your behalf, your broker may charge you a fee for doing so. You should consult
your broker or nominee to determine whether any charges will apply.
We are making this offer in order to acquire all of the outstanding shares
of InnerDyne common stock and we intend, as soon as possible after completion of
the offer, to cause our VLMS subsidiary to merge with InnerDyne. The purpose of
the merger is to complete the acquisition of all of the InnerDyne shares not
tendered and exchanged pursuant to the offer. In the merger, each then
outstanding share of InnerDyne common stock (except for treasury shares,
InnerDyne shares owned by Tyco and its subsidiaries and shares as to which
appraisal rights are exercised) would be converted into the same fraction of a
Tyco common share as is exchanged in the offer.
Our obligation to exchange Tyco shares for InnerDyne shares in the offer is
subject to several conditions referred to below under "Conditions of the Offer,"
including the minimum tender condition, the regulatory approvals condition and
other conditions that are discussed below.
TIMING OF THE OFFER
The offer is scheduled to expire at 12:00 midnight, New York City time on
Tuesday, November 14, 2000. For more information, see the discussion under
"Extension, Termination and Amendment" below.
EXTENSION, TERMINATION AND AMENDMENT
If the conditions to the offer are not satisfied or waived on any scheduled
expiration date of the offer, we will extend the offer, from time to time for
such amount of time as is reasonably necessary to permit such conditions to be
satisfied or waived; provided, that (a) no single extension shall exceed 10
business days and (b) we will not be required to extend the offer beyond
April 30, 2001. If we decide
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to so extend our offer, we will make an announcement to that effect no later
than 9:00 a.m., New York City time, on the next business day after the
previously scheduled expiration date.
During any such extension, all InnerDyne shares previously tendered and not
properly withdrawn will remain subject to the offer, subject to your right to
withdraw your InnerDyne shares. See the discussion under "Withdrawal Rights" for
more details on page 32.
We reserve the right, in our sole discretion (subject to the provisions of
the merger agreement), at any time or from time to time, (a) to extend the offer
for any period required by any rule or regulation of the SEC applicable to the
offer, and (b) if at least a majority but less than 90% of the outstanding
shares shall have been validly tendered pursuant to the offer as of the
scheduled or extended expiration date, to accept the shares tendered for
exchange and to extend the offer for an aggregate period of not more than
20 business days beyond the expiration date that occurred prior to the time we
first accepted shares for exchange in the offer.
We reserve the right to increase the exchange ratio or to make any other
changes in the terms and conditions of the offer; provided, however, that
(a) the minimum condition may be amended or waived only with the prior written
consent of InnerDyne, and (b) no change may be made that changes the form or
decreases the amount of consideration to be exchanged, decreases the number of
shares sought in the offer, imposes conditions to the offer in addition to those
set forth in the merger agreement, extends the expiration date of the offer
beyond the initial expiration date of the offer (except as provided above) or
makes any other change that is adverse to the holders of the InnerDyne shares.
We will follow any extension change, amendment, or termination of the offer
as promptly as practicable, with a public announcement. In the case of an
extension, any announcement will be issued no later than 9:00 a.m., New York
City time, on the next business day after the previously scheduled expiration
date. Subject to applicable law (including Rules 14d-4(c) and 14d-6(d) under the
Exchange Act, which require that any material change in the information
published, sent or given to stockholders in connection with the offer be
promptly sent to stockholders in a manner reasonably designed to inform
stockholders of the change) and without limiting the manner in which we may
choose to make any public announcement, we assume no obligation to publish,
advertise or otherwise communicate any such public announcement other than by
making a release to the Dow Jones News Service.
If we make a material change in the terms of the offer or the information
concerning the offer, or if we waive a material condition of the offer, we will
extend the offer to the extent required under the Exchange Act. If, prior to the
expiration date, we change the percentage of InnerDyne shares being sought or
the consideration offered to you, that change will apply to all holders whose
InnerDyne shares are accepted for exchange pursuant to the offer. If at the time
notice of that change is first published, sent or given to you, the offer is
scheduled to expire at any time earlier than the tenth business day from and
including the date that the notice is first so published, sent or given, we will
extend the offer until the expiration of that ten business-day period. For
purposes of the offer, a "business day" means any day other than a Saturday,
Sunday or federal holiday and consists of the time period from 12:01 a.m.
through 12:00 midnight, New York City time.
EXCHANGE OF INNERDYNE SHARES; DELIVERY OF TYCO COMMON SHARES
Upon the terms and subject to the conditions of the offer (including, if the
offer is extended or amended, the terms and conditions of the extension or
amendment), we will accept for exchange, InnerDyne shares validly tendered and
not properly withdrawn as promptly as permitted to do so under applicable law
and will exchange Tyco common shares for the shares of InnerDyne common stock
promptly thereafter. In all cases, exchange of InnerDyne shares tendered and
accepted for exchange pursuant to the offer will be made only after timely
receipt by the exchange agent of certificates for those InnerDyne shares (or a
confirmation of a book-entry transfer of those InnerDyne shares in the exchange
agent's account at The Depository Trust Company), a properly completed and duly
executed
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letter of transmittal (or a manually signed facsimile of that document), and any
other required documents.
For purposes of the offer, we will be deemed to have accepted for exchange
InnerDyne shares validly tendered and not properly withdrawn when we notify the
exchange agent of our acceptance of the tenders of those InnerDyne shares
pursuant to the offer. The exchange agent will deliver Tyco common shares in
exchange for InnerDyne shares pursuant to the offer and cash instead of
fractional Tyco common shares as soon as practicable after delivery of our
notice. The exchange agent will act as agent for tendering stockholders for the
purpose of receiving Tyco common shares and cash to be paid instead of
fractional Tyco common shares and any dividend or distribution payable pursuant
to the terms of the merger agreement and transmitting such stock and cash to
you. You will not receive any interest on any cash that we pay you, even if
there is a delay in making the exchange.
If we do not accept any tendered InnerDyne shares for exchange pursuant to
the terms and conditions of the offer for any reason, or if certificates are
submitted for more InnerDyne shares than are tendered, we will return
certificates for such unexchanged InnerDyne shares without expense to the
tendering stockholder. In the case of InnerDyne shares tendered by book-entry
transfer of such InnerDyne shares into the exchange agent's account at DTC
pursuant to the procedures set forth below under the discussion entitled
"Procedure for Tendering," those InnerDyne shares will be credited to an account
maintained within DTC, as soon as practicable following expiration or
termination of the offer.
If we increase the consideration offered to InnerDyne stockholders in the
offer prior to the expiration date, such increased consideration will be given
to all stockholders whose InnerDyne shares are tendered pursuant to the offer,
whether or not such InnerDyne shares were tendered or accepted for exchange
prior to such increase in consideration.
CASH INSTEAD OF FRACTIONAL TYCO COMMON SHARES
We will not issue certificates representing fractional Tyco common shares
pursuant to the offer. Instead, each tendering stockholder who would otherwise
be entitled to a fractional Tyco common share will receive cash in an amount
equal to the product obtained by multiplying (i) the fractional share interest
to which the holder would otherwise be entitled by (ii) the Tyco average share
price used to calculate the exchange ratio.
PROCEDURE FOR TENDERING
For you to validly tender InnerDyne shares pursuant to the offer, (a) a
properly completed and duly executed letter of transmittal (or manually executed
facsimile of that document), along with any required signature guarantees, or an
agent's message in connection with a book-entry transfer, and any other required
documents, must be transmitted to and received by the exchange agent at one of
its addresses set forth on the back cover of this prospectus, and certificates
for tendered InnerDyne shares must be received by the exchange agent at such
address or those InnerDyne shares must be tendered pursuant to the procedures
for book-entry tender set forth below (and a book-entry confirmation of receipt
of such tender received), in each case before the expiration date, or (b) you
must comply with the guaranteed delivery procedures set forth below.
The term "agent's message" means a message, transmitted by DTC to, and
received by, the exchange agent and forming a part of a book-entry confirmation,
which states that DTC has received an express acknowledgment from the
participant in DTC tendering the InnerDyne shares which are the subject of the
book-entry confirmation, that the participant has received and agrees to be
bound by the terms of the letter of transmittal and that we may enforce that
agreement against the participant.
The exchange agent will establish accounts with respect to the InnerDyne
shares at DTC for purposes of the offer within two business days after the date
of this prospectus, and any financial
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institution that is a participant in DTC may make book-entry delivery of the
InnerDyne shares by causing DTC to transfer such InnerDyne shares into the
exchange agent's account in accordance with DTC's procedure for the transfer.
However, although delivery of InnerDyne shares may be effected through
book-entry at DTC, the letter of transmittal (or a manually signed facsimile
thereof), with any required signature guarantees, or an agent's message in
connection with a book-entry transfer, and any other required documents, must,
in any case, be transmitted to and received by the exchange agent at one or more
of its addresses set forth on the back cover of this prospectus prior to the
expiration date, or the guaranteed delivery procedures described below must be
followed.
Signatures on all letters of transmittal must be guaranteed by an eligible
institution, except in cases in which InnerDyne shares are tendered either by a
registered holder of InnerDyne shares who has not completed the box entitled
"Special Issuance Instructions" or the box entitled "Special Delivery
Instructions" on the letter of transmittal or for the account of an eligible
institution. By "eligible institution," we mean a bank, broker, dealer, credit
union, savings association or other entity which is a member in good standing of
a recognized Medallion Program approved by the Securities Transfer Association
Inc., including the Securities Transfer Agent's Medallion Program (STAMP), the
Stock Exchange Medallion Program (SEMP) and the New York Stock Exchange
Medallion Signature Program (MSP) or any other "eligible guarantor institution,"
as that term is defined in Rule 17 Ad-15 under the Exchange Act.
If the certificates for InnerDyne shares are registered in the name of a
person other than the person who signs the letter of transmittal, or if
certificates for unexchanged InnerDyne shares are to be issued to a person other
than the registered holder(s), the certificates must be endorsed or accompanied
by appropriate stock powers, in either case signed exactly as the name or names
of the registered owner or owners appear on the certificates, with the
signature(s) on the certificates or stock powers guaranteed in the manner we
have described above.
THE METHOD OF DELIVERY OF INNERDYNE SHARE CERTIFICATES AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH DTC, IS AT YOUR OPTION AND RISK,
AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE EXCHANGE
AGENT. IF DELIVERY IS BY MAIL, WE RECOMMEND REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED. IN ALL CASES, YOU SHOULD ALLOW SUFFICIENT TIME TO
ENSURE TIMELY DELIVERY.
TO PREVENT BACKUP FEDERAL INCOME TAX WITHHOLDING WITH RESPECT TO CASH IN
LIEU OF FRACTIONAL SHARES RECEIVED PURSUANT TO THE OFFER, YOU MUST PROVIDE THE
EXCHANGE AGENT WITH YOUR CORRECT TAXPAYER IDENTIFICATION NUMBER AND CERTIFY
WHETHER YOU ARE SUBJECT TO BACKUP WITHHOLDING OF FEDERAL INCOME TAX BY
COMPLETING THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL. SOME
STOCKHOLDERS (INCLUDING, AMONG OTHERS, ALL CORPORATIONS AND SOME FOREIGN
INDIVIDUALS) ARE NOT SUBJECT TO THESE BACKUP WITHHOLDING AND REPORTING
REQUIREMENTS. IN ORDER FOR A FOREIGN INDIVIDUAL TO QUALIFY AS AN EXEMPT
RECIPIENT, THE STOCKHOLDER MUST SUBMIT A FORM W-8, SIGNED UNDER PENALTIES OF
PERJURY, ATTESTING TO THAT INDIVIDUAL'S EXEMPT STATUS.
WITHDRAWAL RIGHTS
Your tender of InnerDyne shares pursuant to the offer is irrevocable, except
that InnerDyne shares tendered pursuant to the offer may be withdrawn at any
time prior to the applicable expiration date, and, unless we have previously
accepted them pursuant to the offer, may also be withdrawn at any time after
December 18, 2000.
For your withdrawal to be effective, the exchange agent must receive from
you a written, telex or facsimile transmission notice of withdrawal at one of
its addresses set forth on the back cover of this prospectus, and your notice
must include your name, address, social security number, the certificate
number(s) and the number of InnerDyne shares to be withdrawn as well as the name
of the registered holder, if it is different from that of the person who
tendered those InnerDyne shares. If InnerDyne
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shares have been tendered pursuant to the procedures for book-entry tender
discussed under "Procedure for Tendering," any notice of withdrawal must specify
the name and number of the account at DTC to be credited with the withdrawn
InnerDyne shares and must otherwise comply with DTC's procedures. If
certificates have been delivered or otherwise identified to the exchange agent,
the name of the registered holder and the serial numbers of the particular
certificates evidencing the InnerDyne shares withdrawn must also be furnished to
the exchange agent, as stated above, prior to the physical release of the
certificates. We will decide all questions as to the form and validity
(including time of receipt) of any notice of withdrawal, in our sole discretion,
and our decision shall be final and binding.
An eligible institution must guarantee all signatures on the notice of
withdrawal unless the InnerDyne shares have been tendered for the account of an
eligible institution.
Neither we, the exchange agent, the information agent nor any other person
will be under any duty to give notification of any defects or irregularities in
any notice of withdrawal or will incur any liability for failure to give any
notification. Any InnerDyne shares properly withdrawn will be deemed not to have
been validly tendered for purposes of our offer. However, you may retender
withdrawn InnerDyne shares by following one of the procedures discussed under
"Procedure for Tendering" or "Guaranteed Delivery" at any time prior to the
expiration date.
GUARANTEED DELIVERY
If you wish to tender InnerDyne shares pursuant to the offer and your
certificates are not immediately available or you cannot deliver the
certificates and all other required documents to the exchange agent prior to the
expiration date or cannot complete the procedure for book-entry transfer on a
timely basis, your InnerDyne shares may nevertheless be tendered, so long as all
of the following conditions are satisfied:
- you make your tender by or through an eligible institution;
- a properly completed and duly executed notice of guaranteed delivery,
substantially in the form made available by us, is received by the
exchange agent as provided below on or prior to the expiration date; and
- the certificates for all tendered InnerDyne shares (or a confirmation of a
book-entry transfer of such securities into the exchange agent's account
at DTC as described above), in proper form for transfer, together with a
properly completed and duly executed letter of transmittal (or a manually
signed facsimile thereof), with any required signature guarantees (or, in
the case of a book-entry transfer, an agent's message) and all other
documents required by the letter of transmittal are received by the
exchange agent within three Nasdaq National Market trading days after the
date of execution of such notice of guaranteed delivery.
You may deliver the notice of guaranteed delivery by hand or transmit it by
facsimile transmission or mail to the exchange agent and you must include a
guarantee by an eligible institution in the form set forth in that notice.
In all cases, we will exchange InnerDyne shares tendered and accepted for
exchange pursuant to our offer only after timely receipt by the exchange agent
of certificates for InnerDyne shares (or timely confirmation of a book-entry
transfer of such securities into the exchange agent's account at DTC as
described above), properly completed and duly executed letter(s) of transmittal
(or a manually signed facsimile(s) thereof), or an agent's message in connection
with a book-entry transfer, and any other required documents.
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GENERAL
By executing a letter of transmittal as set forth above, you irrevocably
appoint our designees as your attorneys-in-fact and proxies, each with full
power of substitution, to the full extent of your rights with respect to your
InnerDyne shares tendered and accepted for exchange by us and with respect to
any and all other InnerDyne shares and other securities issued or issuable in
respect of the InnerDyne shares on or after Tuesday, November 14, 2000. That
appointment is effective, and voting rights will be affected, when and only to
the extent that we deposit Tyco common shares for InnerDyne shares that you have
tendered with the exchange agent. All such proxies shall be considered coupled
with an interest in the tendered InnerDyne shares and therefore shall not be
revocable. Upon the effectiveness of such appointment, all prior proxies that
you have given will be revoked, and you may not give any subsequent proxies
(and, if given, they will not be deemed effective). Our designees will, with
respect to the InnerDyne shares for which the appointment is effective, be
empowered, among other things, to exercise all of your voting and other rights
as they, in their sole discretion, deem proper at any annual, special or
adjourned meeting of InnerDyne's stockholders or otherwise. We reserve the right
to require that, in order for InnerDyne shares to be deemed validly tendered,
immediately upon our exchange of those InnerDyne shares, we must be able to
exercise full voting rights with respect to such InnerDyne shares.
We will determine questions as to the validity, form, eligibility (including
time of receipt) and acceptance for exchange of any tender of InnerDyne shares,
in our sole discretion, and our determination shall be final and binding. We
reserve the absolute right to reject any and all tenders of InnerDyne shares
that we determine are not in proper form or the acceptance of or exchange for
which may, in the opinion of our counsel, be unlawful. We expressly reserve the
right to increase the exchange ratio or to make any other changes in the terms
and conditions of the offer; provided, however, that (a) the minimum condition
may be amended or waived only with the prior written consent of InnerDyne and
(b) no change may be made that changes the form or decreases the amount of
consideration to be exchanged, decreases the number of shares sought in the
offer, imposes conditions to the offer in addition to those set forth in the
merger agreement, extends the expiration date of the offer beyond the initial
expiration date of the offer (except as provided above) or makes any other
change which is adverse to the holders of the shares. No tender of InnerDyne
shares will be deemed to have been validly made until all defects and
irregularities in tenders of InnerDyne shares have been cured or waived. Neither
we, the exchange agent, the information agent nor any other person will be under
any duty to give notification of any defects or irregularities in the tender of
any InnerDyne shares or will incur any liability for failure to give any such
notification. Our interpretation of the terms and conditions of our offer
(including the letter of transmittal and instructions thereto) will be final and
binding.
The tender of InnerDyne shares pursuant to any of the procedures described
above will constitute a binding agreement between us and you upon the terms and
subject to the conditions of the offer.
DIRECT REGISTRATION SYSTEM
The Tyco common shares delivered in exchange for InnerDyne shares in the
offer and the merger will be issued under Tyco's direct registration system.
This means that InnerDyne stockholders will not receive certificates for their
Tyco shares. Instead, the Tyco shares will be held in an account with
ChaseMellon Shareholder Services, Tyco's transfer agent. If you wish to obtain a
physical certificate for the Tyco shares you receive in the offer or merger, you
may request one at any time.
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MATERIAL U.S. FEDERAL INCOME TAX AND BERMUDA TAX CONSEQUENCES
U.S. FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a summary of the material U.S. federal income
tax consequences of the exchange of InnerDyne common stock for Tyco common
shares pursuant to the offer and merger and the ownership of Tyco common shares.
The discussion which follows is based on the U.S. Internal Revenue Code,
Treasury Regulations promulgated thereunder, administrative rulings and
pronouncements and judicial decisions as of the date hereof, all of which are
subject to change, possibly with retroactive effect.
The discussion below is for general information only and, except where
specifically noted, does not address the effects of any state, local or
non-United States tax laws. In addition, the discussion below relates to persons
who hold InnerDyne common stock and will hold Tyco common shares as capital
assets. The tax treatment of an InnerDyne shareholder may vary depending upon
such shareholder's particular situation, and certain shareholders may be subject
to special rules not discussed below. Such shareholders would include, for
example, insurance companies, tax-exempt organizations, financial institutions,
broker-dealers, stockholders who held shares of InnerDyne as part of a hedge,
straddle, constructive sale or conversion transaction, and individuals who
received InnerDyne common stock pursuant to the exercise of employee stock
options or otherwise as compensation. In addition, this discussion does not
address the tax consequences to any InnerDyne shareholder who will own 5% or
more of either the total voting power or the total value of the outstanding Tyco
common shares after the offer or the merger, determined after there is taken
into account ownership under the applicable attribution rules of the U.S.
Internal Revenue Code.
As used in this section, a "U.S. Holder" means a beneficial owner of
InnerDyne common stock who exchanges InnerDyne common stock for Tyco common
shares and who is, for U.S. federal income tax purposes:
- a citizen or resident of the U.S.;
- a corporation, partnership or other entity, other than a trust, created or
organized in or under the laws of the U.S. or any political subdivision
thereof;
- an estate whose income is subject to U.S. federal income tax regardless of
its source; or
- a trust
(1) if, in general, a court within the U.S. is able to exercise primary
supervision over its administration and one or more U.S. persons have
authority to control all of its substantial decisions, or
(2) that has a valid election in effect under applicable U.S. treasury
regulations to be treated as a U.S. person.
As used in this section, a non-U.S. Holder is a holder of InnerDyne common
stock who exchanges InnerDyne common stock for Tyco common shares and who is not
a U.S. Holder.
1. CONSEQUENCES OF THE OFFER AND THE MERGER
In the opinions of PricewaterhouseCoopers LLP and Orrick, Herrington &
Sutcliffe LLP, the material U.S. federal income tax consequences that will
result from the offer and the merger, other than with respect to an InnerDyne
shareholder that is a "5% transferee shareholder" within the meaning of U.S.
Treasury Regulation Section 1.367(a)-3(c)(5)(ii), are as follows:
- The offer and the merger will constitute a reorganization within the
meaning of Section 368(a) of the Code;
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- An InnerDyne shareholder will not recognize any income, gain or loss as a
result of the receipt of Tyco common shares in exchange for InnerDyne
common stock pursuant to the offer and/or merger, except for cash received
in lieu of a fractional Tyco common share;
- The tax basis to an InnerDyne shareholder of the Tyco common shares
received in exchange for InnerDyne common stock pursuant to the offer
and/or merger, including any fractional share interest in Tyco common
shares for which cash is received, will equal such InnerDyne shareholder's
tax basis in the InnerDyne common stock surrendered in exchange therefor;
- The holding period of an InnerDyne shareholder for the Tyco common shares
received pursuant to the offer and/or merger will include the holding
period of the InnerDyne common stock surrendered in exchange therefor;
- An InnerDyne shareholder who is a U.S. Holder and who receives cash in
lieu of a fractional share interest in Tyco common shares pursuant to the
offer and/or merger will be treated as having received such cash in
exchange for such fractional share interest and generally will recognize
capital gain or loss on such deemed exchange in an amount equal to the
difference between the amount of cash received and the basis of the
InnerDyne stock allocable to such fractional share. Non-U.S. Holders who
receive cash in lieu of a fractional share interest in Tyco common shares
will not be subject to United States income or withholding tax except as
set forth in paragraph 3.b below; and
- No income, gain or loss will be recognized by Tyco, Tyco Acquisition,
InnerDyne or VLMS as a result of the transfer to InnerDyne shareholders of
the Tyco common shares provided by Tyco to Tyco Acquisition pursuant to
the merger.
The above opinions, which are not binding on the U.S. Internal Revenue
Service or the courts, are conditioned upon the following factual assumptions
(which we refer to as the supporting conditions):
- the offer and the merger are completed under the current terms of the
merger agreement;
- the minimum condition for the offer is satisfied; and
- the merger is completed promptly after the offer.
The ability to satisfy the supporting conditions, and therefore the federal
income tax consequences of the offer and the merger, depend in part on facts
that will not be available until the completion of the merger. There can be no
assurance that the merger will be completed, or that the supporting conditions
will be satisfied. In addition to the supporting conditions, the above opinions
are based on, among other things, facts existing as of the date hereof, on
certain representations as to factual matters made by Tyco, Tyco Acquisition,
VLMS and InnerDyne and on the assumption as to the absence of material changes
in facts or in law between the date hereof and the effective time of the merger.
If the supporting conditions are not satisfied, or if such representations
or assumption are incorrect in certain material respects, the conclusions
reached in the opinions could be jeopardized and the tax consequences of the
offer and the merger could differ materially from those set forth above. In
particular, in such event the exchange by InnerDyne shareholders of InnerDyne
common stock for Tyco common shares in the offer and/or the merger could be
taxable depending on the particular facts surrounding the offer and/or the
merger, some of which may not be available until completion of the merger. If
the offer and/or the merger is taxable, then U.S. Holders generally will
recognize gain or loss on the exchange of InnerDyne common stock for Tyco common
shares in such taxable transaction measured by the difference between the fair
market value of the Tyco common shares (together with any cash received in lieu
of a fractional Tyco common share) received by such shareholders and such
shareholders' respective tax bases in the InnerDyne common stock surrendered.
The above opinions as to the consequences of the offer and merger to
InnerDyne shareholders relate to InnerDyne shareholders generally who hold their
InnerDyne common stock as capital assets,
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and, as noted above, the tax treatment of an InnerDyne shareholder may vary
depending upon such shareholder's particular situation and certain shareholders
may be subject to special rules not discussed herein. InnerDyne shareholders are
urged to consult with their own tax advisors to determine the particular United
States federal, state, local and non-United States income or other tax
consequences to them of participation in the offer or the merger.
2. TRANSFER TAXES
In the event that any state or local transfer taxes are imposed on InnerDyne
shareholders as a result of the offer or merger, InnerDyne will pay all such
transfer taxes, if any, directly to state and local taxing authorities on behalf
of all InnerDyne shareholders. Any such payments by InnerDyne made on behalf of
the InnerDyne shareholders may result in dividend income to each InnerDyne
shareholder on behalf of whom such payment is made. The amount of such dividend
income attributable to each share of InnerDyne common stock cannot be determined
at this time, but is not expected to be material.
3. OWNERSHIP OF TYCO COMMON SHARES
a. U.S. Holders
DISTRIBUTIONS
Distributions made to U.S. Holders of Tyco common shares will be treated as
dividends and taxable as ordinary income to the extent that such distributions
are made out of Tyco's current or accumulated earnings and profits as determined
for U.S. federal income tax purposes, with any excess being treated as a
tax-free return of capital which reduces such U.S. Holder's tax basis in the
Tyco common shares to the extent thereof, and thereafter as capital gain from
the sale or exchange of property. The U.S. federal income tax treatment
described in the immediately preceding sentence applies whether or not such
distributions are treated as a return of capital for nontax purposes. Amounts
taxable as dividends generally will be treated as foreign source "passive"
income for 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. U.S. Holders of Tyco common shares that are
corporations generally will not be entitled to claim a dividends received
deduction with respect to distributions by Tyco, because Tyco is a foreign
corporation.
DISPOSITION
Gain or loss recognized by a U.S. Holder of Tyco common shares on the sale,
exchange or other taxable disposition of Tyco common shares will be subject to
U.S. federal income taxation as capital gain or loss in an amount equal to the
difference between the amount realized on such sale, exchange or other
disposition and such U. S. Holder's adjusted tax basis in the Tyco common shares
surrendered. Such gain or loss will be long term capital gain or loss if such
U.S. Holder's holding period for its Tyco common shares is more than one year.
Any gain or loss so recognized generally will be United States source.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Certain U.S. Holders may be subject to information reporting with respect to
payments of dividends on, and the proceeds of the disposition of, Tyco common
shares. U.S. Holders who are subject to information reporting and who do not
provide appropriate information when requested may be subject to backup
withholding at a 31% rate. U.S. Holders should consult their tax advisors
regarding the imposition of backup withholding and information reporting with
respect to distributions on, and dispositions of, Tyco common shares.
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b. Non-U.S. Holders
DISTRIBUTIONS AND DISPOSITION
In general, and subject to the discussion below under "Information Reporting
and Backup Withholding," a non-U.S. Holder will not be subject to U.S. federal
income or withholding tax on income from distributions with respect to, or gain
upon the disposition of, Tyco common shares, unless either (1) the income or
gain is effectively connected with the conduct by the non-U.S. Holder of a trade
or business in the U.S. or (2) in the case of gain realized by an individual
non-U.S. Holder upon a disposition of Tyco common shares, the non-U.S. Holder is
present in the U.S. for 183 days or more in the taxable year of the sale and
certain other conditions are met.
In the event that clause (1) in the preceding paragraph applies, such income
or gain generally will be subject to regular U.S. federal income tax in the same
manner as if such income or gain, as the case may be, were realized by a U.S.
Holder. In addition, if such non-U.S. Holder is a non-U.S. corporation, such
income or gain may be subject to a branch profits tax at a rate of 30%, although
a lower rate may be provided by an applicable income tax treaty. In the event
that clause (2), but not clause (1), in the preceding paragraph applies, the
gain generally will be subject to tax at a rate of 30%, or such lower rate as
may be provided by an applicable income tax treaty.
INFORMATION REPORTING AND BACKUP WITHHOLDING
If the Tyco common shares are held by a non-U.S. Holder through a non-U.S.,
and non-U.S. related, broker or financial institution, information reporting and
backup withholding generally would not be required with respect to distributions
on and dispositions of Tyco common shares. Information reporting, and possibly
backup withholding, may apply if the Tyco common shares are held by a non-U.S.
Holder through a U.S., or U.S. related, broker or financial institution and the
non-U.S.Holder fails to provide appropriate information. Non-U.S. Holders should
consult their tax advisors regarding the imposition of backup withholding and
information reporting with respect to distributions on and dispositions of Tyco
common shares.
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 the delivery of Tyco common shares to InnerDyne shareholders in
exchange for InnerDyne common stock pursuant to the offer and 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
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 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 adoption of the merger agreement. InnerDyne
shareholders are urged to consult their tax advisors concerning the United
States federal, state, local and non-United States tax consequences of the
merger to them.
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PURPOSE OF THE OFFER; THE MERGER; APPRAISAL RIGHTS.
We are making the offer and will consummate the merger in order to acquire
all of the outstanding shares of InnerDyne common stock. We intend, as soon as
practicable after completion of the offer, to have VLMS merge with and into
InnerDyne. The purpose of the merger is to acquire all InnerDyne shares not
tendered and exchanged pursuant to the offer. In the merger, each then
outstanding InnerDyne share (except for shares held in InnerDyne's treasury,
shares held by Tyco and its subsidiaries and any appraisal shares) will be
converted into the same fraction of a Tyco common share as is paid in the offer.
Under Sections 251 of the Delaware General Corporation Law ("DGCL"), the
approval of the board of directors of InnerDyne and the affirmative vote of the
holders of a majority of its outstanding shares entitled to vote are required to
approve and adopt a merger and a merger agreement. Stockholder approval is not
required if the conditions described below for a short-form merger are
satisfied. The InnerDyne board of directors has previously approved the merger.
If we complete the offer (after satisfaction of the minimum tender condition),
we would have a sufficient number of InnerDyne shares to approve the merger
without the affirmative vote of any other holder of InnerDyne shares.
Section 253 of the DGCL would permit the merger to occur without a vote of
InnerDyne's stockholders (a "short-form merger") if we were to acquire at least
90% of the outstanding InnerDyne shares in the offer or otherwise, including as
a result of additional shares accepted for exchange during any extention of the
offer following the initial acceptance of shares for exchange in the offer. If,
however, we do not acquire at least 90% of the then outstanding InnerDyne shares
pursuant to the offer or otherwise, and a vote of InnerDyne's stockholders is
required under the DGCL, a longer period of time will be required to effect the
merger. We have agreed in the merger agreement to effect the merger at the
earliest practicable time, and if we obtain ownership of 90% of the outstanding
InnerDyne shares in the offer, to effect the merger as a short-form merger.
APPRAISAL RIGHTS
Under Delaware law, InnerDyne stockholders do not have appraisal rights in
connection with the offer. Stockholders will not have appraisal rights in
connection with the merger, unless the short-form merger procedures are used.
The following summarizes provisions of Delaware law regarding appraisal rights
that would be applicable in the event of a short-form merger. This discussion is
qualified in its entirety by reference to Section 262 of the DGCL, which
contains the Delaware appraisal statute. A copy of this provision is attached to
this document as Annex B. If you fail to take any action required by Delaware
law, your rights to an appraisal will be waived or terminated.
NOTIFICATION OF MERGER'S EFFECTIVENESS
Either before the effective time of the merger or within ten days
thereafter, InnerDyne will send notice of the effectiveness of the merger and
the availability of appraisal rights to each InnerDyne stockholder (other than
Tyco or its subsidiaries).
ELECTING APPRAISAL RIGHTS
To exercise appraisal rights, the record holder of InnerDyne common stock
must within 20 days after the date of mailing of such notice deliver a written
demand for appraisal to InnerDyne. This demand must reasonably inform InnerDyne
of the identity of the holder of record and that the stockholder demands
appraisal of his or her shares of InnerDyne common stock.
A demand for appraisal must be delivered to: Corporate Secretary, InnerDyne,
1244 Reamwood Ave., Sunnyvale, CA 94089.
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RECORD HOLDERS MUST DEMAND APPRAISAL RIGHTS
Only a record holder of InnerDyne common stock is entitled to demand
appraisal rights. The demand must be executed by or for the record holder, fully
and correctly, as the holder's name appears on the holder's stock certificates.
- If the InnerDyne common stock is owned of record in a fiduciary capacity,
such as by a trustee, guardian or custodian, the demand should be executed
in that capacity.
- If the InnerDyne common stock is owned of record by more than one person,
as in a joint tenancy or tenancy in common, the demand should be executed
by or for all owners.
- An authorized agent, including one of two or more joint owners, may
execute the demand for appraisal for a holder of record. The agent must
identify the owner or owners of record and expressly disclose the fact
that, in executing the demand, the agent is acting as agent for the owner
or owners of record.
- A holder of record, such as a broker, who holds common stock as nominee
for beneficial owners, may exercise a holder's right of appraisal with
respect to common stock held for all or less than all of such beneficial
owners. In that case, the written demand should set forth the number of
shares of common stock covered by the demand. If no number of shares of
common stock is expressly mentioned, the demand will be presumed to cover
all shares of common stock standing in the name of the record holder.
COURT PETITION MUST BE FILED
Within 120 days after the effective time of the merger, the surviving
corporation in the merger or any stockholder who has satisfied the foregoing
conditions may file a petition in the Delaware Court of Chancery demanding a
determination of the fair value of the InnerDyne common stock. Stockholders
seeking to exercise appraisal rights should initiate all necessary action to
perfect his rights within the time periods prescribed by Delaware law.
STATEMENT REGARDING SHARES NOT VOTED FOR MERGER
Within 120 days after the effective time of the merger, any stockholder who
has complied with the requirements for exercise of appraisal rights is entitled,
upon written request, to receive a statement setting forth the aggregate number
of shares of common stock not voted in favor of the merger and with respect to
which demands for appraisal have been made and the aggregate number of holders
of such stock. The surviving corporation in the merger is required to mail this
statement within ten days after it receives the written request.
APPRAISAL PROCEEDING BY DELAWARE COURT
If a petition for an appraisal is timely filed, after a hearing on the
petition, the Delaware Court of Chancery will determine which of the
stockholders are entitled to appraisal rights. The court will appraise the
common stock owned by the stockholders and determine its fair value. In
determining fair value, the court may consider a number of factors including
market values of InnerDyne's stock, asset values and other generally accepted
valuation considerations, but will exclude any element of value arising from the
accomplishment and expectation of the merger. The court will also determine the
amount of interest, if any, to be paid upon the value of the common stock to the
stockholders entitled to appraisal.
The value determined by the court for InnerDyne common stock could be more
than, less than, or the same as the merger consideration. The court may also
order that all or a portion of any stockholder's expenses incurred in connection
with an appraisal proceeding, including reasonable
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attorney's fees and fees and expenses of experts utilized in the appraisal
proceeding, be charged against the value of all common stock entitled to
appraisal.
EFFECT OF APPRAISAL DEMAND ON VOTING AND RIGHT TO DIVIDENDS
Any stockholder who has duly demanded an appraisal in compliance with
Delaware law will not, after the effective time of the merger, be entitled to
vote the shares subject to the demand for any purpose. The shares subject to the
demand will not be entitled to dividends or other distributions, other than
those payable or deemed to be payable to stockholders of record as of a date
prior to the effective time.
LOSS, WAIVER OR WITHDRAWAL OF APPRAISAL RIGHTS
Holders of InnerDyne common stock lose the right to appraisal if no petition
for appraisal is filed within 120 days after the effective time of the merger. A
stockholder will also lose the right to an appraisal by delivering to the
surviving corporation a written withdrawal of such stockholder's demand for an
appraisal. In addition, any attempt to withdraw that is made more than 60 days
after the effective time requires the written approval of the surviving
corporation. If appraisal rights are not perfected or a demand for appraisal
rights is withdrawn, a stockholder will be entitled to receive the consideration
otherwise payable pursuant to the merger. The number of Tyco shares delivered to
such stockholder will be based on the same exchange ratio utilized in the offer
and the merger, regardless of the market price of Tyco shares at the time of
delivery.
DISMISSAL OF APPRAISAL PROCEEDING
If an appraisal proceeding is timely instituted, such proceeding may not be
dismissed as to any stockholder who has perfected a right of appraisal without
the approval of the court.
CONDITIONS OF THE OFFER
The offer is subject to a number of conditions, which are described below:
MINIMUM TENDER CONDITION
There must be validly tendered and not properly withdrawn prior to the
expiration of the offer a number of InnerDyne shares which will constitute at
least a majority of the total number of outstanding InnerDyne shares on a fully
diluted basis (as though all options or other securities convertible into or
exercisable or exchangeable for InnerDyne shares within 180 days of the
expiration of the offer had been so converted, exercised or exchanged) as of the
date that we accept the InnerDyne shares pursuant to the offer. Based on
information supplied by InnerDyne, the number of InnerDyne shares needed to
satisfy the minimum tender condition would have been 13,151,260 as of
October 12, 2000.
ANTITRUST CONDITION
This condition requires that any applicable waiting periods under the HSR
Act or similar statutes or regulations of foreign jurisdictions that may be
applicable to the offer and merger have expired or been terminated. We are
unaware of any such statutes or regulations other than the HSR Act.
REGISTRATION STATEMENT EFFECTIVENESS CONDITION
The registration statement on Form S-4 of which this prospectus is a part
must have become effective under the Securities Act and not be the subject of
any stop order or proceedings seeking a stop order.
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LISTING CONDITION
The Tyco common shares issuable in the offer must have been approved for
listing on the New York Stock Exchange.
TAX OPINION CONDITION
The tax opinions of PricewaterhouseCoopers LLP and Orrick, Herrington &
Sutcliffe LLP to the effect that the offer and merger will be treated as a tax
free reorganization for U.S. federal income tax purposes must not be withdrawn.
OTHER CONDITIONS OF THE OFFER
The offer is also subject to the conditions that, at the time of the
expiration date of the offer, none of the following shall have occurred and be
continuing which, in our good faith judgment, regardless of the circumstances,
makes it inadvisable to proceed with the offer:
(1) there shall be in effect an injunction, order, decree, judgment or ruling by
a governmental authority of competent jurisdiction or a statute, rule,
regulation or order shall have been promulgated or shall have been enacted
by a governmental authority of competent jurisdiction that (i) restrains or
prohibits the offer or the merger, (ii) prohibits or restricts our (or any
of our subsidiaries' or affiliates') ownership or operation of, or compels
us (or any of our subsidiaries or affiliates) to dispose of or hold
separate, any portion of InnerDyne's business or assets or any material
portion of Tyco's medical device business; or which would substantially
deprive us and/or any of our affiliates or subsidiaries of the benefit of
ownership of InnerDyne's business or assets, (iii) imposes material
limitations on our ability to acquire, hold or exercise full rights of
ownership of InnerDyne shares, including the right to vote InnerDyne shares,
(iv) imposes any material limitations on our ability and/or our
subsidiaries' or affiliates' ability to control InnerDyne's business and
operations in any material respect, or (v) seeks to materially restrict any
future business activity by Tyco (or any of its affiliates) relating to the
healthcare business;
(2) there has been instituted, pending or threatened an action by a governmental
authority seeking to restrain or prohibit the offer or the merger or to
impose any other restriction, prohibition or limitation referred to in
paragraph (1);
(3) the merger agreement has been terminated in accordance with its terms;
(4) there has occurred any general suspension of, or limitation on prices for,
trading in InnerDyne shares on Nasdaq or Tyco shares on the New York Stock
Exchange or a declaration of a banking moratorium or any general suspension
of payments in respect of banks in the United States or in the case of any
of the foregoing existing at the time of the execution of the merger
agreement, a material acceleration or worsening thereof;
(5) we and InnerDyne have agreed to terminate the offer or postpone the exchange
of shares pursuant thereto;
(6) (i) any of the representations and warranties made by InnerDyne in the
merger agreement shall not have been true when made or become untrue in any
material respect or (ii) InnerDyne has breached its obligations under the
merger agreement and the failure of such representations and warranties to
be true or such breach, individually or in the aggregate, has had or could
reasonably be expected to have a material adverse effect on InnerDyne and
cannot be or has not been cured within 5 days after notice to InnerDyne or
prior to the initial expiration date of the offer;
(7) InnerDyne's board of directors has withdrawn or adversely modified or
amended its recommendation of the offer or has recommended another
transaction; or
(8) (i) any person/group (other than Tyco Acquisition or one or more of its
affiliates) has acquired beneficial ownership of more than 15% of the
outstanding InnerDyne shares or shall have been
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granted any options or rights, conditional or otherwise, to acquire a total
of more than 15% of the outstanding shares and which, in each case, does not
tender the shares beneficially owned by it in the offer; (ii) any new group
shall have been formed which beneficially owns more than 15% of the
outstanding Shares and which does not tender the shares beneficially owned
by it in the offer; or (iii) any person/group shall have entered into an
agreement in principle or definitive agreement with the InnerDyne with
respect to a tender or exchange offer for any shares or a merger,
consolidation or other business combination with or involving InnerDyne; or;
(9) any change, development, effect or circumstance has occurred or has been
threatened that would reasonably be expected to have a material adverse
effect on InnerDyne; or
(10) InnerDyne has filed for bankruptcy or another person has filed a bankruptcy
petition against InnerDyne that is not dismissed within 2 business days;
The conditions to the offer are for our sole benefit and may be waived by
us, in whole or in part at any time and from time to time, in our reasonable
discretion. Our failure to exercise any of the foregoing rights shall not be
deemed a waiver of any right and each right shall be deemed an ongoing right
which may be asserted at any time and from time to time. We may, in our sole
discretion, waive these conditions in whole or in part, other than the minimum
tender condition (which may only be waived with InnerDyne's prior written
consent), provided that no change may be made that changes the form or decreases
the amount of consideration to be exchanged, decreases the number of shares
sought in the offer, imposes conditions to the offer in addition to those set
forth above, extends the expiration date of the offer beyond the initial
expiration date of the offer (except as provided in the merger agreement) or
makes any other change which is adverse to the holders of the shares.
REGULATORY APPROVALS
Except as set forth herein, we are not aware of any licenses or regulatory
permits that appear to be material to the business of InnerDyne and that might
be adversely affected by our acquisition of InnerDyne shares in the offer. In
addition, except as set forth herein, we are not aware of any filings, approvals
or other actions by or with any governmental authority or administrative or
regulatory agency that would be required for our acquisition or ownership of the
InnerDyne shares. Should any such approval or other action be required, we
expect to seek such approval or action, except as described under "State
Takeover Laws." Should any such approval or other action be required, we cannot
be certain that we would be able to obtain any such approval or action without
substantial conditions or that adverse consequences might not result to
InnerDyne's businesses, or that certain parts of InnerDyne's, Tyco or any of its
subsidiaries' businesses might not have to be disposed of or held separate in
order to obtain such approval or action. In that event, subject to the
provisions of the merger agreement, we may not be required to purchase any
InnerDyne shares in the offer.
STATE TAKEOVER LAWS. A number of states have adopted takeover laws and
regulations that purport to be applicable to attempts to acquire securities of
corporations that are incorporated in those states or that have substantial
assets, stockholders, principal executive offices or principal places of
business in those states. To the extent that these state takeover statutes
purport to apply to the offer or the merger, we believe that those laws conflict
with U.S. federal law and are an unconstitutional burden on interstate commerce.
In 1982, the Supreme Court of the United States, in EDGAR V. MITE CORP.,
invalidated on constitutional grounds the Illinois Business Takeovers Statute,
which, as a matter of state securities law, made takeovers of corporations
meeting certain requirements more difficult. The reasoning in that decision is
likely to apply to certain other state takeover statutes. In 1987, however, in
CTS CORP. V. DYNAMICS CORP. OF AMERICA, the Supreme Court of the United States
held that the State of Indiana could as a matter of corporate law and, in
particular, those aspects of corporate law concerning corporate governance,
constitutionally disqualify a potential acquiror from voting on the affairs of a
target corporation without the prior approval of the remaining stockholders, as
long as those laws were applicable only under certain conditions. Subsequently,
in TLX PURCHASER CORP. V. TELEX
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CORP., a federal district court in Oklahoma ruled that the Oklahoma statutes
were unconstitutional insofar as they apply to corporations incorporated outside
Oklahoma, because they would subject those corporations to inconsistent
regulations. Similarly, in TYSON FOODS, INC. V. MCREYNOLDS, a federal district
court in Tennessee ruled that four Tennessee takeover statutes were
unconstitutional as applied to corporations incorporated outside Tennessee. This
decision was affirmed by the United States Court of Appeals for the Sixth
Circuit. In December 1988, a federal district court in Florida held, in GRAND
METROPOLITAN PLC V. BUTTERWORTH, that the provisions of the Florida Affiliated
Transactions Act and Florida Control Share Purchaser Act were unconstitutional
as applied to corporations incorporated outside of Florida.
InnerDyne is incorporated under the laws of the State of Delaware. In
general, Section 203 of the DGCL prevents an "interested stockholder" (generally
a person who owns or has the right to acquire 20% or more of a corporation's
outstanding voting stock, or an affiliate or associate thereof) from engaging in
a "business combination" (defined to include mergers and certain other
transactions) with a Delaware corporation for a period of three years following
the date such person became an interested stockholder unless, among other
things, prior to such date the board of directors of the corporation approved
either the business combination or the transaction in which the interested
shareholder became an interested shareholder. The board of directors of
InnerDyne has recommended the offer, approved the merger agreement, and the
other transactions contemplated by such agreement, and such approval is
sufficient to render inapplicable to the merger the provisions of Section 203 of
the DGCL.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations that are incorporated, or have
substantial assets, shareholders, or whose business operations otherwise have
substantial economic effects in such states. InnerDyne conducts business in a
number of states throughout the United States, some of which may have enacted
takeover laws as described above. We do not believe that any such takeover
statutes are applicable to the offer or the merger and have not attempted to
comply with any such state takeover statutes in connection therewith.
We reserve the right to challenge the validity or applicability of any state
law allegedly applicable to the offer or the merger, and nothing herein nor any
action that we take in connection with the offer is intended as a waiver of that
right. In the event that it is asserted that one or more takeover statutes apply
to the offer or the merger, and it is not determined by an appropriate court
that the statutes in question do not apply or are invalid as applied to the
offer or the merger, as applicable, we may be required to file certain documents
with, or receive approvals from, the relevant state authorities, and we might be
unable to accept for exchange InnerDyne shares tendered in the offer or be
delayed in continuing or consummating the offer. In that case, we may not be
obligated to accept for purchase, or pay for, any InnerDyne shares tendered.
ANTITRUST. Under the HSR Act and the rules that have been promulgated
thereunder by the Federal Trade Commission (the "FTC"), certain transactions may
not be consummated unless certain information has been furnished to the
Antitrust Division of the Department of Justice (the "Antitrust Division") and
the FTC and certain waiting period requirements have been satisfied. The
acquisition of InnerDyne shares pursuant to the offer is subject to such
requirements.
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Pursuant to the requirements of the HSR Act, Tyco has filed or will in the
near future file a Notification and Report Form with respect to the offer with
the Antitrust Division and the FTC. Under the provisions of the HSR Act
applicable to the Offer, the purchase of InnerDyne Shares pursuant to the offer
may not be consummated until the expiration of a 30-calendar day waiting period
following the filing by Tyco, unless such waiting period is earlier terminated
by the FTC and the Antitrust Division or extended by a request from the FTC or
the Antitrust Division for additional information or documentary material prior
to the expiration of the waiting period. Pursuant to the HSR Act, Tyco has
requested or will request early termination of the waiting period applicable to
the offer. There can be no assurance, however, that the waiting period will be
terminated early. If either the FTC or the Antitrust Division were to request
additional information or documentary material from Tyco with respect to the
offer, the waiting period with respect to the offer would expire on the
twentieth calendar day after the date of substantial compliance with such
request. Additional delays thereafter could occur under possible agreements to
effectively extend the waiting period or under court orders that might be sought
by the FTC or the Antitrust Division to temporarily or permanently block the
transaction. If the acquisition of shares is delayed pursuant to a request by
the FTC or the Antitrust Division for additional information or documentary
material pursuant to the HSR Act, the offer may, but need not, be extended and,
in any event, the acquisition of and payment for shares will be deferred until
after any applicable waiting period, agreement or court order blocking the
transaction expires or is terminated. Any such extension of the waiting period
will not give rise to any withdrawal rights not otherwise provided for by
applicable law. It is a condition to the offer that the waiting period
applicable under the HSR Act to the offer expire or be terminated. See
"Conditions of the Offer."
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of shares
pursuant to the offer. At any time before or after the exchange of shares
pursuant to the offer, 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 to enjoin the exchange of shares pursuant to the
offer or seeking the divestiture of shares purchased in the offer or the
divestiture of substantial assets of Tyco, its subsidiaries or InnerDyne.
Private parties and state attorneys general may also bring legal action under
federal or state antitrust laws under certain circumstances. As in any case,
there can be no assurance that a challenge to the offer on antitrust grounds
will not be made or, if such a challenge is made, what the result would be.
NON-U.S. APPROVALS. We are unaware of any requirement for the filing of
information with, or the obtaining of the approval or consent of, governmental
authorities in any non-U.S. jurisdiction that is applicable to the offer and the
merger.
CERTAIN EFFECTS OF THE OFFER
REDUCED LIQUIDITY; POSSIBLE DELISTING. The purchase of InnerDyne shares
pursuant to the offer will reduce the number of holders of InnerDyne shares and
the number of InnerDyne shares that might otherwise trade publicly and could
adversely affect the liquidity and market value of the remaining InnerDyne
shares held by the public. InnerDyne shares are included for quotation and
principally traded on the Nasdaq National Market. Depending on the number of
InnerDyne shares acquired pursuant to the offer, following consummation of the
offer, InnerDyne shares may no longer meet the requirements of Nasdaq for
continued quotation. The National Association of Securities Dealers'
requirements for continued inclusion in Nasdaq, among other things, require that
an issuer have either: (i) at least 750,000 publicly held shares, held by at
least 400 stockholders of round lots, with a market value of at least
$5 million and net tangible assets of at least $4 million and at least two
registered and active market makers for the shares or (ii) at least 1,100,000
publicly held shares, held by at least 400 stockholders of round lots, with a
market value of at least $15 million and at least four registered and active
market markers, or (iii) a market capitalization of at least $50 million or
(iv) total assets and
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total revenue of at least $50 million each for the most recently completed
fiscal year or two of the last three most recently completed fiscal years.
Following consummation of the offer, the InnerDyne shares might nevertheless
continue to be included in the Nasdaq with quotations published in Nasdaq's
"additional list" or in one of the "local lists," but if the number of holders
of the shares were to fall below 300, the number of publicly held shares were to
fall below 500,000 or there were not at least two registered and active market
makers for the shares, the NASD's rules provide that the shares would no longer
be "qualified" for Nasdaq reporting and Nasdaq would cease to provide any
quotations. Shares held directly or indirectly by directors, officers or
beneficial owners of more than 10% of the shares are not considered as being
publicly held for this purpose. If, following the closing of the offer, the
shares of InnerDyne no longer meet the requirements of the NASD for continued
inclusion in the Nasdaq National Market or in any other tier of Nasdaq and the
shares were no longer included in the Nasdaq National Market or in any other
tier of Nasdaq, the market for shares could be adversely affected.
If the shares no longer meet the requirements of the NASD for continued
inclusion in any tier of Nasdaq, it is possible that the shares would continue
to trade in the over-the-counter market and that price quotations would be
reported by other sources. The extent of the public market for the InnerDyne
shares and the availability of quotations for InnerDyne shares would, however,
depend upon the number of holders of shares remaining at that time, the interest
in maintaining a market in InnerDyne shares on the part of securities firms, the
possible termination of registration of the shares under the Exchange Act, as
described below, and other factors. We cannot predict whether the reduction in
the number of InnerDyne shares that might otherwise trade publicly would have an
adverse or beneficial effect on the market price for, or marketability of, the
InnerDyne shares.
Tyco Acquisition intends to cause the delisting of the InnerDyne shares from
Nasdaq following consummation of the offer and the merger.
According to InnerDyne, there were, as of October 12, 2000, approximately
23,081,639 InnerDyne shares outstanding, held by approximately 4,000 holders of
record.
STATUS AS "MARGIN SECURITIES." The InnerDyne shares are presently "margin
securities" under the regulations of the Federal Reserve Board, which has the
effect, among other things, of allowing brokers to extend credit on the
collateral of InnerDyne shares. Depending on the factors similar to those
described above with respect to listing and market quotations, following
consummation of the offer, the InnerDyne shares may no longer constitute "margin
securities" for the purposes of the Federal Reserve Board's margin regulations,
in which event the InnerDyne shares would be ineligible as collateral for margin
loans made by brokers.
FINANCING OF THE OFFER AND THE MERGER. The securities required to
consummate the offer and the merger come from Tyco's authorized but unissued
shares. The related fees and expenses are estimated to be approximately $500,000
for the information agent, the exchange agent, the financial printer, counsel
and other professionals. We will obtain all of such funds from Tyco's available
capital resources
GOING PRIVATE TRANSACTIONS. The SEC has adopted Rule 13e-3 under the
Exchange Act which is applicable to certain "going private" transactions and
which may under certain circumstances be applicable to the merger or another
business combination following the purchase of InnerDyne shares pursuant to the
offer in which Tyco Acquisition seeks to acquire the remaining shares not held
by it. We believe that Rule 13e-3 will not be applicable to the merger.
Rule 13e-3 requires, among other things, that certain financial information
concerning InnerDyne and certain information relating to the fairness of the
proposed transaction and the consideration offered to minority stockholders in
such transaction be filed with the Commission and disclosed to shareholders
prior to consummation of the transaction.
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PLANS FOR INNERDYNE. Except as otherwise set forth in this offer, it is
expected that initially following the merger, the business and operations of
InnerDyne will be continued substantially as they are being conducted, but
within Tyco's healthcare unit. Following the merger, Tyco intends to conduct a
comprehensive review of InnerDyne's business, operations, capitalization and
management with a view to optimizing InnerDyne's potential in conjunction with
Tyco's businesses.
REGISTRATION UNDER THE EXCHANGE ACT. InnerDyne shares are currently
registered under the Exchange Act. InnerDyne can terminate that registration
upon application to the SEC if the outstanding shares are not listed on a
national securities exchange and if there are fewer than 300 holders of record
of InnerDyne shares. Termination of registration of the InnerDyne shares under
the Exchange Act would reduce the information that InnerDyne must furnish to its
stockholders and to the SEC and would make certain provisions of the Exchange
Act, such as the short-swing profit recovery provisions of Section 16(b) and the
requirement of furnishing a proxy statement in connection with stockholders
meetings pursuant to Section 14(a) and the related requirement of furnishing an
annual report to stockholders, no longer applicable with respect to InnerDyne
shares. In addition, if InnerDyne shares are no longer registered under the
Exchange Act, the requirements of Rule 13e-3 under the Exchange Act with respect
to "going-private" transactions would no longer be applicable to InnerDyne.
Furthermore, the ability of "affiliates" of InnerDyne and persons holding
"restricted securities" of InnerDyne to dispose of such securities pursuant to
Rule 144 under the Securities Act may be impaired or eliminated. If registration
of the shares under the Exchange Act were terminated, they would no longer be
eligible for Nasdaq listing or for continued inclusion on the Federal Reserve
Board's list of "margin securities."
RELATIONSHIPS WITH INNERDYNE
Except as set forth herein, neither we nor, to the best of our knowledge,
any of our directors, executive officers or other affiliates has any contract,
arrangement, understanding or relationship with any other person with respect to
any securities of InnerDyne, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or the voting
of any such securities, joint ventures, loan or option arrangements, puts or
calls, guaranties of loans, guaranties against loss or the giving or withholding
of proxies. Except as described herein, there have been no contacts,
negotiations or transactions since October 18, 1998, between us or, to the best
of our knowledge, any of our directors, executive officers or other affiliates
on the one hand, and InnerDyne or its affiliates, on the other hand, concerning
a merger, consolidation or acquisition, a tender offer or other acquisition of
securities, an election of directors, or a sale or other transfer of a material
amount of assets. Neither we, nor, to the best of our knowledge, any of our
directors, executive officers or other affiliates has since October 18, 1998 had
any transaction with InnerDyne or any of its executive officers, directors or
affiliates that would require disclosure under the rules and regulations of the
SEC applicable to the offer.
InnerDyne and U.S. Surgical, which is included in Tyco's healthcare group,
had a previous relationship covering the licensing and potential
commercialization of InnerDyne technology for the treatment of excessive uterine
bleeding. This relationship terminated in August 1998. U.S. Surgical paid
InnerDyne approximately $618,861 in fiscal year 1998 under this arrangement.
InnerDyne and U.S. Surgical have an ongoing relationship related to the
potential use of defined InnerDyne coating technologies by U.S. Surgical. U.S.
Surgical paid InnerDyne approximately $227,080 and $97,320 in fiscal years 1998
and 1999, respectively, under this arrangement.
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ACCOUNTING TREATMENT
Tyco will account for the merger under the "purchase" method of accounting
in accordance with generally accepted accounting principles. Therefore, the
total merger consideration paid by Tyco in connection with the merger, together
with the direct costs of the merger, will be allocated to InnerDyne's assets and
liabilities based on their fair market values, with any excess being treated as
goodwill. The assets and liabilities and results of operations of InnerDyne will
be consolidated into the assets and liabilities and results of operations of
Tyco after the merger.
FEES AND EXPENSES
We have retained MacKenzie Partners, Inc. as information agent in connection
with the offer. The information agent may contact holders of InnerDyne shares by
mail, telephone, telex, telegraph and personal interview and may request
brokers, dealers and other nominee stockholders to forward material relating to
the offer to beneficial owners of InnerDyne shares. We will pay the information
agent $7,500 for these services in addition to reimbursing the information agent
for its reasonable out-of-pocket expenses. We have agreed to indemnify the
information agent against certain liabilities and expenses in connection with
the offer, including certain liabilities under the U.S. federal securities laws.
In addition, we have retained ChaseMellon Shareholder Services L.L.C. as the
exchange agent. We will pay the exchange agent reasonable and customary fees for
its services in connection with the offer, will reimburse the exchange agent for
its reasonable out-of-pocket expenses and will indemnify the exchange agent
against certain liabilities and expenses, including certain liabilities under
the U.S. federal securities laws.
Except as set forth above, we will not pay any fees or commissions to any
broker, dealer or other person for soliciting tenders of InnerDyne shares
pursuant to the offer. We will reimburse brokers, dealers, commercial banks and
trust companies and other nominees, upon request, for customary clerical and
mailing expenses incurred by them in forwarding offering materials to their
customers.
STOCK EXCHANGE LISTING
Tyco's common shares are listed on the New York Stock Exchange and the
Bermuda Stock Exchange under the symbol "TYC" and on the London Stock Exchange
under the symbol "TYI".
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THE MERGER AGREEMENT
The following is a description of the material terms of the merger agreement
but does not purport to describe all the terms of the agreement. The complete
text of the merger agreement is attached as Annex A to this prospectus. All
stockholders are urged to read the merger agreement in its entirety because it
is the legal document that governs the offer and the merger.
THE OFFER
TERMS OF THE OFFER. The merger agreement provides for our offer to exchange
Tyco common shares in accordance with the exchange ratio described below, for
each outstanding share of common stock of InnerDyne that is validly tendered and
not properly withdrawn. The merger agreement provides that the fraction of a
Tyco common share into which each share of InnerDyne common stock will be
converted in the offer will be determined by dividing $7.50 by the average of
the daily volume-weighted selling prices per Tyco common share on the New York
Stock Exchange, (as reported by Bloomberg Financial Markets), for each of the
five consecutive trading days ending on the second trading day before the
expiration date preceding the first acceptance of InnerDyne shares for exchange
in the offer.
The merger agreement prohibits us, without the consent of InnerDyne, from
amending or waiving the minimum tender condition or amending the offer to change
the form of consideration to be paid, decreasing the price per share of
InnerDyne common stock or the number of shares of InnerDyne common stock sought
in the offer, imposing additional conditions to the offer, extending the
expiration date of the offer except as described below or making any other
change which is adverse to the holders of the shares of InnerDyne common stock.
MANDATORY EXTENSIONS OF THE OFFER. If any of the conditions to the offer
are not satisfied or waived on any scheduled expiration date of the offer, we
will extend the offer until such conditions are satisfied or waived; provided
that (i) no extension will exceed ten business days and (ii) we are not required
to extend the offer beyond April 30, 2001.
OPTIONAL EXTENSIONS OF THE OFFER. We have the right (i) to extend the offer
if and to the extent required by applicable rules and regulations of the SEC and
(ii) if at least a majority but less than 90% of the InnerDyne shares have been
validly tendered in the offer at the scheduled or extended expiration date, to
accept the tendered shares and to extend the offer for an aggregate period of
not more than twenty business days beyond the expiration date occurring prior to
the first acceptance of InnerDyne shares for exchange in the offer.
PROMPT EXCHANGE FOR INNERDYNE SHARES AFTER THE CLOSING OF THE
OFFER. Subject to the conditions of the offer, we will accept for exchange, and
will exchange all shares of InnerDyne common stock validly tendered and not
properly withdrawn pursuant to the offer as soon as practicable after the
expiration date of the offer and acceptance of the tendered shares.
THE MERGER
The merger agreement provides that VLMS will be merged with and into
InnerDyne as promptly as practicable following the satisfaction or waiver of the
conditions set forth in the merger agreement. Under the terms of the merger
agreement, at the closing of the merger, each outstanding share of InnerDyne
common stock will be converted into the same fraction of a Tyco common share as
was exchanged in the offer. Notwithstanding the foregoing, the merger
consideration will not be exchangeable in respect of InnerDyne shares held by
InnerDyne, Tyco, Tyco Acquisition or VLMS or stockholders exercising appraisal
rights, if available.
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EFFECTIVE TIME OF THE MERGER. The merger will become effective upon the
filing of certificate of merger with the Secretary of State of the State of
Delaware. The filing of the certificate of merger will take place as soon as
practicable after satisfaction or waiver of the conditions described below under
"Conditions to the Merger."
CERTIFICATE OF INCORPORATION; BY-LAWS; DIRECTORS AND OFFICERS. The restated
certificate of incorporation of InnerDyne in effect at the effective time will
be the certificate of incorporation of the surviving corporation (except that
such certificate of incorporation shall be amended to provide that the number of
shares that the surviving corporation shall have the authority to issue is
10,000 shares of common stock, par value $0.01 per share) until thereafter
amended in accordance with the provisions of the certificate of incorporation
and as provided by the DGCL. The by-laws of VLMS in effect at the effective time
will be the by-laws of the surviving corporation until thereafter amended in
accordance with the provisions of the by-laws, the certificate of incorporation
of the surviving corporation and the DGCL.
From and after the effective time and until their respective successors are
duly elected or appointed and qualified (i) the directors of VLMS at the
effective time will be the directors of the surviving corporation and (ii) the
officers of InnerDyne at the effective time will be the officers of the
surviving corporation.
INNERDYNE BOARD OF DIRECTORS
Upon the acceptance for exchange of shares of InnerDyne common stock
pursuant to the offer, we will be entitled to designate a number of directors
(rounded up to the next whole number) that equals the product of (i) the total
number of directors on InnerDyne's board of directors and (ii) the percentage
that the number of shares beneficially owned by Tyco and its subsidiaries bears
to the total number of shares of InnerDyne common stock outstanding. Until the
merger has become effective, InnerDyne's board of directors will consist of at
least two members who were directors of InnerDyne prior to the consummation of
the offer. The merger agreement provides that, prior to the effective time of
the merger, the affirmative vote of the continuing InnerDyne directors will be
required to:
- terminate the agreement on behalf of InnerDyne,
- amend the agreement when such amendment requires approval of InnerDyne's
board of directors,
- waive compliance with any rights, benefits or remedies contained in the
merger agreement,
- extend the time for performance of our obligations under the merger
agreement, or
- approve any other action of InnerDyne which is reasonably likely to
adversely affect the holders of InnerDyne common stock.
TREATMENT OF INNERDYNE STOCK OPTIONS AND WARRANTS
Each InnerDyne stock option which was granted under the InnerDyne, Inc. 1987
Stock Option Plan, the InnerDyne, Inc. 1996 Stock Option Plan, and the
InnerDyne, Inc. 2000 Directors' Option Plan and options granted before April 8,
1993 under the InnerDyne, Inc. 1989 Incentive Stock Option Plan, whether or not
otherwise vested or exercisable, will become fully vested and exercisable
shortly before the effective time of the merger. Any such option that is not
exercised before the effective time will be cancelled at the effective time in
exchange for a cash payment equal to $7.50 (subject to certain adjustments
described in the merger agreement) less the exercise price-per-share of the
option, multiplied by the number of shares of InnerDyne common stock subject to
such option.
Each InnerDyne stock option granted after April 7, 1993 under the 1989
Option Plan will be converted into an option to purchase Tyco common shares
unless the holder of such option elects to
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have it treated the same as other InnerDyne stock options, as described in the
previous paragraph. Each converted option shall be exercisable upon the same
terms and conditions as those under the 1989 Option Plan and the applicable
option agreement, including the vesting schedule, except that (i) each such
option will be exercisable for that number of Tyco shares (rounded down to the
nearest whole share) that the holder of such option would have received had he
exercised the option prior to the merger (I.E., the number of shares the option
was exercisable into immediately prior to the effective time multiplied by the
exchange ratio in the offer), and (ii) the exercise price per Tyco share will be
an amount (rounded up to the nearest whole cent) equal to the exercise price per
share subject to such option in effect immediately prior to the effective time
divided by the exchange ratio in the offer.
Outstanding warrants expiring May 14, 2001 to acquire 232,500 shares of
InnerDyne common stock at a price of $4.20 per share will be converted as a
result of the merger into warrants to acquire Tyco common shares. The number of
Tyco shares issuable upon exercise of the warrants will be the number of shares
(rounded to the nearest whole number) that would have been received by
warrantholders if the warrants had been exercised immediately prior to the
merger. The exercise price per Tyco common share will be the aggregate exercise
price of the warrants divided by the number of Tyco shares issuable upon
exercise.
REPRESENTATIONS AND WARRANTIES
InnerDyne has made customary representations and warranties in the merger
agreement about itself. We have made customary representations and warranties
about Tyco and its subsidiaries.
CONDUCT OF BUSINESS PENDING MERGER
The merger agreement obligates InnerDyne, until the earlier of the
termination of the merger agreement or the consummation of the merger, to
conduct its business only in the ordinary and usual course of business
consistent with its past practice, to use reasonable commercial efforts to
preserve the business organization of InnerDyne as it has historically been
conducted (it being understood that, notwithstanding the efforts of InnerDyne,
changes or disruptions resulting from the announcement of the execution of the
merger agreement and the proposed consummation of the transaction contemplated
by the merger agreement, including impacts on customers, distributors, license
partners, employees or consultants, may occur), to keep available the services
of the present officers, employees and consultants of InnerDyne and to preserve
the relationships of InnerDyne with its customers, suppliers and other persons
with which InnerDyne has significant business relations. In particular, subject
to certain exceptions, InnerDyne has agreed that, without our prior written
consent, it will not:
1. amend or otherwise change InnerDyne's Certificate of Incorporation or
By-laws;
2. 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 in InnerDyne or any of its affiliates, subject to
certain exceptions in the case of InnerDyne's equity-based incentive
plans;
3. sell, pledge, dispose of or encumber any assets of InnerDyne, other than
sales of assets in the ordinary course of business and in a manner
consistent with past practice or pursuant to other limited exceptions;
4. - declare, set aside, make or pay any dividend or other distribution in
respect of any of its capital stock,
- 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,
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- amend the terms or change the period of exercisability of, purchase,
repurchase, redeem or otherwise acquire any of its securities or any
option, warrant or right to acquire any such securities, or
- settle, pay or discharge any claim, suit or other action brought or
threatened against InnerDyne with respect to or arising out of a
stockholder equity interest in InnerDyne;
5. - make any acquisitions,
- incur any indebtedness for borrowed money, other than pursuant to
existing credit facilities,
- issue any debt securities or assume, guarantee or endorse or otherwise
become responsible for, the obligations of any person, or make any
loans or advances (including loans and advances to employees of
InnerDyne to fund the exercise price of InnerDyne options or otherwise
to purchase shares of InnerDyne common stock), other than in the
ordinary course of business consistent with past practice,
- authorize any capital expenditures or purchases of fixed assets which
are, in the aggregate, in excess of $1,200,000 over the 12 months from
the date of the merger agreement, or
- enter into or materially amend any contract, agreement, commitment or
arrangement to effect any of the above;
6. - except as otherwise provided in the merger agreement, increase the
compensation or severance payable or to become payable to its
directors, officers, employees or consultants except in accordance
with past practice,
- grant any severance or termination pay (except to make payments
required to be made under obligations existing on the date of the
merger agreement in accordance with the terms of such obligations) to,
or enter into or amend any employment or severance agreement with, any
current or prospective employee of InnerDyne, or
- except as otherwise provided in the merger agreement, establish, adopt,
enter into or amend any collective bargaining agreement, benefit plan
(including any plan that provides for the payment of bonuses or
incentive compensation), trust, fund, policy or arrangement for the
benefit of any current or former directors, officers, employees or
consultants or any of their beneficiaries;
7. change accounting policies or procedures;
8. make any tax election or settle or compromise any United States federal,
state, local or non-United States tax liability;
9. pay, discharge or satisfy any claims, liabilities or obligations out of
the ordinary course of business in excess of $100,000 in the aggregate;
10. enter into, modify or renew any contract, agreement or arrangement,
whether or not in writing, for the distribution of InnerDyne's products,
for the licensing of its technology or for any material research and
development collaboration; or
11. take, or agree in writing or otherwise to take, any of the actions
described in (1)--(10) above or any action which would make any of the
representations or warranties of InnerDyne contained in the merger
agreement untrue or incorrect or prevent InnerDyne from performing or
cause InnerDyne not to perform its covenants under the merger agreement.
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CONDUCT OF BUSINESS OF TYCO
We have agreed that, prior to the consummation of the merger, Tyco will
conduct its business and that of its subsidiaries in the ordinary course of
business and consistent with past practice, including actions taken by Tyco or
its subsidiaries in contemplation of the merger, and will not, without the prior
written consent of InnerDyne:
1. amend or otherwise change Tyco's Memorandum of Association or Bye-Laws;
2. make or agree to make any acquisition of any business or any
corporation, partnership, association or other business organization or
division thereof or of any assets of any other person or disposition of
assets, which, in any such case, would materially delay or prevent the
consummation of the offer, the merger and the other transactions
contemplated by the merger agreement;
3. declare, set aside, make or pay any dividend or other distribution on
any of its capital stock, other than the regular quarterly cash dividends
and other than a dividend to Tyco by a wholly-owned subsidiary of Tyco;
4. change accounting policies or procedures except as required by a change
in GAAP occurring after the date of the merger agreement; or
5. take, or agree in writing or otherwise to take, any action which would
make any of our representations or warranties contained in the merger
agreement untrue or incorrect or prevent us from performing our covenants
under the merger agreement.
NO SOLICITATION
InnerDyne has agreed that it will not solicit or encourage the initiation of
any inquiries or proposals regarding any merger, sale of assets, sale of shares
of capital stock or similar transactions involving InnerDyne that if consummated
would constitute an "Alternative Transaction." An Alternative Transaction means:
- any transaction pursuant to which any third party acquires more than 30%
of the outstanding shares of any class of InnerDyne's equity securities,
whether from InnerDyne or pursuant to a tender offer or exchange offer or
otherwise,
- a merger or other business combination involving InnerDyne pursuant to
which any third party acquires more than 30% of the outstanding equity
securities of InnerDyne or the entity surviving such merger or business
combination,
- any transaction pursuant to which any third party acquires or would
acquire control of more than 30% of the fair market value of all of the
assets of InnerDyne immediately prior to such transaction, or
- any other consolidation, business combination, recapitalization or similar
transaction involving InnerDyne, other than transactions contemplated by
the offer and the merger agreement.
Any inquiry or proposal by a third party to effect an Alternative
Transaction is referred to as an "Acquisition Proposal."
Until the initial acceptance of the shares of InnerDyne for exchange in the
offer, if InnerDyne's board of directors, following consultation with
independent legal counsel, reasonably determines in good faith that such action
is or is reasonably likely to be required to discharge properly its fiduciary
duties, InnerDyne's Board of Directors, after notice to Tyco Acquisition, is
permitted to:
- furnish information to a third party which has made, but was not solicited
to make in violation of the merger agreement, a BONA FIDE Acquisition
Proposal that would, if consummated,
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constitute a "Superior Proposal." A Superior Proposal means any proposal
made by a third party to acquire, directly or indirectly, for cash and/or
securities, all of InnerDyne's equity securities, or all or substantially
all of InnerDyne's assets, on terms which InnerDyne's board of directors
reasonably believes (after consultation with a nationally recognized
financial advisor) to be more favorable from a financial point of view to
InnerDyne stockholders than the merger and the transactions contemplated
by the merger agreement, taking into account at the time of determination
any changes to the financial terms of the merger proposed by Tyco
Acquisition, and is also more favorable to InnerDyne taking into account
all other factors deemed relevant by the InnerDyne board under Delaware
law, however, a Superior Proposal may be subject to a diligence review and
other customary conditions; and
- consider and negotiate a BONA FIDE Acquisition Proposal that is a Superior
Proposal not solicited in violation of the merger agreement.
Neither InnerDyne nor InnerDyne's Board of Directors may withdraw or modify,
or propose to withdraw or modify, in a manner adverse to us, the InnerDyne
Board's recommendation with respect to the offer, its adoption of the merger
agreement or its approval of the merger, except to the extent that InnerDyne's
Board of Directors reasonably determines in good faith and after consultation
with independent legal counsel that it is or is reasonably likely to be required
to do so in order to discharge properly its fiduciary duties.
In addition, unless the merger agreement has been terminated in accordance
with its terms, InnerDyne and InnerDyne's Board of Directors may not enter into
any agreement with respect to, or otherwise approve or recommend, or propose to
approve or recommend, any Acquisition Proposal or Alternative Transaction.
The merger agreement expressly provides that the foregoing covenants do not
prohibit InnerDyne from taking and disclosing to its stockholders a position
regarding an Alternative Transaction or Acquisition Proposal required by the
Exchange Act or from making any disclosure to its stockholders required by
applicable law, rule or regulation.
InnerDyne has agreed:
- that it will not redeem the rights issued under the Preferred Shares
Rights Agreement, dated as of September 19, 1997, as amended, between
InnerDyne and the American Stock Transfer and Trust Company, as Rights
Agent, or waive or amend any provision of that agreement, in any such case
to permit or facilitate the consummation of any Acquisition Proposal or
Alternative Transaction; however, a deferral of the distribution of rights
following the commencement of a tender offer or exchange offer is not
prohibited under the merger agreement.
- to immediately cease and cause to be terminated any existing discussions
or negotiations with any persons that were ongoing at the time of the
execution of the merger agreement; and
- not to release any third party from the confidentiality and standstill
provisions of any agreement to which InnerDyne is a party.
InnerDyne will ensure that the officers and directors of InnerDyne and any
investment banker or other advisor or representative retained by InnerDyne are
aware of the restrictions against solicitation of Alternative Transactions or
Acquisition Proposals described in the merger agreement.
CERTAIN OTHER COVENANTS
ACCESS TO INFORMATION; CONFIDENTIALITY.
InnerDyne will take all action necessary to afford, from the date of the
merger agreement to the effective time, our officers, employees, accountants,
counsel and other representatives and agents
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reasonable access to its properties, books, contracts, commitments and records
and shall promptly furnish us all information concerning its business,
properties and personnel as we may reasonably request and shall make available
to us appropriate individuals for discussion of InnerDyne's business, properties
and personnel as we may reasonably request. We undertake a similar covenant with
respect to Tyco for the benefit of InnerDyne.
Each party covenants to hold any confidential information of InnerDyne in
accordance with the confidentiality agreement between InnerDyne and Tyco.
CONSENTS; APPROVALS
Each of InnerDyne and Tyco Acquisition will use its reasonable best efforts
to obtain, and to cooperate with each other in order to obtain, all consents,
waivers, approvals, authorizations or orders. Each of InnerDyne and Tyco
Acquisition 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
For six years following the consummation of the merger, the certificate of
incorporation and by-laws of the surviving corporation will contain the same
indemnification provisions as currently set forth in InnerDyne's Certificate of
Incorporation and By-laws and such provisions will not be amended, modified or
otherwise repealed in any manner that would adversely affect the rights
thereunder of individuals who were directors, officers, employees or agents of
InnerDyne at the consummation of the merger unless otherwise required by law.
After the consummation of the merger, the surviving corporation will, to the
fullest extent permitted under applicable law or under its certificate of
incorporation or by-laws, indemnify and hold harmless each present and former
director, officer or employee of InnerDyne against any costs or expenses,
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
consummation of the merger, to the same extent as provided in InnerDyne's
Certificate of Incorporation or By-laws or any applicable contract or agreement
as in effect on the date of the merger agreement, in each case for a period of
six years following the consummation of the merger.
Following the merger, the surviving corporation will honor and fulfill in
all respects InnerDyne's obligations under the indemnification agreements and
employment agreements with InnerDyne's officers and directors existing at or
before the consummation of the merger.
In addition, we will provide, or cause the surviving corporation to provide,
for a period of not less than six years after the consummation of the merger,
InnerDyne's current directors and officers with an insurance and indemnification
policy that provides coverage for events occurring at or prior to the
consummation of the merger that is no less favorable than InnerDyne's existing
policy or, if substantially equivalent insurance coverage is unavailable, the
best available coverage; provided, however, that we will not be required to pay
an annual insurance premium in excess of 200% of the annual premium currently
paid by InnerDyne for such insurance, but in such case will purchase as much
coverage as possible for such amount.
NOTIFICATION OF CERTAIN MATTERS
The parties will give each other prompt notice of the occurrence or
nonoccurrence of any event which would reasonably be expected to cause any
representation or warranty contained in the merger
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agreement to be materially untrue or inaccurate, or any material failure to
comply with or satisfy any covenant, condition or agreement contained in the
merger agreement.
FURTHER ACTION/TAX TREATMENT
The parties to the merger agreement will use all reasonable efforts to take,
or cause to be taken, all actions and to do, or cause to be done, all other
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by 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 each of their obligations
under the merger agreement. The foregoing covenant does not include Tyco's
obligation to agree to divest, abandon, license, enter into, modify, maintain or
renew any contract or arrangement regarding or take similar action with respect
to any assets of Tyco or InnerDyne. In addition, the parties will use reasonable
best efforts to cause the offer and the merger to qualify as a reorganization
under the provisions of Section 368 of the U.S. Internal Revenue Code, as
specified in the merger agreement, and will not, either before or after the
consummation of the merger, take any actions or fail to take any actions which
might reasonably be expected to prevent the offer and the merger from so
qualifying.
PUBLIC ANNOUNCEMENTS
We and InnerDyne will not issue any press release or make any written public
statement with respect to the merger or the merger agreement without the prior
consent of the other party, which consent will not be unreasonably withheld,
except as required by law or the rules and regulations of the Nasdaq National
Market or the New York Stock Exchange.
TYCO COMMON SHARES
We have covenanted to take all actions necessary so that Tyco will issue to
Tyco Acquisition the Tyco common shares to be delivered to InnerDyne
stockholders in the offer and the merger. Tyco has also guaranteed to use its
best efforts to list on the New York Stock Exchange the Tyco common shares to be
delivered in the offer and the merger prior to the effective time of the merger.
CERTAIN EMPLOYEE BENEFITS
During the period from the effective time of the merger through
December 31, 2001, the surviving corporation will provide each person who was an
employee of InnerDyne at the effective time of the merger with coverage under
pension and welfare benefit plans, programs and arrangements providing benefits
not substantially less favorable in the aggregate to the coverage provided to
such employees immediately prior to the merger. The surviving corporation will
recognize service accrued by InnerDyne employees prior to the merger for
purposes of any eligibility requirements, waiting periods, vesting periods and
benefit accrual.
InnerDyne's severance and retention bonus programs in effect prior to the
effective time of the merger are required to be maintained for at least one year
following the closing date of the merger, without any modification that would
reduce benefits under such programs.
These provisions are subject to certain limitations and qualifications set
forth in the merger agreement. These provisions may not be enforced against the
surviving corporation by any employee of InnerDyne, and they do not prevent the
surviving corporation or any other subsidiary of Tyco from amending or modifying
any employee benefit plan, program or arrangement in any respect or terminating
or modifying the terms and conditions of employment or other service of any
person, except as described in the immediately preceding paragraph.
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CONDITIONS TO THE MERGER
CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE MERGER
The obligations of the parties to consummate the merger are subject to the
satisfaction of the following conditions:
1. EFFECTIVENESS OF REGISTRATION STATEMENT. The SEC has not issued any stop
order suspending the effectiveness of the registration statement of which
this document is a part, nor has it started or threatened any proceedings
for that purpose or in respect of this document;
2. STOCKHOLDER ADOPTION. If less than 90% of the outstanding shares of
InnerDyne common stock were tendered and not withdrawn in the offer, the
requisite number of InnerDyne stockholders have approved the merger and
the merger agreement;
3. ANTITRUST. All waiting periods applicable to the consummation of the
merger under the HSR Act have expired or been terminated, and all
necessary clearances and approvals for the merger under any non-U.S.
antitrust laws have been obtained, other than for clearances or approvals
under any non-U.S. antitrust laws which, if not obtained, would not be
reasonably expected to have a material adverse effect on InnerDyne, Tyco
or Tyco's healthcare products business;
4. GOVERNMENTAL ACTIONS. There shall not be in effect any judgment, decree
or order of any governmental authority, administrative agency or court of
competent jurisdiction preventing consummation of the merger; and
5. ILLEGALITY. No statute, rule, regulation or order is enacted, entered,
enforced or deemed applicable to the merger which makes the consummation
of the merger illegal.
TERMINATION; FEES AND EXPENSES
CONDITIONS TO TERMINATION
The merger agreement may be terminated:
1. by mutual written consent duly authorized by our board of directors and
that of InnerDyne, at any time prior to the initial acceptance of shares
for exchange in the offer;
2. by either us or InnerDyne prior to the initial acceptance of shares for
exchange in the offer, if the initial acceptance of shares for exchange
in the offer has not been consummated on or prior to April 30, 2001;
provided, however, that this right to terminate is not available to any
party whose failure to fulfill any of its obligations under the merger
agreement has been the cause of, or resulted in, the failure of the
acceptance of shares for exchange in the offer to occur on or prior to
April 30, 2001;
3. by either us or InnerDyne, if the offer has terminated or expired in
accordance with its terms without the exchange of shares pursuant to the
offer; provided, however, that this right to terminate is not available
to any party whose failure to fulfill any of its obligations under the
merger agreement has been the cause of, or resulted in, the failure of
any conditions to the offer to be satisfied;
4. by either us or InnerDyne, if, at any time prior to the consummation of
the merger, a court of competent jurisdiction or governmental, regulatory
or administrative agency or commission has issued a nonappealable final
order, decree or ruling or taken any other nonappealable final action
having the effect of permanently restraining, enjoining or otherwise
prohibiting the offer or the merger;
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5. by us, if, prior to the initial acceptance of shares for exchange in the
offer, whether or not permitted to do so by the merger agreement, the
board of directors of InnerDyne or InnerDyne:
- withdraws, modifies or changes its approval or recommendation of the
merger agreement, the offer or the merger in a manner adverse to us,
- approves or recommends to the stockholders of InnerDyne an Acquisition
Proposal or Alternative Transaction,
- approves or recommends that the stockholders of InnerDyne tender their
shares in any tender or exchange offer that is an Alternative
Transaction, or
- takes any position or makes any disclosures to InnerDyne's stockholders
required by applicable law, rule or regulation having the effect of any
of the foregoing; or
6. by us or InnerDyne, prior to the initial acceptance of shares for
exchange in the offer:
- if any representation of the other party set forth in the merger
agreement was untrue in any material respect when made or has become
untrue in material respect, or
- upon a material breach of any covenant or agreement set forth in the
merger agreement by the other party;
provided, that, if such misrepresentation or breach is curable prior to the date
designated for expiration of the offer, as such date may be extended, following
which we first accept shares for exchange, and the party in breach exercises its
reasonable best efforts to cure the same, the merger agreement may not be
terminated under this clause while such party continues to exercise such
efforts;
7. by InnerDyne in order to accept a Superior Proposal, if:
- we have not accepted any shares for exchange pursuant to the offer,
- InnerDyne's board of directors determines after consultation with
independent counsel that it is, or is reasonably likely to be, required
to accept such proposal to properly discharge its fiduciary duties,
- InnerDyne has given us two full business days advance notice of its
intention to accept the Superior Proposal,
- InnerDyne in fact accepts such Superior Proposal,
- InnerDyne has paid us the fees and expenses required to be paid
pursuant to the merger agreement, and
- InnerDyne has complied in all material respects with its no
solicitation obligations described on page 53;
provided, however, that if the merger agreement is terminated in respect of
paragraphs 2 and 3 above, but the merger agreement could at the time also have
been terminated in respect of any other paragraph described above, the merger
agreement will also be deemed to have been terminated pursuant to such other
paragraphs.
FEES AND EXPENSES
Except as set forth below, each of the parties to the merger agreement will
pay its own fees and expenses incurred in connection with the merger agreement
and the transactions contemplated by the merger agreement, whether or not the
offer or merger is consummated, provided that, if the offer or merger is not
consummated, we and InnerDyne will share equally all filing fees and printing
expenses
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incurred in connection with the printing and SEC filing of this document and the
related registration statement, the Schedule 14D-9 and any other related offer
documents.
InnerDyne will pay Tyco a fee of $6 million, and will pay the actual,
documented and reasonable out-of-pocket expenses of Tyco and Tyco Acquisition
relating to the merger of up to $600,000, upon the first to occur of any of the
following events:
1. the termination of the merger agreement by us or InnerDyne due to either
(i) the initial acceptance of shares for exchange in the offer not having
been consummated on or prior to April 30, 2001 or (ii) the offer having
terminated or expired in accordance with its terms without the exchange
of shares pursuant to the offer, if
- the minimum condition has not been satisfied and no other condition to
the offer has been unsatisfied at the time of termination, other than
any condition that shall not have been satisfied as a result of a
misrepresentation or breach of any covenant by InnerDyne, and
- either
- prior to such termination, there shall be outstanding a bona fide
Acquisition Proposal which has been made directly to the
stockholders of InnerDyne or has otherwise become publicly known or
there shall be outstanding an announcement by any credible third
party of a BONA FIDE intention to make an Acquisition Proposal (in
each case whether or not conditional and whether or not such
proposal shall have been rejected by the board of directors of
InnerDyne) or
- InnerDyne or any third party publicly announces an Alternative
Transaction within 9 months following the date of termination of
the merger agreement and such transaction is at any time thereafter
consummated on substantially the terms previously announced;
2. our termination of the merger agreement under the circumstances
described in paragraph 5 under "Conditions to Termination" above; or
3. the termination of the merger agreement by InnerDyne due to the
acceptance by InnerDyne's Board of Directors of a Superior Proposal under
the circumstances described in paragraph 7 under "Conditions to
Termination" above.
If we terminate the merger agreement because InnerDyne has breached a
covenant or agreement (as described in paragraph 6 under "Conditions to
Termination" above), InnerDyne must pay Tyco and Tyco Acquisition their
respective expenses relating to the transactions contemplated by the merger
agreement in an amount not to exceed $600,000. In addition, InnerDyne must pay
us a fee of $6 million if:
- prior to such termination, there shall be outstanding a BONA FIDE
Acquisition Proposal which has been made directly to the stockholders
of InnerDyne or has otherwise become publicly known or there shall be
outstanding an announcement by any credible third party of a BONA FIDE
intention to make an Acquisition Proposal (in each case whether or not
conditional and whether or not such proposal shall have been rejected
by the board of directors of InnerDyne) or
- InnerDyne or any third party publicly announces an Alternative
Transaction within 9 months following the date of termination of the
merger agreement and such transaction is at any time thereafter
consummated on substantially the terms previously announced.
If we terminate the merger agreement because a representation or warranty of
InnerDyne was untrue when made (as described in paragraph 6 under "Conditions to
Termination" above), InnerDyne must pay Tyco and Tyco Acquisition their
respective expenses in an amount not to exceed $600,000.
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If InnerDyne terminates the merger agreement because a representation or
warranty that we made was untrue when made (as described in paragraph 6 under
"Conditions to Termination" above), we must pay InnerDyne its expenses in an
amount not to exceed $600,000.
The fee and/or expenses described above are payable within one business day
after a demand for payment following the occurrence of the event requiring such
payment; provided that, in no event will InnerDyne or Tyco Acquisition be
required to pay such fee and/or expenses to any entity entitled thereto if,
immediately prior to the termination of the merger agreement, the other entity
entitled thereto was in material breach of its obligations under the merger
agreement.
The fee payable under certain circumstances by InnerDyne to us is intended,
among other things, to compensate Tyco and Tyco Acquisition for our respective
costs, including lost opportunity costs, if certain actions or inactions by
InnerDyne or its stockholders lead to the abandonment of the merger. This may
have the effect of increasing the likelihood that the offer and merger will be
consummated in accordance with the terms of the merger agreement. The fee may
also have the effect of discouraging persons from making an offer to acquire all
of or a significant interest in InnerDyne by increasing the cost of any such
acquisition.
AMENDMENT AND WAIVER; PARTIES IN INTEREST
The parties to the merger agreement may amend the merger agreement in
writing by action taken by or on behalf of their respective boards of directors
at any time prior to the consummation of the merger. However, after approval of
the merger and adoption of the merger agreement by the InnerDyne stockholders,
the merger agreement cannot be amended without stockholder approval if
stockholder approval of such amendment is required by law.
At any time prior to the consummation of the merger, any party to the merger
agreement may extend the time for the performance of any of the obligations or
other acts by the other, waive any inaccuracies in the representations and
warranties contained in the merger agreement or in any document delivered
pursuant to the merger agreement, or waive compliance with any of the agreements
or conditions contained in the merger agreement. Any such extension or waiver
will be valid if set forth in writing by the party or parties granting such
extension or waiver.
The merger agreement is binding upon and inures solely to the benefit of the
parties thereto, and nothing in the merger agreement, express or implied,
confers upon any other person any right, benefit or remedy of any nature
whatsoever, other than certain indemnification and insurance obligations of Tyco
Acquisition and InnerDyne following the consummation of the merger which are
intended for the benefit of certain specified officers and directors of
InnerDyne and may be enforced by such individuals and other than certain
obligations of the parties to pay certain fees and expenses.
GUARANTEE
Tyco has fully and unconditionally guaranteed the representations,
warranties, covenants, agreements and other obligations of Tyco Acquisition and
VLMS under the merger agreement.
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INTERESTS OF CERTAIN PERSONS
The information contained in Item 3 of InnerDyne's
Solicitation/Recommendation Statement on Schedule 14D-9 dated October 18, 2000
which accompanies this prospectus and in the Information Statement attached as
Annex A to the Schedule 14D-9 is incorporated in this prospectus by reference.
This material and the material disclosed elsewhere in this prospectus set forth
each material agreement, arrangement or understanding and any actual or
potential conflict of interest between InnerDyne or its affiliates and
InnerDyne's executive officers, directors or affiliates of which we are aware,
and each such agreement, arrangement or understanding between InnerDyne or its
affiliates and Tyco or Tyco Acquisition or their respective executive officers,
directors or affiliates.
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COMPARISON OF RIGHTS OF STOCKHOLDERS OF INNERDYNE
AND SHAREHOLDERS OF TYCO
InnerDyne is a Delaware corporation, and the rights of InnerDyne's
stockholders are governed by InnerDyne's Restated Certificate of Incorporation
and By-laws. Upon the consummation of the merger, InnerDyne's stockholders will
become shareholders of Tyco and their rights will be governed by Tyco's
Memorandum of Association and Bye-laws and by Bermuda law.
The following is a summary of material differences between the rights of an
InnerDyne stockholder and the rights of a Tyco shareholder arising from
differences between the corporate laws of Delaware and Bermuda and the governing
instruments of the two companies. This summary is not a complete description of
those laws or governing instruments.
Copies of Tyco's Memorandum of Association and Bye-laws and InnerDyne's
Restated Certificate of Incorporation and By-laws have been filed with the SEC
and will be sent to stockholders of InnerDyne upon request. See "Where You Can
Find More Information" on page 1.
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GOVERNING DOCUMENTS OF INNERDYNE GOVERNING DOCUMENTS OF TYCO
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SPECIAL MEETINGS OF STOCKHOLDERS
- The InnerDyne By-laws provide that a - Tyco shareholders holding at least 10% of
special meeting may be called by InnerDyne the paid-up capital of Tyco may require Tyco
stockholders holding shares in the to call a special general meeting.
aggregate entitled to cast not less than
10% of the votes at that meeting.
QUORUM
- The presence, in person or by proxy, of - The presence, in person or by proxy, of
the holders of a majority of the stock any two Tyco shareholders at a general
entitled to vote at a stockholders meeting meeting will generally constitute a
constitutes a quorum for all purposes. quorum.
VOTING RIGHTS
- The InnerDyne By-laws provide that each - Any proposal at a general meeting may be
outstanding share, regardless of class, is decided by a show of hands of the
entitled to one vote on all matters shareholders present in person unless a
submitted to InnerDyne stockholders. Any poll is demanded. Where a poll has been
stockholder entitled to vote on any matter demanded, a shareholder is entitled to one
may vote part of the shares in favor of vote for each common share held by the
the proposal and refrain from voting the shareholder.
remaining shares or, except when the
matter is the election of directors, may - The Tyco Bye-laws provide that a Tyco
vote them against the proposal; but, if shareholder will lose voting rights:
the stockholder fails to specify the
number of shares which the stockholder (1) for the period the shareholder fails to
is voting affirmatively, it will be comply with a notice from Tyco
conclusively presumed that the requesting specified information
stockholder's approving vote is with regarding such person's interest in Tyco
respect to all shares which the shares, plus an additional ninety days;
stockholder is entitled to vote.
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GOVERNING DOCUMENTS OF INNERDYNE GOVERNING DOCUMENTS OF TYCO
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(2) if such shareholder fails after notice
by Tyco to make a takeover offer in
accordance with the City Code on
Takeovers and Mergers of the United
Kingdom as applied by or in accordance
with the Tyco Bye-laws;
(3) upon notice by the directors, 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 and fails to notify Tyco of
such acquisition within two days; or
(4) upon notice by the directors, for a
period of 180 days if such shareholder holds
three percent or more of the issued
share capital of any class of Tyco
shares and 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.
STOCKHOLDER NOMINATIONS AND PROPOSALS
- Any InnerDyne stockholder may nominate a - Any Tyco shareholder may nominate a
director for election or submit a director for election. Under Bermuda law,
stockholder proposal. only Tyco shareholders holding not less
than 1/20th of the total voting rights or
100 or more in number may require a
proposal be submitted to an annual general
meeting. The Tyco board can waive these
requirements, and the staff of the SEC has
taken the position that the SEC's proxy
rules may require Tyco to include in its
proxy materials proposals of shareholders
who do not satisfy these requirements.
DERIVATIVE ACTIONS
- InnerDyne stockholders do not have a - Tyco shareholders may not generally
direct and individual right to enforce initiate an action for a wrongdoing to the
rights which could be asserted by company. In certain limited circumstances,
InnerDyne, but may do so only derivatively however, Tyco shareholders may proceed in
on behalf of InnerDyne. a derivative action.
- Under Delaware law, the complaint must: - The Bermuda courts would ordinarily follow
(1) state that the plaintiff was a English precedent, which permits a
stockholder at the time of the shareholder to commence a derivative
transaction of which the plaintiff action only if:
complains or that the plaintiff's
shares thereafter devolved on the (1) the act complained of is alleged to be
plaintiff by operation of law, and beyond the corporate power of the
company or to be illegal;
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(2) (a) allege with particularity the (2) the act complained of is alleged to
efforts made by the plaintiff to constitute a fraud against the minority
obtain the action the plaintiff desires shareholders by the majority
from the directors, or shareholders who have used their
(b) state the reasons for the controlling position to prevent the
plaintiff's failure to obtain the company from taking action against the
action or for not making the effort. wrongdoers;
- Additionally, the plaintiff must remain a (3) an act requires approval by a greater
stockholder through the duration of the percentage of the company's shareholders
derivative suit. than actually approved it; or
(4) there is an absolute necessity to waive
the general rule that a shareholder may
not bring a derivative action so that
the company's memorandum of association
or bye-laws are not violated.
- Under Bermuda law, a shareholder who
complains that the affairs of a company
are being or have been conducted in a
manner oppressive or prejudicial to some
of the shareholders, including himself,
may petition the court for relief, and the
court has a wide discretion to grant
relief if it is satisfied that the
complaint is so justified and that:
(1) to wind up the company would unfairly
prejudice those shareholders, but
(2) the facts otherwise would justify a
winding up order on just and equitable
grounds.
Traditionally, such relief has been granted
in relatively limited circumstances.
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BOARD OF DIRECTORS
- InnerDyne's By-laws provide that the - The Tyco Bye-laws provide that the number
authorized number of directors shall be of directors will be determined by the
not less than three nor more than nine and shareholders at a general meeting,
the exact number of directors shall be provided that there are at least two
seven until changed by a by-law duly directors. The Tyco Bye-laws require a
adopted by the board of directors or by director to be a shareholder.
the stockholders. Additionally, the - Bermuda law would permit a classified
indefinite number of directors may be board of directors, but the Tyco Bye-laws do
changed, or a definite number may be fixed not provide for one.
without provision for an indefinite
number, by a duly adopted amendment to the
Certificate of Incorporation or by an
amendment to the By-laws adopted by the
vote or written consent of holders of a
majority of the outstanding shares
entitled to vote.
REMOVAL OF DIRECTORS
- A director of InnerDyne may be removed at - A director of Tyco may be removed with or
any time, with or without cause, by an without cause by the shareholders or by
affirmative vote of a majority of the written resolution signed by all the other
shares then entitled to vote at an directors.
election of directors.
AMENDMENTS TO CHARTER DOCUMENTS AND BY-LAWS
- Under Delaware law, any amendment of the - Bermuda law provides that a company may
InnerDyne charter requires: alter its memorandum of association by
(1) the recommendation of the Board of resolution passed at a general meeting of
Directors; shareholders of which due notice has
(2) the affirmative vote of a majority of been given and, where required, with
the outstanding shares entitled to the consent of the Minister of
vote thereon; and Finance.
(3) the affirmative vote of a majority of - Holders of at least 20% of any class of
the outstanding shares of each class the company's share capital may apply to the
entitled to vote thereon as a class. Bermuda Supreme Court to annul any
alteration. Upon such application,
the alteration will not have effect
until it is confirmed by the Court.
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- The InnerDyne Restated Certificate of - The Tyco Bye-laws provide that, if Tyco
Incorporation and By-laws provide that the has two or more classes of shares, the rights
board of directors is expressly authorized attached to any class of shares, unless
to make, alter or repeal By-laws of the otherwise provided by the terms of such
corporation subject to the rights of class, may be varied either by the consent
InnerDyne stockholders to adopt, amend or in writing of the holders of three-fourths
repeal by-laws made by the Board of of the shares of the class, or by a
Directors. An affirmative vote of a resolution passed at a separate meeting of
majority of the total number of votes of the holders of such class of shares by
the then outstanding shares of InnerDyne holders of three-fourths of the shares of
entitled to vote is necessary for the such class voting at such separate
adoption, amendment, or repeal of by-laws meeting. Certain procedural rules of such
adopted by the board of directors. a separate meeting differ from the rules
of a Tyco general meeting.
- Pursuant to Bermuda law, holders of at
least 10% of a class of shares in a company
in which the share capital is divided into
different classes may apply to the Bermuda
Supreme Court to annul any variation in
the rights attached to the class of
shares. Upon such application, the
variation will not have effect until it is
confirmed by the Court.
- The Tyco Bye-laws may only be amended by
the Tyco board and such amendment will
become effective only after confirmation
by the Tyco shareholders.
SHARE PURCHASES
- Under Delaware law, a corporation may - Generally, Tyco may repurchase its shares
generally redeem or repurchase shares of for cancellation, unless, on the date on
its stock if the redemption or repurchase which the purchase is to be effected,
will not impair the capital of the there are reasonable grounds for believing
corporation. that Tyco is, or after the purchase would
be, unable to pay its liabilities as they
become due and subject to certain
statutory requirements as to the funds
from which payment in respect of such
repurchase may be made.
- A subsidiary of Tyco may also purchase
Tyco shares. Tyco shares owned by a
subsidiary of Tyco may be voted on all
matters on which shareholders are entitled
to vote and counted for quorum purposes.
- Bermuda law and Tyco's memorandum of
association permit Tyco to constitute and
issue preference shares which are
redeemable at the option of either the
company or the holder.
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SALE, LEASE OR EXCHANGE OF ASSETS AND MERGERS
- Generally, under Delaware law, the merger, - Under Bermuda law, a company's
consolidation, sale, lease or exchange of shareholders are not generally required to
all or substantially all of InnerDyne's approve a sale, lease or exchange of all
assets or dissolution requires: or substantially all of a company's
(1) approval of the board of directors, property and assets. However, Bermuda laws
and requires shareholders to approve certain
(2) the affirmative vote of the holders forms of mergers and reconstructions.
of a majority of the outstanding - A compromise or arrangement in connection
stock entitled to vote thereon. with a scheme for the reconstruction of
the company on terms which include the
transfer of all or part of the undertaking
or the property of the company to another
company requires the approval of a
majority in number representing
three-fourths in value of the shareholders
or class of shareholders, as the case may
be, present and voting either in person or
by proxy at the meeting, and the sanction
of the Bermuda Supreme Court.
- Pursuant to Bermuda law, an amalgamation
of two or more companies requires board
approval and the approval of the
shareholders of each company by a
three-fourths majority vote. The required
vote of shareholders may be reduced to not
less than a majority by a company's
bye-laws. 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.
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SHARE ACQUISITIONS, BUSINESS COMBINATIONS AND RELATED PROVISIONS
- Section 203 of the Delaware General - Tyco's Bye-laws permit Tyco's board of
Corporation Law prohibits "business directors to make applicable to Tyco
combinations," including mergers, sales certain rules of the City Code on
and leases of assets, issuances of Takeovers and Mergers issued by the Panel
securities and similar transactions by a on Takeovers and Mergers in the United
corporation or a subsidiary with an Kingdom.
"interested stockholder" who beneficially - The City Code on Takeovers and Mergers
owns 15% or more of a corporation's voting requires any person or group acting in
stock, within three years after the person concert which acquires shares which,
or entity becomes an interested together with shares previously owned by
stockholder, unless: it, have 30% or more of the voting power
(1) the transaction that will cause the of a company, to make an offer to purchase
person to become an interested all equity shares of the company and
stockholder is approved by the board any of the company's voting non-equity
of directors of the target corporation capital shares of the type held by
prior to the transaction; such person or group. The offer price
(2) after completion of the transaction in must not be less than the highest
which the person becomes an interested price paid in the preceding 12 months
stockholder, the interested for shares of the same class by such
stockholder holds at least 85% of the person or anyone in such group and
voting stock of the corporation, not must be made in cash or include a cash
including (a) shares held by persons alternative.
who are directors and also officers - If a person or group owns 30% or more of
and (b) shares held by specified employee the Tyco shares, and the Tyco board
benefit plans; or determines that an offer under the City
(3) after the person becomes an interested Code is not expedient or the person or
stockholder, the business combination group is required to make such an offer
is approved by the board of directors but fails to do so, the Tyco board may
and holders of at least 66 2/3% of the by notice require such a person or
outstanding voting stock, excluding group to make an offer which:
shares held by the interested (1) includes all shares of every class of
stockholder. share capital of Tyco, and the Tyco board may
also require that the offer include all
securities of Tyco convertible into Tyco
shares;
(2) is in cash or includes a cash
alternative;
(3) is made within 30 days of the Tyco
board's notice;
(4) remains open for at least 14 days after
the offer becomes unconditional;
(5) requires payment to be made within 21
days after the offer becomes
unconditional; and
</TABLE>
68
<PAGE>
<TABLE>
<CAPTION>
DELAWARE LAW AND CURRENT BERMUDA LAW AND CURRENT
GOVERNING DOCUMENTS OF INNERDYNE GOVERNING DOCUMENTS OF TYCO
--------------------------------------------- ---------------------------------------------
<S> <C>
(6) is at a price not less than the highest
price paid in the preceding 12 months
for shares of the same class by the
person or any member of the group, or if
the price is unavailable or
inappropriate, then at a price fixed by
the Tyco board. The purchase price for
convertible securities must be on terms
the Tyco board considers fair and
reasonable.
- The Rules Governing Substantial
Acquisitions of Shares issued by the Takeover
Panel provide, subject to certain
exceptions, that a person or group acting
in concert may not acquire in a period of
seven days shares representing 10% or more
of the voting shares of a company if those
shares, when aggregated with shares of the
company already held by the person or
group, would carry more than 15%, but less
than 30%, of the total voting rights of
the company. The Tyco board may require
compliance with these rules and may
require any person or group to dispose of
any Tyco shares acquired in violation of
these rules.
- Under the Tyco Bye-laws, any person who
acquires an interest in three percent or
more of the issued share capital of any
class of Tyco is required to notify Tyco
of that interest and of any change in that
person's interest amounting to one percent
or more of the issued capital of any
class. Any such notification must be made
within two business days after the
relevant event. In determining the
percentage interest of any person for
these and similar purposes, interests of
persons acting in concert may be
aggregated.
</TABLE>
69
<PAGE>
<TABLE>
<CAPTION>
DELAWARE LAW AND CURRENT BERMUDA LAW AND CURRENT
GOVERNING DOCUMENTS OF INNERDYNE GOVERNING DOCUMENTS OF TYCO
--------------------------------------------- ---------------------------------------------
<S> <C>
REQUIRED PURCHASE AND SALE OF SHARES; SHORT FORM MERGER
- Under Delaware law, a parent company may - Under Bermuda law, where a scheme or
effect a merger with its subsidiary contract involving the transfer of shares
without stockholder approval if the parent or any class of shares in a company to
company owns at least 90% of each class of another company, has, within four months
the outstanding shares of the subsidiary. after the making of the offer in this
At least 20 days before the effective date regard by the transferee company, been
of the merger, the parent company must approved by the holders of not less than
give notice to each stockholder of the 90% in value of the shares or class of
subsidiary that the merger will become shares for which the offer was made,
effective on or after a specified date. within two months beginning with the date
The stockholders of the subsidiary have on which such appraisal is obtained, the
appraisal rights with respect to the transferee company may give notice to any
merger. dissenting shareholder that it desires to
acquire his or her shares. Such transferee
company will then 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.
- 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, the transferee
company is required to 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 or her shares on the same
terms as provided for in the scheme or
contract relating to the transfer, 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.
</TABLE>
70
<PAGE>
<TABLE>
<CAPTION>
DELAWARE LAW AND CURRENT BERMUDA LAW AND CURRENT
GOVERNING DOCUMENTS OF INNERDYNE GOVERNING DOCUMENTS OF TYCO
--------------------------------------------- ---------------------------------------------
<S> <C>
- Under Bermuda law, a holder or holders of
not less than 95% of the shares or 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.
- Under Bermuda law, an amalgamation is only
permitted without a shareholder vote when
it is between a parent company and its
wholly owned subsidiary or between two or
more wholly owned subsidiaries.
APPRAISAL RIGHTS
- Under Delaware law, appraisal rights may - Under Bermuda law, a properly dissenting
be available in connection with a merger shareholder who did not vote in favor of
or consolidation in certain situations. an amalgamation and who is not satisfied
Appraisal rights are not available under that he or she has been offered fair value
Delaware law to stockholders of the for his or her shares may apply to the
surviving corporation when no vote of its court to appraise the fair value of his or
stockholders is required to approve the her shares. If the court appraised value
merger. In addition, unless otherwise is greater than the value received or to
provided in the charter, no appraisal be received in the amalgamation, the
rights are available under Delaware law to company must pay the court appraised value
holders of shares of any class of stock to the dissenting shareholder within one
which is either: month of the appraisal, unless it decides
(a) listed on a national securities exchange to terminate the amalgamation.
or designated as a national market - Bermuda law additionally provides a right
system security on an inter-dealer of appraisal in respect of the situation
quotation system by the National discussed under "Required Purchase and
Association of Securities Dealers, Inc; or Sale of Shares" above.
(b) held of record by more than 2,000
stockholders, unless those stockholders
are required by the terms of the merger
to accept anything other than:
- shares of stock of the surviving
corporation;
</TABLE>
71
<PAGE>
<TABLE>
<CAPTION>
DELAWARE LAW AND CURRENT BERMUDA LAW AND CURRENT
GOVERNING DOCUMENTS OF INNERDYNE GOVERNING DOCUMENTS OF TYCO
--------------------------------------------- ---------------------------------------------
<S> <C>
- shares of stock of another
corporation which are listed on a
national securities exchange or
designated as a national market
system security on an inter-dealer
quotation system by the National
Association of Securities Dealers,
Inc. or held of record by more than
2,000 stockholders as of the
effective date of the merger or
consolidation;
- cash in lieu of fractional shares
of the stock; or
- any combination of the items listed
above
- Appraisal rights are not available under
Delaware law in the event of a sale, lease
or exchange of all or substantially all of
a corporation's assets or the adoption of
an amendment to its certificate of
incorporation, unless those rights are
granted in the corporation's certificate
of incorporation. The InnerDyne charter
does not grant these rights.
- Because the Tyco common shares to be
issued in exchange for InnerDyne common
stock will be listed on the New York Stock
Exchange, InnerDyne stockholders do not
have appraisal rights in connection with
the merger unless the merger is
accomplished as a short-form merger.
STOCKHOLDERS RIGHTS PLAN
- InnerDyne has adopted Preferred Shares - Tyco has no shareholders' rights plan.
Rights Agreement, dated as of September
19, 1997, as amended, between InnerDyne
and the American Stock Transfer and Trust
Company, as rights agent.
</TABLE>
72
<PAGE>
LEGAL MATTERS
The validity of the Tyco common shares to be delivered to InnerDyne
stockholders in connection with the offer and with the merger will be passed
upon by Appleby Spurling & Kempe, Hamilton, Bermuda, special counsel to Tyco.
Certain other legal matters in connection with the offer and the merger will be
passed upon for Tyco and Tyco Acquisition by Kramer Levin Naftalis & Frankel
LLP, New York, New York, and by Appleby Spurling & Kempe. Michael L. Jones,
secretary of Tyco, is a partner in Appleby Spurling & Kempe. Joshua M. Berman, a
director and vice president of Tyco, is of counsel to Kramer Levin Naftalis &
Frankel LLP and beneficially owns 157,290 Tyco common shares. Certain legal
matters in connection with the merger will be passed upon for InnerDyne by
Orrick, Herrington & Sutcliffe LLP, San Francisco, California.
EXPERTS
The Consolidated Financial Statements and financial statement schedule of
Tyco as of September 30, 1999 and 1998 and for the years ended September 30,
1999 and 1998 and the nine months ended September 30, 1997, included in Tyco's
Annual Report on Form 10-K/A filed June 26, 2000, and incorporated by reference
in this document, have been audited by PricewaterhouseCoopers, independent
accountants, as set forth in their report included therein. In its report, that
firm states that with respect to certain subsidiaries its opinion is based upon
the reports of other independent accountants, namely Deloitte & Touche LLP (as
it relates to the consolidated statements of operations, changes in
stockholders' equity and cash flows of United States Surgical Corporation and
its subsidiaries for the nine months ended September 30, 1997 and the related
financial statement schedule for the nine months ended September 30, 1997) and
Arthur Andersen LLP (as it relates to the consolidated balance sheet of AMP
Incorporated and its subsidiaries as of September 30, 1998, and the related
consolidated statements of income, stockholders' equity and cash flows for the
year ended September 30, 1998 and the nine months ended September 30, 1997). The
Consolidated Financial Statements and financial statement schedule referred to
above have been incorporated herein in reliance on said reports given on the
authority of such firms as experts in auditing and accounting.
The Financial Statements of InnerDyne, Inc. as of December 31, 1999 and 1998
and for each of the years in the three-year period ended December 31, 1999 have
been incorporated by reference herein and in the registration statement in
reliance upon the report of KPMG LLP, independent certified public accountants,
incorporated by reference herein, and upon authority of said firm as experts in
accounting and auditing.
MISCELLANEOUS
The offer is being made solely by this prospectus and the related letter of
transmittal and is being made to holders of all outstanding InnerDyne shares. We
are not aware of any jurisdiction where the making of the offer is prohibited by
any administrative or judicial action pursuant to any valid state statute. If we
become aware of any valid state statute prohibiting the making of the offer or
the acceptance of shares pursuant thereto, we will make a good faith effort to
comply with any such state statute. If, after such good faith effort, we cannot
comply with any such state statute, the offer will not be made to (nor will
tenders be accepted from or on behalf of) the holders of shares in such state.
In any jurisdiction where the securities, blue sky or other laws require the
offer to be made by a licensed broker or dealer, the offer shall be deemed to be
made on our behalf by one or more registered brokers or dealers licensed under
the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF TYCO ACQUISITION OR INNERDYNE NOT CONTAINED IN THIS
PROSPECTUS OR IN THE LETTER OF TRANSMITTAL, AND IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
73
<PAGE>
SCHEDULE I
CERTAIN INFORMATION CONCERNING THE DIRECTORS
AND EXECUTIVE OFFICERS OF TYCO INTERNATIONAL LTD.
The following table sets forth the name, current business address, present
principal occupation or employment, and material occupations, positions, offices
or employment for the past five years of each director of Tyco, each executive
officer of Tyco and certain executive officers of Tyco's subsidiaries. Unless
otherwise indicated, positions held shown in the following table are positions
with Tyco. Except as set forth below, each such person is a citizen of the
United States of America. None of the listed persons, during the past five
years, has been convicted in a criminal proceeding (excluding traffic violations
or similar misdemeanors) or was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which such person
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting activities subject to, federal or state securities
laws or finding any violation of such laws.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL
NAME AND POSITION HELD & OCCUPATION OR EMPLOYMENT
CURRENT BUSINESS ADDRESS AND FIVE-YEAR EMPLOYMENT HISTORY
------------------------------------------- -------------------------------------------
<S> <C>
L. Dennis Kozlowski........................ Mr. Kozlowski has been Chairman of the
Chairman of the Board, Board of Directors, Chief Executive Officer
President and Chief and President of Tyco since July 1997. He
Executive Officer was Chairman of the Board of Directors of
One Tyco Park Tyco International (US) Inc. from January
Exeter, NH 03833 1993 to July 1997. He has been Chief
Executive Officer of Tyco (US) since July
1992 and President of Tyco (US) since 1989.
Michael A. Ashcroft........................ Mr. Ashcroft has been Chairman of Carlisle
Director Holdings Limited (services company) since
P.O. Box 1598 1987. He was Chairman of the Board of
Belize City, Belize Directors and Chief Executive officer of
ADT Limited from 1984 to July 1997. Mr.
Ashcroft is a citizen of Belize.
Joshua M. Berman........................... Mr. Berman has been counsel to the law firm
Director and Vice President of Kramer Levin Naftalis & Frankel LLP
Kramer, Levin, Naftalis & Frankel LLP (counselors at law) since April 1985. He
919 Third Avenue New York, NY 10022 has been Vice President of Tyco since July
1997.
Richard S. Bodman.......................... Mr. Bodman has been Managing General
Director Partner of AT&T Ventures LLC (venture
AT&T Ventures LLC capital) since May 1996. Previously, he was
2 Wisconsin Circle Senior Vice President, Corporate Strategy
Suite 610 and Development, of AT&T Corporation
Chevy Chase, MD 20815 (communications) from August 1990 to May
1996.
John F. Fort, III.......................... Mr. Fort was Chairman of the Board and
Director Chief Executive Officer of Tyco (US) from
One Tyco Park 1982 to 1992.
Exeter, NH 03833
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL
NAME AND POSITION HELD & OCCUPATION OR EMPLOYMENT
CURRENT BUSINESS ADDRESS AND FIVE-YEAR EMPLOYMENT HISTORY
------------------------------------------- -------------------------------------------
<S> <C>
Stephen W. Foss............................ Mr. Foss has been Chairman, President and
Director Chief Executive Officer of Foss
Foss Manufacturing Company, Inc. Manufacturing Company, Inc. (manufacturer
380 Lafayette Road of synthetic fibers and non-woven fabrics)
Hampton, NH 03842 since 1969.
Philip M. Hampton.......................... Mr. Hampton has been Co-Managing Director
Director of R.H. Arnold & Co. (investment bank)
R.H. Arnold & Co. since April 1997. He was Chairman of
152 West 57th Street Metzler Corporation (investment bank) from
44th Floor October 1989 to March 1997.
New York, NY 10019
Wendy E. Lane.............................. Ms. Lane has been Chairman of Lane
Director Holdings, Inc., a private equity firm,
Lane Holdings, Inc. since 1992.
348 Grove Street
Needham, MA 02492
James S. Pasman, Jr........................ Mr. Pasman has been Director of CSAM Income
Director Fund, Inc. since 1988. He has been Director
One Tyco Park of CSAM Strategic Global Income Fund, Inc.
Exeter, NH 03833 since 1988.
W. Peter Slusser........................... Mr. Slusser has been the President of
Director Slusser Associates, Inc. (investment
Slusser Associates, Inc. banking firm) since 1988.
One Citicorp Center
Suite 5100
153 East 53rd Street
New York, NY 10022
Frank E. Walsh, Jr......................... Mr. Walsh has been Chairman of the
Director Sandyhill Foundation (charitable
Sandyhill Foundation organization) since August 1996.
330 South Street Previously, he was Chairman of Wesray
Morristown, NJ 07962 Capital Corporation (investment firm) from
October 1989 to January 1996.
Mark A. Belnick............................ Mr. Belnick has been Executive Vice
Executive Vice President President and Chief Corporate Counsel of
and Chief Corporate Counsel Tyco since September 1998. Previously, he
One Tyco Park had been a senior partner with the
Exeter, NH 03833 international law firm of Paul, Weiss,
Rifkind, Wharton & Garrison since 1987.
Jerry R. Boggess........................... Mr. Boggess has been President of Tyco Fire
President of Tyco Fire and Security Services since August 1993 and
and Security Services Vice President of Tyco (US) since February
Three Tyco Park 1996.
Exeter, NH 03833
</TABLE>
I-2
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL
NAME AND POSITION HELD & OCCUPATION OR EMPLOYMENT
CURRENT BUSINESS ADDRESS AND FIVE-YEAR EMPLOYMENT HISTORY
------------------------------------------- -------------------------------------------
<S> <C>
Neil R. Garvey............................. Mr. Garvey has been President and Chief
President and Chief Executive Officer of Executive Officer of TyCom Ltd. (undersea
TyCom Ltd. fiber optic networks and services) since
One Tyco Park July 2000 and President of TyCom (US) Inc.
Exeter, NH 03833 (formerly Tyco Submarine Systems Ltd.)
since July 1997. He was President of
Simplex Technologies, a subsidiary of Tyco,
from July 1995 to June 1997 and Vice
President of Sales and Marketing of Simplex
Technologies from June 1992 to July 1995.
Juergen W. Gromer.......................... Mr. Gromer has been President of Tyco
President of Tyco Electronics Electronics since April 1999. He was Senior
Postfach Carl Benz Str. 12-14 Vice President, Worldwide Sales and
64625 Benshiem, Germany Service, of AMP Incorporated, which was
acquired by Tyco in April 1999, from 1998
to April 1999. Previously, he was President
of the Global Automotive Division and
Corporate Vice President of AMP from 1997
to 1998 and Vice President and General
Manager of various divisions of AMP from
1990 to 1997. Mr. Gromer is a citizen of
the Federal Republic of Germany.
Robert P. Mead............................. Mr. Mead has been President of Tyco Flow
President of Tyco Control since May 1993 and Vice President
Flow Control of Tyco (US) since August 1993.
Three Tyco Park
Exeter, NH 03833
Richard J. Meelia.......................... Mr. Meelia has been President of Tyco
President of Tyco Healthcare Group since 1995. He was Group
Healthcare Group President of Kendall Healthcare Products
One Tyco Park Company from 1991 to 1995.
Exeter, NH 03833
Mark H. Swartz............................. Mr. Swartz has been Executive Vice
Executive Vice President President and Chief Financial Officer of
and Chief Financial Officer Tyco since July 1997. He has been Vice
One Tyco Park President and Chief Financial Officer of
Exeter, NH 03833 Tyco (US) since 1995. From 1993 to 1995, he
was Tyco (US)'s Director of Mergers and
Acquisitions.
</TABLE>
I-3
<PAGE>
SCHEDULE II
CERTAIN INFORMATION CONCERNING THE DIRECTORS
AND EXECUTIVE OFFICERS OF TYCO ACQUISTION CORP. X
The following table sets forth the name, current business address, present
principal occupation or employment, and material occupations, positions, offices
or employment for the past five years of each director and executive officer of
Tyco Acquisition Corp. X. Each such person is a citizen of the United States of
America. None of the listed persons, during the past five years, has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction as a result of which such person
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting activities subject to, federal or state securities
laws or finding any violation of such laws.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL
NAME AND POSITION HELD & CURRENT OCCUPATION OR EMPLOYMENT
BUSINESS ADDRESS AND FIVE-YEAR EMPLOYMENT HISTORY
------------------------------------------- -------------------------------------------
<S> <C>
L. Dennis Kozlowski........................ *
Director and President
OneTyco Park
Exeter, NH 03833
Mark H. Swartz............................. *
Director and Vice President
One Tyco Park
Exeter, NH 03833
Irving Gutin............................... Mr. Gutin has been Senior Vice President of
Director and Vice President Tyco (US) for more than the past five
One Tyco Park years.
Exeter, NH 03833
Mark A. Belnick............................ *
Vice President
One Tyco Park
Exeter, NH 03833
Jeffrey D. Mattfolk........................ Mr. Mattfolk has been Senior Vice
Vice President President- Finance of Tyco (US) since April
One Tyco Park 1999. From 1997 to 1999 he served as Vice
Exeter, NH 03833 President- Mergers & Acquisitions of Tyco
(US). From 1994 to 1997 he served in
various positions in Tyco (US).
Michael A. Robinson........................ Mr. Robinson joined Tyco (US) in March 1998
Vice President and Treasurer and is currently Senior Vice President and
One Tyco Park Corporate Treasurer of Tyco (US). From 1993
Exeter, NH 03833 to 1998 he was an investment banker with
Merrill Lynch & Co.
Scott Stevenson............................ Mr. Stevenson joined Tyco (US) in February
Vice President and 1998 and is currently Senior Vice
Assistant Treasurer President--Tax of Tyco (US). Prior to
One Town Center Road joining Tyco, he had been a partner with
Boca Raton, FL 33486 the public accounting firm of Coopers &
Lybrand LLP since 1988.
</TABLE>
------------------------
* Please see the information in Schedule I
II-1
<PAGE>
SCHEDULE III
CERTAIN INFORMATION CONCERNING THE DIRECTORS
AND EXECUTIVE OFFICERS OF VLMS, INC.
The following table sets forth the name, current business address, present
principal occupation or employment, and material occupations, positions, offices
or employment for the past five years of each director and executive officer of
VLMS. Each such person is a citizen of the United States of America. None of the
listed persons, during the past five years, has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or was a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction as a result of which such person was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting activities
subject to, federal or state securities laws or finding any violation of such
laws.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL
NAME AND POSITION HELD & CURRENT OCCUPATION OR EMPLOYMENT
BUSINESS ADDRESS AND FIVE-YEAR EMPLOYMENT HISTORY
------------------------------------------------------------ --------------------------------
<S> <C>
Richard Meelia.............................................. *
Director and President
One Tyco Park
Exeter, NH 03833
Mark H. Swartz.............................................. *
Director
One Tyco Park
Exeter, NH 03833
Irving Gutin................................................ *
Director and Vice President
One Tyco Park
Exeter, NH 03833
Mark Belnick,............................................... *
Vice President
One Tyco Park
Exeter, NH 03833
Jeffrey D. Mattfolk,........................................ *
Vice President
One Tyco Park
Exeter, NH 03833
Michael A. Robinson,........................................ *
Treasurer
One Tyco Park
Exeter, NH 03833
Scott Stevenson,............................................ *
Vice President and
Assistant Treasurer
One Town Center Road
Boca Raton, FL 33486
</TABLE>
------------------------
* Please see the information set forth in Schedule I and Schedule II.
III-1
<PAGE>
ANNEX A
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
TYCO ACQUISITION CORP. X
VLMS, INC.
AND
INNERDYNE, INC.
INCLUDING
GUARANTEE
OF
TYCO INTERNATIONAL LTD.
DATED AS OF OCTOBER 3, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<C> <S> <C>
ARTICLE I TENDER OFFER AND MERGER..................................... A-1
SECTION 1.01 The Offer................................................... A-1
SECTION 1.02 Company Action.............................................. A-3
SECTION 1.03 Directors................................................... A-4
SECTION 1.04 The Merger.................................................. A-4
SECTION 1.05 Effective Time; Closing..................................... A-4
SECTION 1.06 Effect of the Merger........................................ A-5
SECTION 1.07 Certificate of Incorporation; Bylaws........................ A-5
SECTION 1.08 Directors and Officers...................................... A-5
SECTION 1.09 Effect on Capital Stock..................................... A-5
SECTION 1.10 Exchange of Certificates.................................... A-6
SECTION 1.11 No Further Ownership Rights in the Company Common Stock..... A-8
SECTION 1.12 Tax Consequences............................................ A-8
SECTION 1.13 Taking of Necessary Action; Further Action.................. A-8
SECTION 1.14 Appraisal Rights............................................ A-8
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY............... A-9
SECTION 2.01 Organization and Qualification; Subsidiaries................ A-9
SECTION 2.02 Certificate of Incorporation and By-laws.................... A-10
SECTION 2.03 Capitalization.............................................. A-10
SECTION 2.04 Authority Relative to this Agreement........................ A-10
SECTION 2.05 No Conflict; Required Filings and Consents.................. A-11
SECTION 2.06 Compliance; Permits......................................... A-12
SECTION 2.07 SEC Filings; Financial Statements........................... A-12
SECTION 2.08 Absence of Certain Changes or Events........................ A-12
SECTION 2.09 No Undisclosed Liabilities.................................. A-13
SECTION 2.10 Absence of Litigation....................................... A-13
SECTION 2.11 Employee Benefit Plans; Employment Agreements............... A-13
SECTION 2.12 Employment and Labor Matters................................ A-16
SECTION 2.13 Registration Statement; Proxy Statement/Prospectus.......... A-17
SECTION 2.14 Restrictions on Business Activities......................... A-18
SECTION 2.15 Title to Property........................................... A-18
SECTION 2.16 Taxes....................................................... A-18
SECTION 2.17 Environmental Matters....................................... A-19
SECTION 2.18 Brokers..................................................... A-20
SECTION 2.19 Intellectual Property....................................... A-21
SECTION 2.20 Interested Party Transactions............................... A-22
SECTION 2.21 Insurance................................................... A-22
SECTION 2.22 Product Liability and Recalls............................... A-22
SECTION 2.23 Opinion of Financial Advisor................................ A-22
SECTION 2.24 Rights Agreement............................................ A-22
</TABLE>
A-i
<PAGE>
<TABLE>
<CAPTION>
PAGE
--------
<C> <S> <C>
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB..... A-23
SECTION 3.01 Organization and Qualification; Subsidiaries................ A-23
SECTION 3.02 Capitalization.............................................. A-23
SECTION 3.03 Authority Relative to this Agreement........................ A-24
SECTION 3.04 No Conflicts; Required Filings and Consents................. A-24
SECTION 3.05 Compliance.................................................. A-25
SECTION 3.06 SEC Filings; Financial Statements........................... A-25
SECTION 3.07 Absence of Certain Changes or Events........................ A-25
SECTION 3.08 No Undisclosed Liabilities.................................. A-25
SECTION 3.09 Absence of Litigation....................................... A-25
SECTION 3.10 Registration Statement; Proxy Statement/Prospectus.......... A-26
SECTION 3.11 Brokers..................................................... A-26
SECTION 3.12 Ownership of Merger Sub; No Prior Activities................ A-26
SECTION 3.13 Ownership Interest in the Company........................... A-27
ARTICLE IV CONDUCT OF BUSINESS PENDING THE MERGER...................... A-27
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 Guarantor Pending the Merger......... A-30
ARTICLE V ADDITIONAL AGREEMENTS....................................... A-31
SECTION 5.01 Stockholder Approval; Preparation of Post-Effective
Amendment and Proxy Statement/Prospectus.................. A-31
SECTION 5.02 Company Stockholders Meeting................................ A-32
SECTION 5.03 Access to Information; Confidentiality...................... A-33
SECTION 5.04 Consents; Approvals......................................... A-33
SECTION 5.05 Agreements with Respect to Affiliates....................... A-33
SECTION 5.06 Indemnification and Insurance............................... A-33
SECTION 5.07 Notification of Certain Matters............................. A-34
SECTION 5.08 Further Action/Tax Treatment................................ A-35
SECTION 5.09 Public Announcements........................................ A-35
SECTION 5.10 Guarantor Common Shares..................................... A-35
SECTION 5.11 Conveyance Taxes............................................ A-35
SECTION 5.12 Option Plans; ESPP; Other Programs.......................... A-35
SECTION 5.13 Employee Benefits........................................... A-36
SECTION 5.14 Rights Agreement............................................ A-37
SECTION 5.15 Accountant's Letters........................................ A-37
SECTION 5.16 Compliance with State Property Transfer Statutes............ A-37
SECTION 5.17 Amendment of 401(k) Plan.................................... A-37
SECTION 5.18 Form 5500................................................... A-37
SECTION 5.19 Warrants.................................................... A-37
ARTICLE VI CONDITIONS TO THE MERGER.................................... A-38
SECTION 6.01 Conditions to Obligation of Each Party to Effect the
Merger.................................................... A-38
ARTICLE VII TERMINATION................................................. A-38
SECTION 7.01 Termination................................................. A-38
SECTION 7.02 Effect of Termination....................................... A-40
SECTION 7.03 Fees and Expenses........................................... A-40
</TABLE>
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<TABLE>
<CAPTION>
PAGE
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<C> <S> <C>
ARTICLE VIII GENERAL PROVISIONS.......................................... A-41
SECTION 8.01 Effectiveness of Representations, Warranties and
Agreements................................................ A-41
SECTION 8.02 Notices..................................................... A-42
SECTION 8.03 Certain Definitions......................................... A-42
SECTION 8.04 Amendment................................................... A-43
SECTION 8.05 Waiver...................................................... A-43
SECTION 8.06 Headings.................................................... A-43
SECTION 8.07 Severability................................................ A-43
SECTION 8.08 Entire Agreement............................................ A-44
SECTION 8.09 Assignment.................................................. A-44
SECTION 8.10 Parties in Interest......................................... A-44
SECTION 8.11 Failure or Indulgence Not Waiver; Remedies Cumulative....... A-44
SECTION 8.12 Governing Law; Jurisdiction................................. A-44
SECTION 8.13 Counterparts................................................ A-44
SECTION 8.14 WAIVER OF JURY TRIAL........................................ A-44
Annex I Conditions to the Offer..................................... A-I-1
Annex II Index of Defined Terms...................................... A-II-1
</TABLE>
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of October 3, 2000 (this
"AGREEMENT"), among TYCO ACQUISITION CORP. X ("PARENT"), a Delaware corporation
and a direct, wholly-owned subsidiary of TYCO INTERNATIONAL LTD. ("GUARANTOR"),
a Bermuda company, VLMS, INC., a Delaware corporation and a direct, wholly-owned
subsidiary of Parent ("MERGER SUB"), and INNERDYNE, INC., a Delaware corporation
(the "COMPANY").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and the
Company have approved this Agreement, and declared it advisable that Parent
acquire all of the outstanding shares of the Company through (i) an exchange
offer (the "OFFER") to exchange common shares, par value $0.20 per share, of
Guarantor ("GUARANTOR COMMON SHARES") for all of the issued and outstanding
shares of common stock, par value $0.01 per share (the "COMPANY COMMON STOCK"),
of the Company (the "SHARES") and (ii) a merger of Merger Sub with and into the
Company (the "MERGER"), each pursuant to and upon the terms and subject to the
conditions of this Agreement and in accordance with the Delaware General
Corporation Law (the "DGCL");
WHEREAS, Parent, Merger Sub and the Company intend, by approving resolutions
authorizing this Agreement, to adopt this Agreement as a plan of reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "CODE") and the regulations thereunder, and that the Offer and the
Merger (together, the "TRANSACTION") and other transactions contemplated by this
Agreement be undertaken pursuant to such plan. For accounting purposes, the
Merger is intended to be accounted for as a "purchase" under United States
generally accepted accounting principles ("GAAP");
WHEREAS, concurrently with the execution of this Agreement, and as a
condition and inducement to the Company's willingness to enter into this
Agreement, Guarantor has agreed fully and unconditionally to guarantee the
representations, warranties, covenants, agreements and other obligations of
Parent and Merger Sub in this Agreement (the "GUARANTEE"); and
WHEREAS, the Company, Merger Sub and Parent desire to make certain
representations, warranties and agreements in connection with, and establish
various conditions precedent to, the transactions contemplated hereby.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements hereinafter set forth, the parties hereto
agree as follows:
ARTICLE I
TENDER OFFER AND MERGER
SECTION 1.01 THE OFFER. (a) Provided that (i) this Agreement shall not have
been terminated in accordance with Section 7.01 and (ii) none of the events set
forth in Annex I hereto shall have occurred and be continuing, Parent shall, as
soon as practicable after the date hereof, commence the Offer. Each Share
accepted by Parent pursuant to the Offer shall be exchanged for the right to
receive from Parent that number of fully paid and nonassessable Guarantor Common
Shares equal to the Exchange Ratio.
For purposes of this Agreement:
"AVERAGE SHARE PRICE" means the average of the Daily Per Share Prices for
the five consecutive trading days ending on the second trading day prior to the
Designated Expiration Date.
"DAILY PER SHARE PRICE" for any trading day means the volume-weighted
average of the per share selling price on the NYSE of Guarantor Common Shares
for that day, as reported by Bloomberg
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Financial Markets (or if such service is unavailable, a service providing
similar information selected by Parent and the Company).
"DESIGNATED EXPIRATION DATE" means the date designated for the expiration of
the Offer following which Parent will first accept Shares for exchange, as such
expiration date may be extended from time to time.
"EXCHANGE RATIO" means $7.50 (the "MERGER PRICE") divided by the Average
Share Price, subject to adjustment as provided in Section 1.09(e).
"NASDAQ" means the Nasdaq Stock Market.
"NYSE" means the New York Stock Exchange.
(b) The initial expiration date of the Offer shall be the twentieth business
day from and including the date of commencement of the Offer. The Offer shall be
subject to the condition that there shall be validly tendered in accordance with
the terms of the Offer prior to the expiration date of the Offer and not
withdrawn a number of Shares which, together with the Shares then owned by
Guarantor, Parent and Merger Sub (if any), represents at least a majority of the
total number of outstanding Shares, assuming the exercise of all options, rights
and convertible securities (if any) then currently exercisable or convertible or
exercisable within 180 days thereafter and the issuance of all Shares that the
Company is obligated to issue thereunder (such total number of outstanding
Shares being hereinafter referred to as the "FULLY DILUTED SHARES") (the
"MINIMUM CONDITION") and to the other conditions set forth in Annex I hereto.
Parent and Merger Sub expressly reserve the right to waive the conditions to the
Offer and to make any change in the terms or conditions of the Offer; provided,
that, without the prior written consent of the Company, no change shall be made
which decreases the number of Shares sought in the Offer, changes the form or
decreases the amount of consideration to be paid, changes or waives the Minimum
Condition or imposes any conditions to the Offer in addition to those set forth
in Annex I, extends the Offer (except as set forth in the following paragraph),
or makes any other change to any of the terms and conditions to the Offer which
is adverse to the holders of Shares.
(c) Subject to the terms of the Offer and this Agreement and the
satisfaction (or waiver to the extent permitted by this Agreement) of the
conditions to the Offer, Parent shall accept for exchange all Shares validly
tendered and not withdrawn pursuant to the Offer as soon as practicable after
the applicable expiration date of the Offer and shall exchange for Guarantor
Common Shares all such Shares in accordance with the terms of this Agreement
promptly after acceptance; provided that (x) Parent shall extend the Offer for
successive extension periods not in excess of 10 business days per extension but
in no event ending later than April 30, 2001, if, at the scheduled expiration
date of the Offer or any extension thereof, any of the conditions to the Offer
shall not have been satisfied, until such time as such conditions are satisfied
or waived, and (y) Parent may extend the Offer if and to the extent required by
the applicable rules and regulations of the Securities Exchange Commission
("SEC"). In addition, Parent may extend the Offer after the acceptance of Shares
thereunder for a further period of time by means of a subsequent offering period
under Rule 14d-11 promulgated under the Securities Exchange Act of 1934, as
amended and the SEC's rules and regulations thereunder (the "EXCHANGE ACT"), of
not more than 20 business days to meet the objective (which is not a condition
to the Offer) that there be validly tendered, in accordance with the terms of
the Offer, prior to the expiration date of the Offer (as so extended) and not
withdrawn a number of Shares which, together with Shares then owned by
Guarantor, Parent and Merger Sub, represents at least 90% of the outstanding
Shares.
Notwithstanding anything to the contrary set forth herein, no certificates
or scrip representing fractional Guarantor Common Shares shall be issued in
connection with the exchange of Guarantor Common Shares for Shares upon
consummation of the Offer, and in lieu thereof each tendering stockholder who
would otherwise be entitled to a fractional Guarantor Common Share in the Offer
will
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be paid an amount in cash equal to the product obtained by multiplying (A) the
fractional share interest to which such holder would otherwise be entitled by
(B) the Average Share Price.
(d) As soon as practicable after the date of this Agreement, Parent shall
cause Guarantor to prepare and file with the SEC a registration statement on
Form S-4 to register the offer and sale of Guarantor Common Shares pursuant to
the Offer and the Merger (the "REGISTRATION STATEMENT"). The Registration
Statement will include a preliminary prospectus containing the information
required under Rule 14d-4(b) promulgated under the Exchange Act (the
"PRELIMINARY PROSPECTUS"). As soon as practicable but not later than the date of
commencement of the Offer, Parent and Merger Sub shall (i) file, and cause
Guarantor to file, with the SEC a Tender Offer Statement on Schedule TO with
respect to the Offer which will contain or incorporate by reference all or part
of the Preliminary Prospectus and form of the related letter of transmittal
(together with any supplements or amendments thereto, collectively the "OFFER
DOCUMENTS") and (ii) cause the Offer Documents to be disseminated to holders of
Shares. Parent, Merger Sub and the Company each agree promptly to correct any
information provided by it for use in the Registration Statement or the Offer
Documents if and to the extent that it shall have become false or misleading in
any material respect. Parent and Merger Sub agree to take all steps necessary to
cause the Offer Documents as so corrected to be filed with the SEC and to be
disseminated to holders of Shares, in each case as and to the extent required by
applicable federal securities laws. The Company and its counsel shall be given a
reasonable opportunity to review and comment on the Schedule TO, the
Registration Statement and the Offer Documents and any material amendments
thereto prior to their being filed with the SEC.
SECTION 1.02 COMPANY ACTION. (a) The Company hereby consents to the Offer
and represents that its Board of Directors, at a meeting duly called and held,
has by unanimous vote of the directors participating therein (i) determined that
this Agreement and the transactions contemplated hereby, including the Offer and
the Merger, are advisable and are fair to and in the best interest of the
Company's stockholders, (ii) approved and adopted this Agreement and the
transactions and other matters contemplated hereby, including the Offer and the
Merger, in accordance with the requirements of the DGCL, and (iii) resolved to
recommend acceptance of the Offer and approval and adoption of this Agreement
and the Merger by the Company's stockholders (the recommendations referred to in
this clause (iii) are collectively referred to in this Agreement as the
"RECOMMENDATIONS"). The Company further represents that U.S. Bancorp Piper
Jaffray Inc. (the "COMPANY FINANCIAL ADVISOR") has rendered to the Company's
Board of Directors its opinion that the consideration to be received by the
Company's stockholders pursuant to this Agreement is fair to such stockholders
from a financial point of view. The Company has been advised that all of its
directors and executive officers currently intend to tender their Shares
pursuant to the Offer.
(b) As soon as practicable on the day that the Offer is commenced, the
Company will file with the SEC and disseminate to holders of Shares a
Solicitation/ Recommendation Statement on Schedule 14D-9 (the "SCHEDULE 14D-9")
which shall reflect the Recommendations, provided that they have not been
withdrawn as permitted hereby. The Company, Parent and Merger Sub each agree,
promptly to correct any information provided by it for use in the
Schedule 14D-9 if and to the extent that it shall have become false or
misleading in any material respect. The Company agrees to take all steps
necessary to cause the Schedule 14D-9 as so corrected to be filed with the SEC
and to be disseminated to holders of Shares, in each case as and to the extent
required by applicable federal securities laws. Parent and its counsel shall be
given a reasonable opportunity to review and comment on the Schedule 14D-9 and
any material amendments thereto prior to its being filed with the SEC.
(c) The Company will promptly furnish Parent and Merger Sub pursuant to the
terms of the Confidentiality Agreement (as defined in Section 5.03) with a list
of its stockholders, mailing labels and any available listing or computer file
containing the names and addresses of all record holders of Shares and lists of
securities positions of Shares held in stock depositories, in each case as of
the most recent practicable date, and will provide to Parent and Merger Sub such
additional information
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(including, without limitation, updated lists of stockholders, mailing labels
and lists of securities positions) and such other assistance as Parent or Merger
Sub may reasonably request in connection with the Offer.
SECTION 1.03 DIRECTORS. (a) Effective upon the acceptance for exchange by
Parent of Shares pursuant to the Offer (the "APPOINTMENT TIME"), Parent shall be
entitled to designate the number of directors, rounded up to the next whole
number, on the Company's Board of Directors that equals the product of (i) the
total number of directors on the Company's Board of Directors (giving effect to
the election of any additional directors pursuant to this Section 1.03) and
(ii) the percentage that the number of Shares owned by Guarantor, Parent and
Merger Sub (including Shares accepted for payment) bears to the total number of
Shares outstanding, and the Company shall take all action reasonably necessary
to cause Parent's designees to be elected or appointed to the Company's Board of
Directors, including, without limitation, increasing the number of directors, or
seeking and accepting resignations of incumbent directors, or both; provided
that, prior to the Effective Time (as defined in Section 1.05), the Company's
Board of Directors shall always have at least two members who were directors of
the Company prior to consummation of the Offer (each, a "CONTINUING DIRECTOR").
If the number of Continuing Directors is reduced to less than two for any reason
prior to the Effective Time, the remaining and departing Continuing Directors
shall be entitled to designate a person to fill the vacancy and, thereafter,
such person shall be a Continuing Director. Notwithstanding anything in this
Agreement to the contrary, if Parent's designees are elected to the Company's
Board of Directors prior to the Effective Time, the affirmative vote of the
Continuing Directors shall be required for the Company to (a) amend or terminate
this Agreement or agree or consent to any amendment or termination of this
Agreement, (b) waive any of the Company's or its stockholders' rights, benefits
or remedies hereunder, (c) extend the time for performance of Parent's and
Merger Sub's respective obligations hereunder, or (d) approve any other action
by the Company which is reasonably likely to adversely affect the interests of
the stockholders of the Company (other than Parent, Merger Sub and their
affiliates), with respect to the transactions contemplated by this Agreement.
(b) The Company's obligations to appoint designees to its Board of Directors
shall be subject to Section 14(f) of the Exchange Act and Rule 14f-l promulgated
thereunder. The Company shall promptly take all actions required pursuant to
this Section 1.03 and Rule 14f-l in order to fulfill its obligations under this
Section 1.03 and shall include in the Schedule 14D-9 such information with
respect to the Company and its officers and directors as is required under
Section 14(f) and Rule 14f-l to fulfill its obligations under this
Section 1.03. Parent will supply to the Company in writing and be solely
responsible for any information with respect to itself and its nominees,
officers, directors and affiliates required by Section 14(f) and Rule 14f-1.
SECTION 1.04 THE MERGER. Upon the terms and subject to the conditions of
this Agreement and the applicable provisions of the DGCL, at the Effective Time,
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 of the Merger (the "SURVIVING CORPORATION").
SECTION 1.05 EFFECTIVE TIME; CLOSING. Subject to the provisions of this
Agreement, the Company and Merger Sub will prepare and file a certificate of
merger, in such appropriate form as determined by the parties, with the
Secretary of State of the State of Delaware in accordance with the relevant
provisions of the DGCL (the "CERTIFICATE OF MERGER") (the time of such filing
(or such later time as may be agreed in writing by the Company and Parent and
specified in the Certificate of Merger) being the "EFFECTIVE TIME") as soon as
practicable on or after the Closing Date. The closing of the Merger (the
"CLOSING") shall take place at the offices of Kramer Levin Naftalis & Frankel
LLP, 919 Third Avenue, New York, New York, at a time and date to be specified by
the parties, which shall be no later than the second business day after the
satisfaction or waiver of the conditions set forth in Article VI, or at such
other time, date and location as the parties hereto agree in writing (the
"CLOSING DATE").
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SECTION 1.06 EFFECT OF THE MERGER. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement and the applicable provisions of
the DGCL. Without limiting the generality of the foregoing, at the Effective
Time, the Surviving Corporation shall possess all the property, rights,
privileges, powers and franchises of the Company and Merger Sub, and shall be
subject to all debts, liabilities and duties of the Company and Merger Sub.
SECTION 1.07 CERTIFICATE OF INCORPORATION; BYLAWS. (a) At the Effective
Time, the Restated Certificate of Incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended, as provided
by law; provided, however, that at the Effective Time Article Fourth of the
Certificate of Incorporation of the Surviving Corporation shall be amended to
read in its entirety as follows: "The number of shares that the Corporation
shall have authority to issue is 10,000 shares of common stock, par value $0.01
per share".
(b) At the Effective Time, the Bylaws of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the Bylaws of the Surviving
Corporation until thereafter amended.
SECTION 1.08 DIRECTORS AND OFFICERS. The initial directors of the Surviving
Corporation shall be the directors of Merger Sub immediately prior to the
Effective Time, until their respective successors are duly elected or appointed
and qualified. The initial officers of the Surviving Corporation shall be the
officers of the Company immediately prior to the Effective Time, until their
respective successors are duly appointed.
SECTION 1.09 EFFECT ON CAPITAL STOCK. Subject to the terms and conditions of
this Agreement, at the Effective Time, by virtue of the Merger and without any
action on the part of Merger Sub, the Company or the holders of any of the
following securities:
(a) CONVERSION OF THE COMPANY COMMON STOCK. Each share of the Company Common
Stock issued and outstanding immediately prior to the Effective Time, other than
any shares of the Company Common Stock to be canceled pursuant to
Section 1.09(b) and other than shares as to which appraisal rights are exercised
pursuant to Section 1.14, will be canceled and extinguished and automatically
converted (subject to Section 1.09(e)) into the right to receive the number of
Guarantor Common Shares equal to the Exchange Ratio upon surrender of the
certificate representing such share of the Company Common Stock in the manner
provided in Section 1.10 (together with the cash in lieu of fractional Guarantor
Common Shares as specified below, the "MERGER CONSIDERATION"). No fraction of a
Guarantor Common Share will be issued by virtue of the Merger, but in lieu
thereof, a cash payment shall be made pursuant to Section 1.10(e).
(b) CANCELLATION OF THE COMPANY-OWNED AND PARENT-OWNED STOCK. Each share of
the Company Common Stock held by the Company or owned by Guarantor, Parent or
Merger Sub immediately prior to the Effective Time shall be canceled and
extinguished without any conversion thereof.
(c) STOCK OPTIONS; EMPLOYEE STOCK PURCHASE PLAN. At the Effective Time, all
options or rights ("COMPANY STOCK OPTIONS") to purchase Company Common Stock
then outstanding, whether under (i) the Company's 1987 Stock Option Plan,
(ii) the Company's 1989 Incentive Stock Plan (the "1989 PLAN"), (iii) the
Company's 1996 Stock Option Plan, (iv) the Company's 2000 Directors' Option Plan
or (v) otherwise (together, the "COMPANY STOCK OPTION PLANS"), shall be treated
in accordance with Section 5.12 of this Agreement. Rights outstanding under the
Company's employee stock purchase plan (the "COMPANY ESPP") or any similar U.S.
plan shall be treated as set forth in Section 5.12 of this Agreement.
(d) CAPITAL STOCK OF MERGER SUB. Each share of common stock, par value $0.01
per share, of Merger Sub (the "MERGER SUB COMMON STOCK"), issued and outstanding
immediately prior to the Effective Time shall be converted into one validly
issued, fully paid and nonassessable share of common stock, par value $0.01 per
share, of the Surviving Corporation. Following the Effective Time, each
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certificate evidencing ownership of shares of Merger Sub common stock shall
evidence ownership of such shares of capital stock of the Surviving Corporation.
(e) ADJUSTMENTS TO EXCHANGE RATIO. If, during the period between the date of
this Agreement and the Effective Time, any change in the outstanding shares of
capital stock of Guarantor or the Company shall occur, including by reason of
any reclassification, recapitalization, stock split or combination, exchange or
readjustment of shares, or any stock dividend thereon with a record date during
such period, or the issuance or exercise of the Rights (as hereinafter defined),
the Exchange Ratio, the Merger Consideration and any other amounts payable
pursuant to the Offer, the Merger or otherwise pursuant to this Agreement shall
be appropriately adjusted.
SECTION 1.10 EXCHANGE OF CERTIFICATES. (a) EXCHANGE AGENT. Parent shall
select an institution reasonably acceptable to the Company to act as the
exchange agent (the "EXCHANGE AGENT") in the Merger.
(b) EXCHANGE FUND. Following the Effective Time, Parent shall make available
to the Exchange Agent, as needed for exchange in accordance with this
Article I, (i) the Guarantor Common Shares and (ii) an amount of cash sufficient
to permit the Exchange Agent to make the necessary payments of cash in lieu of
fractional Guarantor Common Shares in accordance with Section 1.10(e) (such cash
in lieu of fractional shares and Guarantor Common Shares, together with any
dividends or distributions with respect thereto, are hereinafter referred to as
the "EXCHANGE FUND") payable pursuant to Section 1.09 in exchange for
outstanding shares of the Company Common Stock.
(c) EXCHANGE PROCEDURES. Promptly after the Effective Time, Parent shall
instruct the Exchange Agent to mail to each holder of record of a certificate or
certificates ("CERTIFICATES") which immediately prior to the Effective Time
represented outstanding shares of the Company Common Stock whose shares were
converted into the right to receive Guarantor Common Shares pursuant to
Section 1.09, (i) a letter of transmittal in customary form (that 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 contain such other provisions as Parent may reasonably specify) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing Guarantor Common Shares. Upon surrender
of Certificates for cancellation to the Exchange Agent together with such letter
of transmittal, duly completed and validly executed in accordance with the
instructions thereto, the holders of such Certificates shall be entitled to
receive in exchange therefor certificates representing the number of whole
Guarantor Common Shares into which their shares of the Company Common Stock were
converted at the Effective Time, (or an equivalent evidence of ownership of
Guarantor Common Shares under Guarantor's direct registration system) payment in
lieu of fractional shares that such holders have the right to receive pursuant
to Section 1.10(e) and any dividends or distributions payable pursuant to
Section 1.10(d), and the Certificates so surrendered shall forthwith be
canceled. Until so surrendered, outstanding Certificates will be deemed from and
after the Effective Time, for all corporate purposes, to evidence only the right
to receive the number of full Guarantor Common Shares into which such shares of
the Company Common Stock shall have been so converted and the right to receive
an amount in cash in lieu of the issuance of any fractional shares in accordance
with Section 1.10(e) and any dividends or distributions payable pursuant to
Section 1.10(d). No interest will be paid or accrued on any cash in lieu of
fractional Guarantor Common Shares or on any unpaid dividends or distributions
payable to holders of Certificates. In the event of a transfer of ownership of
shares of the Company Common Stock which is not registered in the transfer
records of the Company, a certificate representing the proper number of
Guarantor Common Shares (or an equivalent evidence of ownership of Guarantor
Common Shares under Guarantor's direct registration system) may be issued to a
transferee if the Certificate representing such shares of the Company Common
Stock 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.
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(d) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends or other
distributions declared or made after the date of this Agreement with respect to
Guarantor Common Shares with a record date after the Effective Time will be paid
to the holders of any unsurrendered Certificates with respect to the Guarantor
Common Shares represented thereby until the holders of record of such
Certificates shall surrender such Certificates. Subject to applicable law,
following surrender of any such Certificates, the Exchange Agent shall deliver
to the holders of certificates representing whole Guarantor Common Shares issued
in exchange therefor (or an equivalent evidence of ownership of Guarantor Common
Shares under Guarantor's direct registration system), without interest,
(i) promptly, the amount of any cash payable with respect to the number of
Guarantor Common Shares to which such holder is entitled pursuant to
Section 1.10(e) and the amount of dividends or other distributions with a record
date after the Effective Time theretofore paid with respect to such whole
Guarantor Common Shares, and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective Time but
prior to surrender and a payment date occurring after surrender, payable with
respect to such whole Guarantor Common Shares.
(e) FRACTIONAL SHARES. No certificate or scrip representing fractional
Guarantor Common Shares will be issued in the Offer or the Merger upon the
surrender for exchange of Certificates, and such fractional Guarantor Common
Shares will not entitle the owner thereof to vote or to any rights of a holder
of Guarantor Common Shares. In lieu of any such fractional Guarantor Common
Shares, each holder of Certificates who would otherwise have been entitled to a
fraction of a Guarantor Common Share in exchange for such Certificate (after
taking into account all Certificates delivered by such holder) pursuant to this
Section shall receive from the Exchange Agent, as applicable, a cash payment in
lieu of such fractional Guarantor Common Share, determined by multiplying
(A) the fractional share interest to which such holder would otherwise be
entitled by (B) the Average Share Price.
(f) REQUIRED WITHHOLDING. The Exchange Agent shall be entitled to deduct and
withhold from any consideration payable or otherwise deliverable pursuant to
this Agreement, and from any dividends or distributions payable pursuant to
Section 1.10(d), to any holder or former holder of the Company Common Stock such
amounts as may be required to be deducted or withheld therefrom under the Code
or under any provision of state, local or foreign tax law or under any other
applicable law. To the extent such amounts are so deducted or withheld, such
amounts shall be treated for all purposes under this Agreement as having been
paid to the person to whom such amounts would otherwise have been paid.
(g) LOST, STOLEN OR DESTROYED CERTIFICATES. In the event that 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, certificates
representing the Guarantor Common Shares into which the shares of the Company
Common Stock represented by such Certificates were converted pursuant to
Section 1.09 (or an equivalent evidence of ownership of Guarantor Common Shares
under Guarantor's direct registration system), cash for fractional shares, if
any, as may be required pursuant to Section 1.10(e) and any dividends or
distributions payable pursuant to Section 1.10(d); provided, however, that
Parent may, in its discretion and as a condition precedent to the delivery of
such certificates representing Guarantor Common Shares, cash and other
distributions, 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 Guarantor, Parent, the Surviving Corporation
or the Exchange Agent with respect to the Certificates alleged to have been
lost, stolen or destroyed.
(h) NO LIABILITY. Notwithstanding anything to the contrary in this
Section 1.10, neither the Exchange Agent, Guarantor, Parent, the Surviving
Corporation nor any party hereto shall be liable to a holder of Guarantor Common
Shares or the Company Common Stock for any amount properly paid to a public
official pursuant to any applicable abandoned property, escheat or similar law.
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(i) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund which
remains undistributed to the holders of the Company Common Stock for six months
after the Effective Time shall be delivered to Parent, upon demand, and any
holders of the Company Common Stock who have not theretofore complied with the
provisions of this Section 1.10 shall thereafter look only to Parent for the
Guarantor Common Shares, any cash in lieu of fractional Guarantor Common Shares
to which they are entitled pursuant to Section 1.10(e) and any dividends or
other distributions with respect to Guarantor Common Shares to which they are
entitled pursuant to Section 1.10(d), in each case, without any interest
thereon.
SECTION 1.11 NO FURTHER OWNERSHIP RIGHTS IN THE COMPANY COMMON STOCK. All
Guarantor Common Shares issued in accordance with the terms hereof (including
any cash paid in respect thereof pursuant to Section 1.10(d) and (e)) shall be
deemed to have been issued in full satisfaction of all rights pertaining to such
shares of the Company Common Stock, and there shall be no further registration
of transfers on the records of the Surviving Corporation of shares of the
Company Common Stock that 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 1.12 TAX CONSEQUENCES. It is intended by the parties hereto that the
Transaction shall constitute a "reorganization" within the meaning of
Section 368(a) of the Code. The parties hereto 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 Income Tax Regulations.
SECTION 1.13 TAKING OF NECESSARY ACTION; FURTHER ACTION. If, at any time
after the Effective Time, any 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, Merger Sub and the Surviving Corporation will take all such
lawful and necessary action in the name of the Company or Merger Sub. Parent
shall cause Merger Sub to perform all of its obligations relating to this
Agreement and the transactions contemplated hereby.
SECTION 1.14 APPRAISAL RIGHTS. Notwithstanding Section 1.09, if the Merger
is effectuated pursuant to Section 253 of the DGCL, Shares outstanding
immediately prior to the Effective Time and held by a holder who has demanded
appraisal for such Shares in accordance with the DGCL shall not be converted
into a right to receive from Parent that number of fully paid and nonassessable
Guarantor Common Shares equal to the Exchange Ratio, unless such holder fails to
perfect or withdraws or otherwise loses his or her right to appraisal. If after
the Effective Time such holder fails to perfect or withdraws or loses his or her
right to appraisal, such Shares shall be treated as if they had been converted
as of the Effective Time into a right to receive from Parent that number of
fully paid and nonassessable Guarantor Common Shares equal to the Exchange
Ratio. The Company shall give Parent prompt notice of any demands received by
the Company for appraisal of Shares, and Parent shall have the right to
participate in all negotiations and proceedings with respect to such demands.
The Company shall not, except with the prior written consent of Parent, make any
payment with respect to, or settle or offer to settle, any such demands. Any
amounts paid to a holder pursuant to a right of appraisal will be paid by the
Company out of Company assets and in no event shall Parent or any affiliate
thereof reimburse the Company for such payments.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Sub as
follows:
SECTION 2.01 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. (a) The Company
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 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 or authority would not reasonably be
expected to have a Material Adverse Effect (as defined below). Except as
disclosed in Section 2.01 of the written disclosure schedule previously
delivered by the Company to the Parent (the "COMPANY DISCLOSURE SCHEDULE"), the
Company 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 would not reasonably be
expected to have a Material Adverse Effect. Except as disclosed in Section 2.01
of the Company Disclosure Schedule, 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 (and currently owns) 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.
(b) The Company has no subsidiaries.
(c) When used in connection with the Company or Guarantor or any of its
subsidiaries, as the case may be, the term "MATERIAL ADVERSE EFFECT" means any
change, effect or circumstance that 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 or Guarantor and its
subsidiaries, as the case may be, in each case taken as a whole; PROVIDED,
HOWEVER, that the following shall be excluded from the definition of "Material
Adverse Effect" and from any determination as to whether a Material Adverse
Effect has occurred or may occur: changes, effects or circumstances, that are
applicable to (A) the healthcare or medical device industries generally,
(B) the United States securities markets generally, (C) changes or disruptions
resulting from the announcement of the execution of this Agreement and the
proposed consummation of the transactions contemplated by this Agreement,
including without limitation, impacts on distributors, license partners,
employees or consultants, other than the loss of one or more customers which,
individually or in the aggregate, accounted for more than 20% of the sales of
the Company in the most recent fiscal year (collectively, without giving effect
to the qualifications regarding loss of more than 20% of sales, "TRANSACTION
CHANGES"), and (D) changes in economic, regulatory or political conditions
generally.
(d) The failure of a representation or warranty to be true and correct,
either individually or together with the failure of other representations or
warranties to be true and correct, or the failure to perform an obligation,
agreement or covenant shall be deemed to have a Material Adverse Effect if
(x) the business, assets (including intangible assets), financial condition, or
results of operations of the Company, or of Guarantor and its subsidiaries taken
as a whole, as the case may be, are or are reasonably likely to be materially
worse than if such representation or warranty had been true and correct or such
obligation, agreement or covenant had been performed, excluding, however, the
effects of the changes specified in the proviso set forth in Section 2.01(c),
(y) in the case of the Company, such representation or warranty materially
misstates the capitalization of the Company or (z) the failure of such
representation or warranty to be true and correct or the failure to perform such
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obligation, agreement or covenant materially and adversely affects the ability
of the Company or Parent, as the case may be, to timely consummate the
transactions contemplated by this Agreement.
SECTION 2.02 CERTIFICATE OF INCORPORATION AND BY-LAWS. The Company has
heretofore made available to Parent a complete and correct copy of its Restated
Certificate of Incorporation and By-laws as amended to date (the "COMPANY
CHARTER DOCUMENTS"). Such Company Charter Documents are in full force and
effect. The Company is not in violation of any of the provisions of the Company
Charter Documents, except for violations of the Company Charter Documents which
do not and are not reasonably likely to materially interfere with the operations
of the Company.
SECTION 2.03 CAPITALIZATION. The authorized capital stock of the Company
consists of 40,000,000 shares of Company Common Stock and 1,000,000 shares of
preferred stock, par value $0.01 per share (the "COMPANY PREFERRED STOCK"). As
of September 29, 2000, (i) 23,077,723 shares of Company Common Stock were issued
and outstanding, all of which are validly issued, fully paid and nonassessable
(excluding shares which are issued but not outstanding all of which are not
entitled to vote), (ii) 3,065,381 shares of Company Common Stock were reserved
for existing grants and 1,487,272 shares were reserved for future grants
pursuant to the Company Stock Option Plans, (iii) 356,286 shares of Company
Common Stock were reserved and available for future issuance pursuant to the
Company ESPP, and (iv) 232,500 shares of Company Common Stock reserved for
issuance pursuant to outstanding warrants. There are no outstanding shares of
Company Preferred Stock. Except as set forth in Section 2.03 of the Company
Disclosure Schedule, no change in such capitalization has occurred since
September 29, 2000, except for changes resulting from the exercise of Company
Stock Options and shares issued pursuant to the ESPP. 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(c) of the Company Disclosure Schedule, there are no options,
warrants or other rights, agreements, arrangements or commitments of any
character binding on the Company relating to the issued or unissued capital
stock of the Company or obligating the Company to issue or sell any shares of
capital stock of, or other equity interests in, the Company. 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 Documents (as defined in Section 2.07), there are no
obligations, contingent or otherwise, of the Company to repurchase, redeem or
otherwise acquire any shares of Company Common Stock. Except as disclosed in
Section 2.03 of the Company Disclosure Schedule, there are no obligations,
contingent or otherwise, of the Company to provide funds to, or make any
investment (in the form of a loan, capital contribution or otherwise) in, any
entity other than obligations in amounts less than $50,000 individually and
$250,000 in the aggregate.
SECTION 2.04 AUTHORITY RELATIVE TO THIS AGREEMENT. (a) 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
approval by the Company's stockholders in accordance with the DGCL and the
Company Charter Documents and the filings and recording of appropriate merger
documents as required by the DGCL).
(b) Assuming the accuracy of the representations and warranties in
Section 3.13, the provisions of Section 203 of the DGCL will not apply to the
Offer or the Merger.
(c) As of the date hereof, the Board of Directors of the Company has
(i) unanimously determined that it is advisable and in the best interest of the
Company's stockholders for the Company to enter into this Agreement and to
consummate the Merger upon the terms and subject to the
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conditions of this Agreement, (ii) unanimously approved this Agreement and the
Merger in accordance with the applicable provisions of the DGCL, and
(iii) unanimously recommended the adoption and approval of this Agreement by
holders of the Company Common Stock and directed that this Agreement be
submitted for consideration by the Company's stockholders at the meeting of the
stockholders of the Company to consider the Merger (the "COMPANY STOCKHOLDERS
MEETING"). This Agreement has been duly and validly executed and delivered by
the Company and, assuming the due authorization, execution and delivery by
Guarantor, Parent and Merger Sub of this Agreement and/or the Guarantee hereof,
as applicable, constitutes a legal, valid and binding obligation of the Company,
enforceable against each of them in accordance with its terms.
SECTION 2.05 NO CONFLICT; REQUIRED FILINGS AND CONSENTS. (a)
Section 2.05(a) of the Company Disclosure Schedule includes, as of the date
hereof, a list of (i) other than intercompany agreements, obligations or other
such arrangements, 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 $150,000 to which
the Company is a party or by which it is bound; (ii) all contracts, agreements,
commitments or other understandings or arrangements to which the Company is a
party or by which it or any of its 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
the case of any such contact, agreement, commitment, or other understanding or
arrangement, individual payments or receipts by the Company of less than
$150,000 over the term of such contract, commitment, agreement, or other
understanding or arrangement; and (iii) all agreements which are required to be
filed as "material contracts" with the SEC pursuant to the requirements of the
Exchange Act but have not been so filed with the SEC.
(b) Except as set forth in Section 2.05(b) of the Company Disclosure
Schedule, the execution and delivery of this Agreement by the Company does not,
and the performance of this Agreement by the Company will not, (i) conflict with
or violate the Restated 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 by which its properties are 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 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
(including a right to purchase) any of the properties or assets of the Company
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which the
Company is a party or by which the Company or any of its properties are bound or
affected, except, in the case of clauses (ii) or (iii), for any such conflicts,
violations, breaches, defaults or other occurrences that would not reasonably be
expected, individually or in the aggregate, 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, administrative or regulatory authority, domestic or foreign
(each a "GOVERNMENTAL AUTHORITY"), except (i) for applicable requirements, if
any, of the Securities Act of 1933, as amended, and the rules and regulations of
the SEC thereunder (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 under any
applicable foreign laws intended to prohibit, restrict or regulate actions
having the purpose or effect of monopolization or restraint of trade ("NON-U.S.
MONOPOLY LAWS"), 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
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and recordation of appropriate merger or other documents as required by the
DGCL, (ii) where the failure to obtain such consents, approvals, authorizations
or permits, or to make such filings or notifications, would not prevent or
materially delay consummation of the Merger, or otherwise prevent or materially
delay the Company from performing its material obligations under this Agreement,
or would not otherwise reasonably be expected, individually or in the aggregate,
to have a Material Adverse Effect, or (iii) as to which any necessary consents,
approvals, authorizations, permits, filings or notifications have heretofore
been obtained or filed, as the case may be, by the Company.
SECTION 2.06 COMPLIANCE; PERMITS. (a) Except as disclosed in
Section 2.06(a) of the Company Disclosure Schedule or the Company SEC Documents,
the Company is not in conflict with, or in default or violation of, (i) any law,
rule, regulation, order, judgment or decree applicable to the Company or by
which any of its properties are 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 is a party or by which the
Company or any of its properties are bound or affected, except for any such
conflicts, defaults or violations which would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect; provided,
the Company makes no representation in this Section 2.06(a) with respect to
matters covered by Sections 2.11, 2.12, 2.16 and 2.17.
(b) Except as disclosed in Section 2.06(b) of the Company Disclosure
Schedule or the Company SEC Documents, the Company 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 taken as a whole as it is now being conducted
(collectively, the "COMPANY PERMITS"), except where the failure to hold such
Company Permits would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect. The Company is in compliance with
the terms of the Company Permits, except as described in the Company SEC
Documents or where the failure to so comply would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
SECTION 2.07 SEC FILINGS; FINANCIAL STATEMENTS. (a) The Company has filed
all reports, schedules, forms, statements and other documents required to be
filed with the SEC since December 31, 1997 (collectively, the "COMPANY SEC
DOCUMENTS"; except that where reference is made in this Article II to
disclosures made in the Company SEC Documents, such reference shall be limited
to Company SEC Documents filed through the date of this Agreement). Except as
disclosed in Section 2.07 of the Company Disclosure Schedule, the Company SEC
Documents (i) have been 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.
(b) Each of the consolidated financial statements (including, in each case,
any related notes thereto) contained in the Company SEC Documents was prepared
in accordance GAAP applied on a consistent basis throughout the periods involved
(except as may be indicated in the notes thereto or in the Company SEC
Documents), and each fairly presents in all material respects the consolidated
financial position of the Company 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 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 Documents,
since December 31, 1999, the
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Company has conducted its business in the ordinary course and there has not
occurred: (i) any changes, effects or circumstances constituting, individually
or in the aggregate, a Material Adverse Effect; (ii) any amendments or changes
in the Restated Certificate of Incorporation or By-laws of the Company;
(iii) any damage to, destruction or loss of any asset of the Company (whether or
not covered by insurance) that would reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect; (iv) any material change by
the Company in its accounting methods, principles or practices; or (v) other
than in the ordinary course of business, any sale of a material amount of assets
of the Company.
SECTION 2.09 NO UNDISCLOSED LIABILITIES. Except as set forth in
Section 2.09 of the Company Disclosure Schedule or the Company SEC Documents,
the Company has no liabilities (absolute, accrued, contingent or otherwise),
except liabilities (a) in the aggregate adequately provided for in the Company's
unaudited balance sheet (including any related notes thereto) as of June 30,
2000 included in the Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 2000 (the "2000 BALANCE SHEET"), (b) incurred since June 30, 2000
in the ordinary course of business, (c) incurred in connection with this
Agreement, the Offer or the Merger or the other transactions contemplated
hereby, or (d) which would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.
SECTION 2.10 ABSENCE OF LITIGATION. Except as set forth in Section 2.10 and
2.19(c) of the Company Disclosure Schedule or the Company SEC Documents, there
is no action, suit, investigation or proceeding pending against, or, to the
knowledge of the Company, threatened against or affecting, the Company, any
present or former officer, director or employee of the Company or any other
Person for whom the Company may be liable or any of their respective properties
before any court or arbitrator or any governmental body, agency or official,
United States or non-United States, which would reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect or that in
any manner challenges or seeks to prevent, enjoin, alter or materially delay the
Merger, the Offer or any of the other transactions contemplated hereby.
SECTION 2.11 EMPLOYEE BENEFIT PLANS; EMPLOYMENT AGREEMENTS. (a)
Section 2.11(a) of the Company Disclosure Schedule lists all "employee pension
benefit plans" ("PENSION PLANS") (as defined in Section 3(2) of the Employee
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 (including those which contain change of control
provisions or pending change of control provisions), and any employment,
executive compensation or severance agreements (including those which contain
change of control provisions or pending change of control provisions), written
or otherwise, as amended, modified or supplemented, that is currently or was
previously maintained or contributed to for the benefit of, or relating to, any
former or current employee, officer, director 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 within the meaning of Sections 414(b), (c),
(m) or (o) of the Code or Section 4001(a) (14) or (b) of ERISA (a "COMPANY ERISA
AFFILIATE"), as well as each plan with respect to which the Company or a Company
ERISA Affiliate could incur any liability (together for the purposes of this
Section 2.11, the "COMPANY EMPLOYEE PLANS"). The Company has made available to
Parent prior to the date of this Agreement copies of (i) each such written
Company Employee Plan (or a written description of any Company 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 (including but
not limited to any communications that have not expressly reserved the right of
the Company to amend, terminate or otherwise modify any Company Employee Plan);
(ii) the three most recent annual reports on Form 5500 series, with
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accompanying schedules and attachments, filed with respect to each Company
Employee Plan required to make such a filing; (iii) the latest reports which
have been filed with the Department of Labor with respect to each Company
Employee Plan required to make such filing; and (iv) the most recent favorable
determination letters issued for each Company Employee Plan and related trust
which is intended to be qualified under Section 401(a) of the Code (and, if an
application for such determination is pending, a copy of the application for
such determination).
(b) Except as set forth in Section 2.11(b) of the Company Disclosure
Schedule, (i) none of the Company Employee Plans promises or provides medical or
other welfare benefits to any director, officer, employee or consultant (or any
of their beneficiaries) after their service with the Company terminates, other
than as required by Section 4980B of the Code or Part 6 of Subtitle B of Title I
of ERISA (hereinafter "COBRA"), or any similar state laws; (ii) none of the
Company Employee Plans is a "multiemployer plan" as such term is defined in
Section 3(37) of ERISA and neither the Company nor any Company ERISA Affiliate
has ever participated in a multiemployer plan; (iii) none of the Company
Employee Plans is subject to Section 302 or Title IV of ERISA or Section 412 of
the Code, and no facts exist under which the Company or any Company ERISA
Affiliate could have any liability under Title IV of ERISA; (iv) 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 Company Employee Plan which could subject the Company or any Company
ERISA Affiliate, directly or indirectly, to a tax, penalty or other liability
for prohibited transactions under ERISA or Section 4975 of the Code; (v) no
fiduciary of any Company Employee Plan has breached any of the responsibilities
or obligations imposed upon fiduciaries under Title I of ERISA; (vi) all Company
Employee Plans have been maintained in accordance with their terms and have
operated in compliance with the requirements of applicable law (including, to
the extent applicable, but not limited to, the applicable notification and other
requirements of COBRA, the Health Insurance Portability and Accountability Act
of 1996, the Newborns' and Mothers' Health Protection Act of 1996, the Mental
Health Parity Act of 1996, and the Women's Health and Cancer Rights Act of
1998), and may by their terms be amended and/or terminated at any time subject
to applicable law and the terms of each Company Employee Plan, and the Company
and each of its affiliates have performed all obligations required to be
performed by them under, are not in default under or violation of, and have no
knowledge of any default or violation by any other party to, any of the Company
Employee Plans; (vii) each Company Employee Plan which is intended to be
qualified under Section 401(a) of the Code is the subject of a favorable
determination letter from the Internal Revenue Service (the "IRS") or is a
standardized prototype plan that has received such favorable determination
letter, and nothing has occurred which may reasonably be expected to impair such
determination; (viii) all contributions required to be made with respect to any
Company Employee Plan (whether pursuant to the terms of such plan, any
collective bargaining agreement, or otherwise) have been made on or before their
due dates (including any extensions thereof); and (ix) other than routine claims
for benefits made in the ordinary course of the operation of the Company
Employee Plans, there are no pending or threatened claims, investigations or
causes of action with respect to any Company Employee Plan, whether made by a
participant or beneficiary of such a plan, a governmental agency or otherwise,
against the Company, any Company director, officer or employee, any Company
Employee Plan, or any fiduciary of a Company Employee Plan.
(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 affiliates 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,
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directly or indirectly, to receive Company Common Stock, together with the
number of shares of Company Common Stock subject to such right.
(d) To the extent not already included and so labeled in Section 2.11(a) of
the Company Disclosure Schedule, Section 2.11(d) of the Company Disclosure
Schedule sets forth (i) a true and complete list of all employment agreements
with officers or employees of the Company or any of its affiliates; (ii) a true
and complete list of all material agreements with consultants; (iii) a true and
complete list of all agreements with respect to the services of independent
contractors or leased employees whether or not they participate in any of the
Company Employee Plans; (iv) a description of any situation in which a material
portion of the workforce of a component of the Company or its affiliates,
whether such component is a subsidiary, unit, work location, line of business or
otherwise, is composed of consultants, independent contractors, leased employees
or other individuals who are not common law employees, which description shall
include, if applicable, representative samples of agreements with such
non-traditional employees; (v) a true and complete list of all officers or other
employees of the Company or any of its affiliates who have executed a
non-competition agreement with the Company or any of its affiliates; (vi) a true
and complete list of all severance agreements, programs and policies of the
Company or any of its affiliates with or relating to its employees; and (vii) a
true and complete list of all plans, programs, agreements and other arrangements
of the Company which contain change of control provisions.
(e) Except as set forth in Section 2.11(e) 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 Company
Employee Plan that invests in, provides for investment in or provides benefits
in or by reference to the value of Company stock; and (ii) since June 30, 1999,
the Company has not announced, proposed nor agreed to any increase in benefits
under any Company Employee Plan (or to the creation of new benefits or new
plans) or change in employee coverage that is not reflected in the applicable
plan documents made available under Section 2.11(a) which would materially
increase the expense of maintaining any Company Employee Plan.
(f) Except as set forth in Section 2.11(f) of the Company Disclosure
Schedule, the consummation of the transactions contemplated by this Agreement,
either alone or in combination with another event, will not result in (i) any
payment (including, without limitation, severance, unemployment compensation,
golden parachute or bonus payments or otherwise) becoming due to any current or
former director, officer, employee or consultant of the Company, (ii) any
increase in the amount of compensation or benefits payable in respect of any
director, officer, employee or consultant of the Company, (iii) accelerate the
vesting or timing of payment of any benefits or compensation payable in respect
of any director, officer, employee or consultant of the Company, or (iv) result
in any "PARACHUTE PAYMENT" under Section 280G of the Code, whether or not such
amount may be considered reasonable compensation for personal services rendered.
(g) No Company Employee Plan provides any benefits for any non-U.S.
employees.
(h) The Company has fiduciary liability insurance of at least $1,000,000 in
effect covering the fiduciaries of the Company Employee Plans (including the
Company) with respect to whom the Company may have liability.
(i) There are no complaints, charges or claims against the Company or any of
its affiliates pending or threatened to be brought by or filed with any
Governmental Authority based on, arising out of, in connection with or otherwise
relating to the classification of any individual by the Company as an
independent contractor or "leased employee" (within the meaning of
section 414(n) of the Code) rather than as an employee, and no conditions exist
under which the Company or any of its affiliates could incur any such liability.
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SECTION 2.12 EMPLOYMENT AND LABOR MATTERS. (a) The Company has, as of
September 29, 2000, a total of 135 full-time employees, 8 part-time employees
and 42 active consultants and has good relationships with such employees and
consultants.
(b) The Company is in all material respects in compliance with all
applicable laws (including any legal obligation to engage in affirmative
action), agreements and contracts relating to employment practices, terms and
conditions of employment, and the employment of former, current, and prospective
employees, independent contractors and "leased employees" (within the meaning of
Section 414(n) of the Code) of the Company including all such laws, agreements
and contracts relating to wages, hours, collective bargaining, employment
discrimination, immigration, disability, civil rights, fair labor standards,
occupational safety and health, workers' compensation, pay equity, wrongful
discharge and violation of the potential rights of such former, current, and
prospective employees, independent contractors and leased employees, and has
timely prepared and filed all appropriate forms (including Immigration and
Naturalization Service Form I-9) required by any relevant Governmental
Authority. The Company is not engaged in any unfair labor practice.
(c) No collective bargaining agreement with respect to the business of the
Company is currently in effect or being negotiated. The Company has no
obligation to negotiate any such collective bargaining agreement, and, to the
best knowledge of the Company, there is no indication that the employees of the
Company desire to be covered by a collective bargaining agreement.
(d) No strike, slowdown or work stoppage has occurred or, to the best
knowledge of the Company, been threatened with respect to the employees of the
Company, nor has any such strike, slowdown or work stoppage occurred or, to the
best knowledge of the Company, been threatened within five years prior to the
date hereof.
(e) There is no representation claim or petition pending before the United
States National Labor Relations Board or any similar foreign, state or local
labor agency of which the Company has been notified and, to the best knowledge
of the Company, no question concerning representation has been raised or
threatened respecting the employees of the Company.
(f) No notice has been received by the Company of any complaint filed
against the Company claiming that the Company has violated any applicable
employment standards, human rights or other labor legislation or any complaints
or proceedings of any kind involving the Company or, to the best knowledge of
the Company, against any of the employees of the Company or threatened to be
filed against the Company before any federal, state, local or foreign agency or
labor relations board, including without limitation the National Labor Relations
Board and the Equal Employment Opportunity Commission. No notice has been
received by the Company of the intent of any federal, state, local or foreign
agency responsible for the enforcement of labor or employment laws to conduct an
investigation of the Company, and, to the best knowledge of the Company, no such
investigation is in progress.
(g) There are no outstanding orders or charges against the Company under any
occupational health or safety legislation and to the best knowledge of the
Company none have been threatened. All material levies, assessments and
penalties made against the Company pursuant to all applicable workers
compensation legislation as of the date of the 2000 Balance Sheet have been paid
or have been reserved for or properly accrued on the books of the Company and
the Company has not, as of the Closing Date, been reassessed under any such
legislation. Except as set forth in Section 2.12(g) of the Company Disclosure
Schedule, there are no outstanding material levies, assessments or penalties
against the Company.
(h) A salary review schedule listing, as of October 3, 2000, the annual base
salary or annualized wages and any guaranteed bonus amounts of each employee of
the Company, has been delivered to Parent. Section 2.11(d) of the Company
Disclosure Schedule accurately sets forth a complete and
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correct list of all employment, management, material consulting or other
agreements with any person employed or retained by the Company (including
independent consultants and commission agents), complete and correct copies of
which have been delivered to Parent. Except as set forth in Section 2.12(h) of
the Company Disclosure Schedule, no material change in the annual base salary or
annualized wages and any guaranteed bonus amounts of each employee of the
Company has occurred since October 3, 2000.
(i) Section 2.12(i) of the Company Disclosure Schedule accurately sets forth
all unpaid severance or continuing payments of any kind (other than pursuant to
a plan or program described in Section 2.11 hereof) which, as of the date of
this Agreement, is due or claimed in writing to be due from the Company to any
person whose employment with the Company was terminated.
(j) Section 2.12(j) of the Company Disclosure Schedule accurately sets forth
all accrued, but unused, vacation of all employees of the Company and the
Company policy with respect thereto.
(k) The Company has made no statements or representations or distributed any
written material to any Company employees regarding continued employment of the
Company's employees subsequent to the date hereof or the Effective Time.
(l) To the best knowledge of the Company, no contractor, manufacturer or
supplier used by or under contract with the Company is in material violation of
any law relating to labor or employment matters.
SECTION 2.13 REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS. (a) Subject
to the accuracy of the representations of Parent in Section 3.10:
(i) the information supplied by the Company specifically for inclusion
in the Registration Statement pursuant to which the Guarantor Common Shares
to be issued in connection with the Offer and the Merger will be registered
with the SEC shall not, at the respective times the Registration Statement
(including any amendments or supplements thereto) is filed with the SEC or
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 not misleading;
(ii) neither the Schedule 14D-9 nor any of the information supplied by
the Company specifically for inclusion in the Registration Statement or
Offer Documents will, at the respective times any such documents or any
amendments or supplements thereto are filed with the SEC, are first
published, sent or given to stockholders of the Company or become effective
under the Securities Act, or at any time Parent accepts for exchange Shares
pursuant to the Offer, 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 included therein not misleading; and
(iii) the information supplied by the Company specifically for inclusion
in the proxy statement/ prospectus in connection with the Company
Stockholders Meeting (such proxy statement/ prospectus as amended or
supplemented is referred to herein as the "PROXY STATEMENT/PROSPECTUS") will
not, at the time the Proxy Statement/Prospectus is filed with the SEC or
first sent to stockholders or at the time of the Company Stockholders
Meeting, 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 light of the circumstances under which they
were made, not misleading.
(b) If at any time prior to the Effective Time any event or circumstance
relating to the Company, any of its affiliates, officers or directors should be
discovered by the Company which should be set forth in an amendment to the
Registration Statement or a supplement to the Offer Documents, the
Schedule 14D-9 or the Proxy Statement/Prospectus, the Company will promptly
inform Parent and Merger Sub.
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(c) The Schedule 14D-9 shall comply as to form in all material respects with
the requirements of all applicable laws, including the Securities Act and the
Exchange Act and the rules and regulations thereunder.
(d) Notwithstanding the foregoing, the Company makes no representation or
warranty with respect to any information supplied by Guarantor, Parent or Merger
Sub or any of their respective affiliates which is included or incorporated by
reference in, or furnished in connection with the preparation of, the Offer
Documents, the Schedule 14d-9, 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 Documents, to the best of the Company's knowledge, there is no
agreement, judgment, injunction, order or decree binding upon the Company which
has or would reasonably be expected to have the effect of prohibiting or
impairing the conduct of business by the Company as currently conducted by the
Company, except for any prohibition or impairment as would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.
SECTION 2.15 TITLE TO PROPERTY. Except as set forth in Sections 2.15 and
2.19(b) of the Company Disclosure Schedule, the Company has good title to all of
its real properties and other 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 interfere with the
present use of the property affected thereby or which would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect,
and except for liens which secure indebtedness reflected in the 2000 Balance
Sheet; and, to the knowledge of the Company, all leases pursuant to which the
Company leases 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 would not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect.
SECTION 2.16 TAXES. Except as would not reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect:
(a) The Company has timely and accurately filed, or caused to be timely and
accurately filed, all material Tax Returns (as hereinafter defined) required to
be filed by it, and has timely paid, collected or withheld, or caused to be
timely paid, collected or withheld, all material amounts of Taxes (as
hereinafter defined) required to be paid, collected or withheld, other than such
Taxes for which adequate reserves in the 2000 Balance Sheet have been
established or which are being contested in good faith. Except as set forth in
Section 2.16(a) of the Company Disclosure Schedule, there are no material claims
or assessments pending against the Company for any alleged deficiency in any
Tax, there are no pending or threatened audits or investigations for or relating
to any liability in respect of any Taxes, and the Company has not been notified
in writing of any proposed Tax claims or assessments against the Company. The
Company has not executed any waivers or extensions that are currently in effect
of any applicable statute of limitations to assess any material amount of Taxes.
There are no outstanding requests by the Company for any extension of time
within which to file any material Tax Return or within which to pay any material
amounts of Taxes shown to be due on any Tax Return. To the best knowledge of the
Company, there are no liens for material amounts of Taxes on the assets of the
Company except for statutory liens for current Taxes not yet due and payable.
The Company is not liable for Taxes of any other Person, or is currently under
any contractual obligation to indemnify any person with respect to Taxes (except
for customary agreements to indemnify lenders or security holders in respect of
taxes other than income taxes), or is a party to any tax sharing agreement or
any other
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agreement providing for payments by the Company with respect to Taxes. Except as
set forth in Section 2.16(a) of the Company Disclosure Schedule, there are no
outstanding powers of attorney enabling any party to represent the Company with
respect to Taxes.
(b) For purposes of this Agreement, the term "Tax" shall mean any United
States federal, state, local, non-United States or provincial income, gross
receipts, property, sales, use, license, excise, franchise, employment, payroll,
alternative or add-on minimum, ad valorem, transfer or excise tax, or any other
tax, custom, duty, governmental fee or other like assessment or charge imposed
by any Governmental Authority, together with any interest or penalty imposed
thereon. The term "Tax Return" shall mean a report, return or other information
(including any attached schedules or any amendments to such report, return or
other information) required to be supplied to or filed with a Governmental
Authority with respect to any Tax, including an information return, claim for
refund, amended return or declaration or estimated Tax.
SECTION 2.17 ENVIRONMENTAL MATTERS. (a) To the knowledge of the Company,
except as set forth in Section 2.17(a) to the Company Disclosure Schedule or in
the Company SEC Documents or as would not reasonably be expected, individually
or in the aggregate, to have a Material Adverse Effect, the operations and
properties of the Company are and at all times have been in compliance with
Environmental Laws (as hereinafter defined), which compliance includes the
possession and maintenance by the Company of all permits and governmental
authorizations required under applicable Environmental Laws, and compliance with
the terms and conditions thereof. For purposes of this Section 2.17, "to the
knowledge of the Company" shall mean the knowledge of the following officers of
the Company: (i) William G. Mavity; (ii) Daniel J. Genter; and (iii) Richard
Gaykowski (who is the person responsible for compliance with Environmental Laws
and the management, handling, and disposal of Materials of Environmental
Concern) or the successors of any of them.
(b) Except as set forth in Section 2.17(b) of the Company Disclosure
Schedule or the Company SEC Documents or as would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect, there are
and have been no Environmental Claims (as hereinafter defined), including claims
based on "ARRANGER LIABILITY," pending or, to the best knowledge of the Company,
threatened against the Company or any predecessor of the Company or against any
person or entity whose liability for any Environmental Claim the Company has
retained or assumed.
(c) Except as set forth on Section 2.17(c) of the Company Disclosure
Schedule or in the Company SEC Documents, there are no past or present actions,
or to the knowledge of the Company, circumstances, conditions, events or
incidents, including the release, emission, discharge, presence or disposal of
any Materials of Environmental Concern (as hereinafter defined), that are
reasonably likely to form the basis of any Environmental Claim against the
Company or against any person or entity whose liability for any Environmental
Claim the Company has retained or assumed, except for such Environmental Claims
that would not reasonably be expected, individually or in the aggregate, to have
a Material Adverse Effect.
(d) Except as would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect or as set forth in Section 2.17(d)
of the Company Disclosure Schedule or the Company SEC Documents, to the
knowledge of the Company (i) there are no off-site locations where the Company
or any predecessor of the Company has stored, disposed or arranged for the
disposal of Materials of Environmental Concern which have been listed on the
National Priority List, CERCLIS, or state Superfund site list or which are
subject to, or in the future are likely to be subject to, any investigation or
cleanup action, and neither the Company nor any predecessor of the Company has
been notified that any of them is a potentially responsible party at any such
location; (ii) there are no underground storage tanks located on property owned
or leased by the Company; (iii) there is no friable asbestos containing material
contained in or forming part of any building, building component, structure or
office space owned, leased or operated by the Company; and (iv) there are no
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polychlorinated biphenyls (PCBs) or PCB-containing items contained in or forming
part of any building, building component, structure or office space owned,
leased or operated by the Company.
(e) (i) All Company Permits the Company is required to have obtained under
Environmental Laws have been obtained and are maintained by the Company, were
duly issued by the appropriate Governmental Authority, are in full force and
effect and are not subject to appeal. The Company has not received notice, or
otherwise has no knowledge, that any Company Permit has been, or is subject to
being, rescinded, terminated, limited, or amended in such a way as could result
in a Material Adverse Effect on the Company.
(ii) To the knowledge of the Company, no additional capital expenditures
will be required by the Company for purposes of compliance with the terms or
conditions of any Company Permits or Company Permit renewals.
(iii) The execution, delivery and performance of the this Agreement and
the consummation of the transactions contemplated hereby will not require
the assignment or transfer of any Company Permit, except for those Company
Permits that may be assigned or transferred on or prior to the Effective
Time without the consent of any Person and without causing any such Company
Permit to be rescinded, terminated or limited.
(f) For purposes of this Agreement:
(i) "ENVIRONMENTAL CLAIM" means any claim, action, cause of action,
investigation or written notice by any person or entity alleging potential
liability (including potential liability for investigatory costs, cleanup
costs, governmental response costs, natural resources damages, property
damages, personal injuries, or penalties) arising out of, based on or
resulting from the manufacturing, production, storage, generation, disposal,
presence, release or threatened release into the environment, of any
Material of Environmental Concern at any location, whether or not owned or
operated by the Company.
(ii) "ENVIRONMENTAL LAWS" means all United States federal, state, local
and non-United States laws, regulations, codes and ordinances, relating to
pollution or protection of human health and the environment (including
ambient air, surface water, ground water, land surface or sub-surface
strata), including laws and regulations relating to emissions, discharges,
releases or threatened releases of Materials of Environmental Concern, or
otherwise relating to the use, treatment, storage, disposal, transport or
handling of Materials of Environmental Concern, including, but not limited
to Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), 42 U.S.C. 9601 et seq., Resource Conservation and Recovery Act
("RCRA"), 42 U.S.C. 6901 et seq., Toxic Substances Control Act ("TSCA"), 15
U.S.C. 2601 et seq., Occupational Safety and Health Act ("OSHA"), 29 U.S.C.
651 et seq., the Clean Air Act, 33 U.S.C. 7401 et seq., the Clean Water Act,
33 U.S.C. 1251 et seq., each as amended or supplemented, and any applicable
transfer statutes or laws.
(iii) "MATERIALS OF ENVIRONMENTAL CONCERN" means chemicals, pollutants,
contaminants, hazardous materials, hazardous substances and hazardous
wastes, medical waste, toxic substances, petroleum and petroleum products,
asbestos-containing materials, polychlorinated biphenyls, and any other
chemicals, pollutants or substances regulated under any Environmental Law.
SECTION 2.18 BROKERS. No broker, finder or investment banker (other than the
Company Financial Advisor, 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 the Company Financial Advisor pursuant to which such firm would be
entitled to any payment relating to the transactions contemplated hereunder.
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SECTION 2.19 INTELLECTUAL PROPERTY. (a) As used herein, the term
"INTELLECTUAL PROPERTY ASSETS" shall mean all worldwide intellectual property
rights, including, without limitation, patents, trademarks, service marks,
domain names and copyrights, and registrations and applications therefor, trade
names, know-how, trade secrets, computer software programs, Internet websites,
products, systems or methods and proprietary information. As used herein,
"COMPANY INTELLECTUAL PROPERTY ASSETS" shall mean the Intellectual Property
Assets used or owned by the Company.
(b) Except as set forth in Section 2.19(b) of the Company Disclosure
Schedule, the Company owns, or is licensed or otherwise possesses legally
enforceable rights to use all Intellectual Property Assets that are owned by or
used in the business of the Company as currently conducted, without conflict
with the rights of others.
(c) Except as disclosed in Section 2.19(c) of the Company Disclosure
Schedule, or as would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect, no claims (i) are currently
pending or, to the knowledge of the Company, threatened by any person with
respect to the Company Intellectual Property Assets, or (ii) are currently
pending or, to the knowledge of the Company, threatened by any person with
respect to the Intellectual Property Assets of a third party (the "THIRD PARTY
INTELLECTUAL PROPERTY ASSETS") used, reproduced or distributed by or through the
Company.
(d) Except as disclosed in Section 2.19(d) of the Company Disclosure
Schedule or as would not reasonably be expected to have a Material Adverse
Effect, no claim is pending or to the knowledge of the Company threatened to the
effect that the manufacture, sale, licensing or use of any product, system or
method now used, sold or licensed, or proposed for use, sale or license by the
Company infringes on any Third Party Intellectual Property Assets.
(e) Section 2.19(e) of the Company Disclosure Schedule sets forth or a list
of (i) all patents and patent applications owned by the Company worldwide;
(ii) all trademark and service mark registrations and all trademark and service
mark applications, material common law trademarks, material trade dress and
material slogans, and all trade names owned by the Company worldwide; (iii) all
copyright registrations and copyright applications owned by the Company
worldwide; (iv) all Internet websites and domain names owned by the Company; and
(v) all licenses of the Company in which the Company is (A) a licensor with
respect to any Company Intellectual Property Assets; or (B) a licensee of any
Third Party Intellectual Property Assets material to the Company except for any
licenses of software programs that are commercially available "off the shelf."
Except as disclosed in Section 2.19(e) of the Company Disclosure Schedule, the
Company has made all necessary filings and recordations to protect and maintain
its interest in the patents, patent applications, trademark and service mark
registrations, trademark and service mark applications, copyright registrations
and copyright applications and licenses and domain names set forth in
Section 2.19(e) of the Company Disclosure Schedule, except where the failure to
so protect or maintain would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.
(f) To the knowledge of the Company, except as set forth in Section 2.19(e)
or 2.19(f) of the Company Disclosure Schedule: (i) each patent, patent
application, trademark or service mark registration, and trademark or service
mark application and copyright registration or copyright application of the
Company is valid and subsisting and (ii) each material license of Company
Intellectual Property Assets or Third Party Intellectual Property Assets by
Company is valid, subsisting and enforceable.
(g) Except as set forth in Section 2.19(g) of the Company Disclosure
Schedule, to the Company's knowledge, there is no material unauthorized use,
infringement or misappropriation of any of the Company's Intellectual Property
Assets by any third party, including any employee, former employee, independent
contractor or consultant of the Company which would reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect.
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(h) All reprogramming required to permit the proper functioning of the
Company's computer systems and networks in, and following, the year 2000 has
been completed and such systems and networks are fully operational, except where
the failure to function properly would not, individually or in the aggregate,
reasonably have a Material Adverse Effect.
SECTION 2.20 INTERESTED PARTY TRANSACTIONS. Except as set forth in
Section 2.20 of the Company Disclosure Schedule or the Company SEC Documents or
for events as to which the amounts involved do not, in the aggregate, exceed
$100,000, since the Company's proxy statement dated May 19, 2000, 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 2.21 INSURANCE. Except as disclosed in Section 2.21 of the Company
Disclosure Schedule or the Company SEC Documents, all material fire and
casualty, general liability, business interruption, product liability and
sprinkler and water damage insurance policies maintained by the Company are with
reputable insurance carriers, provide full and adequate coverage for all normal
risks incident to the business of the Company and its properties and assets and
are in character and amount appropriate for the businesses conducted by the
Company, except as would not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.
SECTION 2.22 PRODUCT LIABILITY AND RECALLS. (a) Except as disclosed in
Section 2.22(a) of the Company Disclosure Schedule or the Company SEC Documents,
the Company is not aware of any claim, pending or threatened, against the
Company 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, including claims arising out of the defective or unsafe nature of
its products or services, which would reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect.
(b) Except as disclosed in Section 2.22(b) of the Company Disclosure
Schedule or the Company SEC Documents, there is no pending or, to the knowledge
of the Company, overtly threatened recall or investigation of any product sold
by the Company, which recall or investigation would reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
SECTION 2.23 OPINION OF FINANCIAL ADVISOR. The Board of Directors of the
Company has been advised by the Company Financial Advisor to the effect that in
its opinion, as of the date of this Agreement, the consideration to be received
by the equity holders of the Company is fair, from a financial point of view, to
such equity holders.
SECTION 2.24 RIGHTS AGREEMENT. The Board of the Directors of the Company has
authorized and approved an amendment to the Rights Agreement (as defined in
Section 4.02(d)) to the effect that (i) none of Parent, Merger Sub and their
respective affiliates, either individually or as a group, shall become an
"Acquiring Person" (as defined in the Rights Agreement) by virtue of the
approval, execution or delivery of this Agreement, the consummation of the
transactions contemplated hereby or any announcement of the same, (ii) no
Distribution Date, Section 13 Event, Shares Acquisition Date or Triggering Event
(as each such term is defined in the Rights Agreement) (each a "RIGHTS EVENT")
shall occur by virtue of the approval, execution or delivery of this Agreement,
the consummation of the transactions contemplated hereby or any announcement of
the same, and (iii) the approval, execution or delivery of this Agreement, the
consummation of the transactions contemplated hereby or any announcement of the
same shall be deemed a Permitted Offer (as defined in the Rights Agreement). The
Company and the Rights Agent (as defined in the Rights Agreement) shall execute
such amendment to the Rights Agreement no later than the second business day
following the date hereof.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby, jointly and severally, represent and warrant
to the Company as follows:
SECTION 3.01 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. (a) Each of
Guarantor, Parent and Merger Sub is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has all corporate power and all government licenses,
authorizations, permits, consents and approvals required to carry on its
business as now conducted, except for those licenses, authorizations, permits,
consents and approvals the absence of which would not have, individually or in
the aggregate, a Material Adverse Effect on Guarantor. Parent has heretofore
made available to the Company true and complete copies of Guarantor's Memorandum
of Association and Bye-Laws, as amended to date (the "GUARANTOR CHARTER
DOCUMENTS").
(b) Each subsidiary of Guarantor is an entity duly organized, validly
existing and in good standing (to the extent the concept of good standing exists
in the applicable jurisdiction) under the laws of its jurisdiction of
organization, has the requisite corporate or other power and authority necessary
to own, lease and operate the properties it purports to own, lease and operate
and to carry on its business as now conducted, except where the failure to be so
organized, existing and in good standing would not reasonably be expected to
have a Material Adverse Effect on Guarantor. Each subsidiary of Guarantor is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction where such qualification is necessary, except for those
jurisdictions where failure to be so qualified or in good standing would
reasonably be expected to have a Material Adverse Effect on Guarantor. Except as
set forth in Section 3.01(b) of the written disclosure schedule previously
delivered by Parent to the Company (the "PARENT DISCLOSURE SCHEDULE"), all of
Guarantor's "significant" subsidiaries, as defined in Regulation S-X, and their
respective jurisdictions of incorporation are identified in the Guarantor's
Annual Report on Form 10-K for the year ended September 30, 1999 the ("GUARANTOR
1999 FORM 10-K") or in any of Guarantor's quarterly reports on Form 10-Q filed
with respect to any quarter of the 2000 fiscal year.
SECTION 3.02 CAPITALIZATION. (a) The authorized capital stock of Guarantor
consists of 2,500,000,000 Guarantor Common Shares and 125,000,000 Preference
Shares, par value $1.00 per share ("GUARANTOR PREFERRED SHARES"). As of
August 31, 2000, (i) 1,686,162,455 Guarantor Common Shares were issued and
outstanding, all of which are validly issued, fully paid and non-assessable,
(ii) no Guarantor Preferred Shares were outstanding and (iii) no more than
33,782,034 Guarantor Common Shares and no Guarantor Preferred Shares were held
by subsidiaries of Guarantor. As of August 31, 2000, 94,960,045 Guarantor Common
Shares were reserved for issuance upon exercise of stock options issued under
Guarantor's stock option plans.
(b) Except as set forth in this Section 3.02(b), except for changes since
August 31, 2000 resulting from the exercise of stock options or the grant of
stock based compensation to directors or employees or from the issuance of
shares in connection with a merger or other acquisition or business combination
determined by Guarantor's Board of Directors to be in the best interests of
Guarantor and its stockholders, including, without limitation, the acquisition
of Mallinckrodt Inc., or from the issuance of shares in an underwritten public
offering at prevailing market prices, there are no outstanding (i) shares of
capital stock or voting securities of Guarantor, (ii) securities of Guarantor
convertible into or exchangeable for shares of capital stock or voting
securities of Guarantor or (iii) options or other rights to acquire from
Guarantor or other obligations of Guarantor to issue, any capital stock, voting
securities or securities convertible into or exchangeable for capital stock or
voting securities of Guarantor. There are no outstanding obligations of
Guarantor or any of its subsidiaries to repurchase, redeem or otherwise acquire
any of the securities referred to in clauses (i), (ii) or (iii) above.
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(c) The Guarantor Common Shares to be issued as part of the Merger
Consideration have been duly authorized and, when issued and delivered in
accordance with the terms of this Agreement, will have been validly issued and
will be fully paid and nonassessable and the issuance thereof is not subject to
any preemptive or other similar right.
SECTION 3.03 AUTHORITY RELATIVE TO THIS AGREEMENT. (a) The execution,
delivery and performance by Parent and Merger Sub of this Agreement, the
execution, delivery and performance by Guarantor of the Guarantee and the
consummation by Guarantor, Parent and Merger Sub of the transactions
contemplated hereby and thereby, as applicable, are within the respective
corporate powers of Guarantor, Parent and Merger Sub and have been duly
authorized by all necessary corporate action. This Agreement constitutes a valid
and binding agreement of each of Parent and Merger Sub, and the Guarantee
constitutes a valid and binding agreement of Guarantor.
(b) At a meeting duly called and held, or by written consent in lieu of
meeting, Parent's Board of Directors has (i) unanimously determined that this
Agreement and the transactions contemplated hereby are fair to and in the best
interests of the sole stockholder of Parent and (ii) unanimously approved and
adopted this Agreement and the transactions contemplated hereby. At a meeting
duly called and held, Guarantor's Board of Directors has (i) determined that the
Guarantee and the transactions contemplated thereby are fair to and in the best
interests of Guarantor's shareholders and (ii) approved the Guarantee and the
transactions contemplated thereby.
SECTION 3.04 NO CONFLICTS; REQUIRED FILINGS AND CONSENTS. (a) The execution,
delivery and performance by Parent and Merger Sub of this Agreement, the
execution, delivery and performance by Guarantor of the Guarantee and the
consummation by Guarantor, Parent and Merger Sub of the transactions
contemplated hereby and thereby, as applicable, require no action by or in
respect of, or filing with, any Governmental Authority, other than (i) the
filing of a Certificate of Merger with respect to the Merger with the Secretary
of State of the State of Delaware, (ii) compliance with any applicable
requirements of the HSR Act and Non-U.S. Monopoly Laws, (iii) compliance with
any applicable requirements of the Securities Act, the Exchange Act and any
applicable state securities laws, (iv) compliance with the Environmental Law of
any state relating to the transfer of ownership or control of property located
in that state and (v) any actions or filings the absence of which would not be
reasonably expected to have, individually or in the aggregate, a Material
Adverse Effect on Guarantor or Parent or materially impair the ability of Parent
and Merger Sub to consummate the transactions contemplated by this Agreement or
the ability of Guarantor to fulfill its obligations under the Guarantee.
(b) The execution, delivery and performance by Parent and Merger Sub of this
Agreement, the execution, delivery and performance by Guarantor of the Guarantee
and the consummation by Guarantor, Parent and Merger Sub of the transactions
contemplated hereby and thereby, as applicable, do not and will not
(i) contravene, conflict with, or result in any violation or breach of any
provision of the Guarantor Charter Documents or the certificate of incorporation
or by-laws of Parent or Merger Sub (or equivalent organizational documents),
(ii) assuming compliance with the matters referred to in Section 3.04(a),
conflict with or violate any law, rule, regulation, order, judgment or decree
applicable to the Guarantor, Parent or Merger Sub or by which they or any of
their respective properties are 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 rights of the Guarantor, Parent or
Merger Sub 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 (including a right to
purchase) any of the properties or assets of the Guarantor, Parent or Merger Sub
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which the
Guarantor, Parent or Merger Sub are a party or by which the Guarantor, Parent
and Merger Sub or any of their respective properties are bound or affected,
except, in the case of clauses (ii) or (iii), for any such conflicts,
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violations, breaches, defaults or other occurrences that would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect on
Guarantor.
SECTION 3.05 COMPLIANCE. Except as disclosed in Section 3.05 of the Parent
Disclosure Schedule or the Guarantor SEC Documents (as defined below), neither
Guarantor 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 Guarantor 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 Guarantor or any of its subsidiaries is
a party or by which Guarantor 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, individually or
in the aggregate, to have a Material Adverse Effect on Guarantor.
SECTION 3.06 SEC FILINGS; FINANCIAL STATEMENTS. (a) Guarantor has filed with
the SEC all reports, schedules, forms, statements and other documents required
to be filed with the SEC since September 30, 1997 (collectively, the "GUARANTOR
SEC DOCUMENTS"; except that where references are made in this Article III to
disclosures made in the Guarantor SEC Documents, such reference shall be limited
to Guarantor SEC Documents filed through the date of this Agreement). Except as
disclosed in Section 3.06 of the Parent Disclosure Schedule, (i) each Guarantor
SEC Document complied as to form in all material respects with the applicable
requirements of the Securities Act and Exchange Act, as the case may be; and
(ii) each Guarantor SEC Document filed did not at the time it was 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 made therein, in the light of the circumstances under which
they were made, not misleading.
(b) Each of the consolidated financial statements (including, in each case,
any related notes thereto) contained in the Guarantor SEC Documents was prepared
in accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto or in the Guarantor
SEC Documents), and each fairly presents in all material respects the
consolidated financial position of Guarantor and its subsidiaries as of 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 3.07 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
Schedule 3.07 of the Parent Disclosure Schedule or the Guarantor SEC Documents,
since September 30, 1999, the business of Guarantor and its subsidiaries has
been conducted in the ordinary course consistent with past practice and there
has not been any event, occurrence, development or state of circumstances or
facts that has had or would reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on Guarantor.
SECTION 3.08 NO UNDISCLOSED LIABILITIES. Except as set forth in
Section 3.08 of the Parent Disclosure Schedule or the Guarantor SEC Documents,
neither the Guarantor nor any of its subsidiaries has any liabilities (absolute,
accrued, contingent or otherwise), except liabilities (a) in the aggregate
adequately provided for in Guarantor's unaudited balance sheet (including any
related notes thereto) as of June 30, 2000 included in the Guarantor's Quarterly
Report on Form 10-Q for the quarter ended June 30, 2000 (the "GUARANTOR 2000
BALANCE SHEET"), (b) incurred since June 30, 2000 in the ordinary course of
business, (c) incurred in connection with this Agreement, the Offer or the
Merger or the other transactions contemplated hereby, or (d) which would not
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect on Guarantor.
SECTION 3.09 ABSENCE OF LITIGATION. Except as set forth in the Guarantor SEC
Documents, there is no action, suit, investigation or proceeding pending
against, or, to the knowledge of Parent,
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threatened against or affecting, Guarantor, any of its subsidiaries, any present
or former officer, director or employee of Guarantor or any of its subsidiaries
or any other Person for whom Guarantor or any subsidiary may be liable or any of
their respective properties before any court or arbitrator or any governmental
body, agency or official, United States or non-United States, that would
reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect on Guarantor or that in any manner challenges or seeks to
prevent, enjoin, alter or materially delay the Merger, the Offer or any of the
other transactions contemplated hereby.
SECTION 3.10 REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS. (a) Subject
to the accuracy of the representations of the Company in Section 2.13:
(i) the Registration Statement, as it may be amended, pursuant to which
the Guarantor Common Shares to be issued in connection with the Offer and
the Merger will be registered with the SEC shall not, at the respective
times the Registration Statement (including any amendments or supplements
thereto) is filed with the SEC or 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 not misleading;
(ii) neither the Offer Documents nor any of the information supplied by
Guarantor, Parent or Merger Sub specifically for inclusion in the
Schedule 14D-9 will, at the respective times any such documents or any
amendments or supplements thereto are filed with the SEC, are first
published, sent or given to stockholders of the Company or become effective
under the Securities Act, or at any time Parent accepts for exchange Shares
pursuant to the Offer, 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 included therein not misleading; and
(iii) the Proxy Statement/Prospectus will not, at the time the Proxy
Statement/Prospectus is filed with the SEC or first sent to shareholders or
at the time of the Company Stockholders Meeting, 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
light of the circumstances under which they were made, not misleading.
(b) If at any time prior to the Effective Time any event or circumstance
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 Offer
Documents, the 14D-9 or the Proxy Statement/Prospectus, Parent or Merger Sub
will promptly inform the Company.
(c) The Offer Documents, the Registration Statement and Proxy
Statement/Prospectus shall comply as to form in all material respects with the
requirements of all applicable laws, including the Securities Act and the
Exchange Act and the rules and regulations thereunder.
(d) Notwithstanding the foregoing, Parent and Merger Sub make no
representation or warranty with respect to any information supplied by the
Company which is included or incorporated by reference in, or furnished in
connection with the preparation of, the Offer Documents, the Registration
Statement or the Proxy Statement/Prospectus.
SECTION 3.11 BROKERS. There is no investment banker, broker, finder or other
intermediary that has been retained by or is authorized to act on behalf of
Parent or Guarantor who might be entitled to any fee or commission from Parent,
Guarantor or any of their respective affiliates in connection with the
transactions contemplated by this Agreement.
SECTION 3.12 OWNERSHIP OF MERGER SUB; NO PRIOR ACTIVITIES. (a) Merger Sub
was formed solely for the purpose of engaging in the transactions contemplated
by this Agreement.
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(b) Except for obligations or liabilities incurred by Merger Sub 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
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 3.13 OWNERSHIP INTEREST IN THE COMPANY. Other than by reason of this
Agreement or the transactions contemplated hereby, neither Parent nor any of its
affiliates is, or has been for the previous three years, an "interested
stockholder" of the Company, as that term is defined in Section 203 of the DGCL.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 4.01 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER. The
Company covenants and agrees that, during the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Effective Time unless Parent shall otherwise agree in writing, and except
as set forth in Section 4.01 (d), (e) or (f) of the Company Disclosure Schedule,
the Company shall conduct its business only, and 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
the business organization of the Company as it has historically been conducted
(it being understood that, notwithstanding the efforts of the Company,
Transaction Changes may occur), to keep available the services of the present
officers, employees and consultants of the Company and to preserve the present
relationships of the Company with customers, suppliers and other persons with
which the Company has significant business relations. By way of amplification
and not limitation, except as contemplated by this Agreement, the Company shall
not, 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 Sections 4.01(d), (e), or (f) of the Company Disclosure
Schedule, directly or indirectly do, or propose to do, any of the following
without the prior written consent of Parent, which, in the case clauses (c),
(d)(iv), (e), (f), (h), (i) or (j),will not be unreasonably withheld or delayed:
(a) amend or otherwise change the Company's Restated Certificate of
Incorporation or By-Laws;
(b) issue, sell, pledge, dispose of or encumber, or authorize the issuance,
sale, pledge, disposition or encumbrance of, any shares of capital stock of any
class, or any options, warrants, convertible securities or other rights of any
kind to acquire any shares of capital stock, or any other ownership interest
(including, without limitation, any phantom interest) in the Company, any of its
affiliates (except for the issuance of shares of Company Common Stock issuable
pursuant to Company Stock Options under the Company Stock Option Plans, which
options are outstanding on the date hereof, or pursuant to the Company ESPP as
in effect on the date hereof and new options granted in the ordinary course of
business consistent with past practices not to exceed 250,000 shares; provided,
however, that any such new options shall (i) provide for the accelerated vesting
and subsequent expiration of such options prior to the Effective Time and
(ii) shall have an exercise price-per-share equal to the fair market value of a
share of Company Common Stock as of the date of grant of such option);
(c) sell, pledge, dispose of or encumber any assets of the Company (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 $200,000 in the
aggregate);
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(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, (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,
(iii) except as required by the terms of any security as in effect on the date
hereof and set forth in Section 4.01(d) of the Company Disclosure Schedule,
amend the terms or change the period of exercisability of, purchase, repurchase,
redeem or otherwise acquire, any of its securities, including, without
limitation, shares of Company Common Stock, or any option, warrant or right,
directly or indirectly, to acquire any such securities, or propose to do any of
the foregoing, or (iv) settle, pay or discharge any claim, suit or other action
brought or threatened against the Company with respect to or arising out of a
stockholder equity interest in the Company;
(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 or endorse or otherwise as an accommodation
become responsible for, the obligations of any person, or make any loans or
advances, except (other than in the case of loans or advances to employees of
the Company to fund the exercise price of Company Stock Options or otherwise to
purchase shares of the Company Common Stock) in the ordinary course of business
consistent with past practice; (iii) authorize any capital expenditures or
purchases of fixed assets which are, in the aggregate, in excess of $1,200,000
over the next 12 month period; or (iv) enter into or materially amend any
contract, agreement, commitment or arrangement to effect any of the matters
prohibited by this Section 4.01(e);
(f) except as set forth in Section 4.01(f) of the Company Disclosure
Schedule, increase the compensation or severance payable or to become payable to
its directors, officers, employees or consultants, except for increases in
salary or wages of employees of the Company in accordance with past practices,
or grant any severance or termination pay (except to make payments required to
be made under obligations existing on the date hereof in accordance with the
terms of such obligations) to, or enter into any employment or severance
agreement, with any current or prospective employee of the Company, or
establish, adopt, enter into or amend any collective bargaining agreement,
Company Employee Plan, trust, fund, policy or arrangement for the benefit of any
current or former directors, officers, employees or consultants or any of their
beneficiaries, except, in each case, as may be required by law or as would not
result in a material increase in the cost of maintaining such collective
bargaining agreement, Company Employee Plan, trust, fund, policy or arrangement;
(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) except as required by a
change in GAAP occurring after the date hereof;
(h) make any Tax election or settle or compromise any United States federal,
state, local or non-United States Tax liability;
(i) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise) in excess
of $100,000 in the aggregate, 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 Documents filed prior to the date of this Agreement or
incurred in the ordinary course of business and consistent with past practice;
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(j) enter into, modify or renew any contract, agreement or arrangement,
whether or not in writing, for the distribution of the Company's products, for
the licensing of its technology or for any material research and development
collaboration; or
(k) take, or agree in writing or otherwise to take, any of the actions
described in Sections 4.01(a) through (j) 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.
Additionally, the Company shall use its commercially reasonable efforts to
obtain any and all written consents of customers which, pursuant to the terms of
any contracts, agreements or arrangements with such customers, are required to
prevent the termination of such contracts, agreements or arrangements in
connection with, or as a result of, the Transaction, except if and insofar as
the failure to obtain such consents would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
SECTION 4.02 NO SOLICITATION. (a) The Company shall not, directly or
indirectly, through any officer, director, employee, representative or agent of
the Company, solicit or encourage the initiation of (including by way of
furnishing information) any inquiries or proposals regarding any merger, sale of
assets, sale of shares of capital stock (including without limitation by way of
a tender offer) or similar transactions involving the Company that if
consummated would constitute an Alternative Transaction (as defined in
Section 7.01) (any of the foregoing inquiries or proposals being referred to
herein as an "ACQUISITION PROPOSAL"). Nothing contained in this Agreement shall
prevent the Board of Directors of the Company from (i) furnishing information to
a third party which has made a BONA FIDE Acquisition Proposal that is a Superior
Proposal (as defined below) not solicited in violation of this Agreement,
PROVIDED that such third party has executed an agreement with confidentiality
provisions substantially similar to those then in effect between the Company and
a subsidiary of Guarantor or (ii) subject to compliance with the other terms of
this Section 4.02, including Sections 4.02(c) and (d), considering and
negotiating a bona fide Acquisition Proposal that is a Superior Proposal not
solicited in violation of this Agreement; PROVIDED, HOWEVER, that, as to each of
clauses (i) and (ii), (x) such actions occur at a time prior to initial
acceptance of Shares for exchange in the Offer and (y) the Board of Directors of
the Company reasonably determines in good faith (after due consultation with
independent counsel, which may be Orrick, Herrington & Sutcliffe LLP), that it
is or is reasonably likely to be required to do so in order to discharge
properly its fiduciary duties. For purposes of this Agreement, a "SUPERIOR
PROPOSAL" means any proposal made by a third party to acquire, directly or
indirectly, for consideration consisting of cash and/or securities, all of the
equity securities of the Company entitled to vote generally in the election of
directors or all or substantially all the assets of the Company, on terms which
the Board of Directors of the Company reasonably believes (i) (after
consultation with a financial advisor of nationally recognized reputation, which
may be the Company Financial Advisor) to be more favorable from a financial
point of view to its stockholders than the Merger and the transactions
contemplated by this Agreement taking into account at the time of determination
any changes to the financial terms of this Agreement proposed by Parent and
(ii) to be more favorable to the Company than the Merger and the transactions
contemplated by this Agreement after taking into account all pertinent factors
deemed relevant by the Board of Directors of the Company under the laws of the
State of Delaware; PROVIDED, HOWEVER, that a Superior Proposal may be subject to
a due diligence review of confidential information and to other customary
conditions.
(b) The Company shall notify Parent promptly (but in no event later than
24 hours) 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 in connection with an Acquisition Proposal or for access
to the properties, books or records of the Company by any person or entity that
informs the Board of Directors of the Company 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
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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 the Company, 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(a). The Company
shall keep Parent fully informed, on a current basis, of any material changes in
the status and any material changes or modifications in the material terms of
any such Acquisition Proposal, indication or request. The Company shall also
immediately notify Parent, orally and in writing, if it enters into negotiations
concerning any Acquisition Proposal.
(c) Except to the extent the Board of Directors of the Company reasonably
determines in good faith (after due consultation with independent counsel, which
may be Orrick, Herrington & Sutcliffe LLP) that it is or is reasonably likely to
be required to act to the contrary in order to discharge properly its fiduciary
duties (and, with respect to the approval, recommendation or entering into any,
Acquisition Proposal, it may take such contrary action only after the second
business day following Parent's and Merger Sub's receipt of written notice of
the Board of Directors' intention to do so), neither the Company nor the Board
of Directors of the Company shall withdraw or modify, or propose to withdraw or
modify, in a manner adverse to Parent or Merger Sub, the approval by such Board
of Directors of this Agreement, the Offer or the Merger.
(d) The Company and the Board of Directors of the Company shall not
(i) redeem the rights (the "RIGHTS") issued under the Preferred Shares Rights
Agreement, dated as of September 19, 1997, as amended, between the Company and
the American Stock Transfer and Trust Company, as Rights Agent (the "RIGHTS
AGREEMENT"), or waive or amend any provision of the Rights Agreement, in any
such case to permit or facilitate the consummation of any Acquisition Proposal
or Alternative Transaction, or (ii) enter into any agreement with respect to, or
otherwise approve or recommend, or propose to approve or recommend, any
Acquisition Proposal or Alternative Transaction, unless this Agreement has been
terminated in accordance with its terms. It is understood and agreed that a
deferral of the distribution of Rights following the commencement of a tender
offer or exchange offer shall not be prohibited hereunder.
(e) Nothing contained in this Section 4.02 shall prohibit the Company from
taking and disclosing to its stockholders a position required by Rule 14e-2(a)
or Rule 14d-9 promulgated under the Exchange Act or from making any disclosure
to its stockholders required by applicable law, rule or regulation.
(f) 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 and
standstill provisions of any agreement to which the Company is a party.
(g) The Company shall ensure that the officers and directors of the Company
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 GUARANTOR 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 initial acceptance of Shares for Exchange
in the Offer, Parent covenants and agrees that, except as set forth in
Section 4.03 of the Parent Disclosure Schedule or unless the Company shall
otherwise agree in writing, Parent shall take all action necessary so that
(i) Guarantor 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, including actions taken by Guarantor or its subsidiaries in
contemplation of the Merger,
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and (ii) Guarantor 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 Guarantor's Charter Documents;
(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, or dispose of any assets, which, in any
such case, would materially delay or prevent the consummation of the Offer, the
Merger and the other 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 Guarantor may
declare and pay a dividend to its parent, and except that Guarantor may declare
and pay quarterly cash dividends on the Guarantor Common Shares of $0.125 per
share consistent with past practice;
(d) take any action to change its accounting policies or procedures
(including, without limitation, procedures with respect to revenue recognition,
payments of accounts payable and collection of accounts receivable) except as
required by a change in GAAP occurring after the date hereof; or
(e) take or agree in writing or otherwise to take any action that 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 STOCKHOLDER APPROVAL; PREPARATION OF POST-EFFECTIVE AMENDMENT
AND PROXY STATEMENT/ PROSPECTUS. (a) If Section 5.02(c) shall not apply and
approval of the Company's stockholders is required by applicable law in order to
consummate the Merger, the Company shall, and Parent shall cause Guarantor to,
as soon as practicable following the acceptance of Shares pursuant to the Offer,
prepare, and the Company shall file with the SEC, the Proxy Statement/Prospectus
with respect to the Company Stockholders Meeting, and the Company shall, and
Parent shall cause Guarantor to, prepare and Parent shall file with the SEC a
post-effective amendment to the Registration Statement (the "POST-EFFECTIVE
AMENDMENT") for the offer and exchange of the Guarantor Common Shares pursuant
to the Merger and in which the Proxy Statement/Prospectus will be included as a
prospectus. The Company shall, and Parent shall cause Guarantor to, use all
reasonable efforts to have the Post-Effective Amendment declared effective under
the Securities Act as promptly as practicable after such filing and to maintain
such effectiveness for so long as shall be required for the issuance of the
Guarantor Common Shares in the Merger. The Company shall use all reasonable
efforts to cause the Proxy Statement/Prospectus to be mailed to the Company's
stockholders as promptly as practicable after the Post-Effective Amendment is
declared effective under the Securities Act. Parent shall also cause Guarantor
to take any action (other than qualifying to do business in any jurisdiction in
which it is not now so qualified or to file a general consent to service of
process) required to be taken under the applicable state securities laws in
connection with the issuance of Guarantor Common Shares in the Offer and the
Merger, and the Company shall furnish to Guarantor all information concerning
the Company and the holders of capital stock of the Company as may be reasonably
requested in connection with any such action and the preparation, filing and
distribution of the Proxy Statement/ Prospectus. No filing of, or amendment or
supplement to, or correspondence to the SEC or its staff with respect to, the
Post-Effective Amendment or the Proxy Statement/Prospectus will be made by the
Company or the Guarantor, without providing the other party a reasonable
opportunity to review and
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comment thereon. Parent will advise the Company, promptly after Guarantor
receives notice thereof, of the time when the Post-Effective Amendment has
become effective or any supplement or amendment has been filed, the issuance of
any stop order, the suspension of the qualification of the Guarantor Common
Shares issuable in connection with the Merger for offering or sale in any
jurisdiction, or any request by the SEC for amendment of the Post-Effective
Amendment or comments thereon and responses thereto or requests by the SEC for
additional information. Company will advise Parent, promptly after it receives
notice thereof, of any request by the SEC for the amendment of the Proxy
Statement/Prospectus or comments thereon and responses thereto or requests by
the SEC for additional information. If at any time prior to the Effective Time
any information relating to the Company or Parent, or any of their respective
affiliates, officers or directors, should be discovered by the Company or Parent
which should be set forth in an amendment or supplement to either of the
Post-Effective Amendment or the Proxy Statement/Prospectus so that any of such
documents would not include any misstatement of a material fact or omit to state
any material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, the party which
discovers such information shall promptly notify the other parties hereto and an
appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and, to the extent required by law, disseminated to
the stockholders of the Company.
(b) Parent shall cause Guarantor to include as an exhibit to the
Registration Statement tax opinions of PricewaterhouseCoopers LLP and Orrick,
Herrington & Sutcliffe LLP, in form and substance reasonably satisfactory to
Parent and to the Company, on the basis of customary facts, representations,
warranties, covenants and assumptions set forth in such opinions (including
without limitation assumptions that (i) the Minimum Condition shall be
satisfied, and (ii) the Merger shall be completed promptly following the Offer),
to the effect that the Transaction will be treated for federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the Code
that is not subject to Section 367(a)(1) of the Code pursuant to Treasury
Regulation Section 1.367(a)-3(c) (other than with respect to Company
stockholders who are or will be "5% transferee stockholders" within the meaning
of Treasury Regulation Section 1.367(a)-3(c)(5)(ii)), and that each of
Guarantor, Parent and the Company will be a party to the reorganization within
the meaning of Section 368(b) of the Code.
(c) The Proxy Statement/Prospectus shall include the recommendation of the
Board of Directors of the Company in favor of approval of the Merger and
adoption of this Agreement.
SECTION 5.02 COMPANY STOCKHOLDERS MEETING. (a) If Section 5.02(c) shall not
apply and approval of this Agreement by the Company's stockholders is required
by applicable law in order to consummate the Merger, the Company shall
establish, prior to or as soon as practicable following the date upon which the
Post-Effective Amendment becomes effective, a record date for, duly call, give
notice of, convene and hold the Company Stockholders Meeting as promptly as
practicable for the purpose of voting upon the approval of this Agreement, and
the Company shall use all reasonable efforts to cause the Proxy
Statement/Prospectus to be mailed to the Company's stockholders and to hold the
Company Stockholders Meeting as promptly as practicable after the Post-Effective
Amendment is declared effective under the Securities Act. The Company shall
solicit from its stockholders proxies in favor of approval of this Agreement and
shall take all other reasonable action necessary or advisable to secure the vote
or consent of stockholders in favor of such approval.
(b) Parent and Merger Sub agree to vote all Shares acquired in the Offer or
otherwise beneficially owned by them, Guarantor or any of their subsidiaries in
favor of approval and adoption of this Agreement and the Merger at the Company
Stockholder Meeting and to take such other actions to effectuate as promptly as
practicable the Merger pursuant to Section 251 of the DGCL, on the terms and
subject to the conditions set forth in this Agreement.
(c) Notwithstanding the foregoing above, if Parent shall acquire at least
90% of the outstanding Shares in the Offer, Parent shall contribute all of its
Company Common Stock to Merger Sub and the
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parties hereto shall take all necessary actions (including actions referred to
in Sections 5.01 (a) and (b) above, as applicable) to cause the Merger to become
effective, as soon as practicable after the expiration of the Offer, without a
meeting of stockholders of the Company, in accordance with Section 253 of the
DGCL.
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 shall and Parent shall take all action necessary such
that Guarantor shall (i) afford to the officers, employees, accountants, counsel
and other representatives of the other, reasonable access, during the period
after the execution and delivery of this Agreement and prior to the Effective
Time, to its properties, books, contracts, commitments and records and,
(ii) during such period, 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 agreement,
dated August 1, 2000 (the "CONFIDENTIALITY AGREEMENT"), between a subsidiary of
Guarantor and the Company.
SECTION 5.04 CONSENTS; APPROVALS. The Company and Parent shall each use its
reasonable best efforts to obtain and to cooperate with each other in order to
obtain all consents, waivers, approvals, authorizations or orders (including,
without limitation, all United States and non-United States governmental and
regulatory rulings and approvals), and the Company and Parent shall make (or
Parent shall take all action necessary such that Guarantor will make) all
filings (including, without limitation, all filings with United States and
non-United States 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.
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 "COMPANY AFFILIATE LETTER")
identifying all persons who are anticipated to be "affiliates" of the Company at
the time of the Company Stockholders Meeting for purposes of Rule 145 under the
Securities Act ("RULE 145"). The Company shall use its reasonable best efforts
to cause each person who is identified as an "affiliate" in the Affiliate Letter
to deliver to Parent, prior to the date of the initial acceptance of Shares for
exchange in the Offer, a written agreement (an "AFFILIATE AGREEMENT")
restricting the sales of securities by such affiliates in accordance with the
restrictions on affiliates under Rule 145, in a form mutually agreeable to the
Company and Parent.
SECTION 5.06 INDEMNIFICATION AND INSURANCE. (a) The Certificate of
Incorporation and By-laws of the Surviving Corporation shall contain the
provisions with respect to indemnification set forth in the Restated Certificate
of Incorporation and the By-laws of the Company, which provisions shall not be
amended, modified or otherwise repealed 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 after the Effective Time by law and then only to the
minimum extent required by such law.
(b) The Surviving Corporation shall, to the fullest extent permitted under
applicable law or under the Surviving Corporation's Certificate of Incorporation
or By-laws, indemnify and hold harmless, each present and former director,
officer or employee of the Company (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
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pertaining to the transactions contemplated by this Agreement or (y) otherwise
with respect to any acts or omissions occurring at or prior to the Effective
Time, to the same extent as provided in the Company's Restated Certificate of
Incorporation or By-laws or any applicable contract or agreement as in effect on
the date hereof, in each case for a period of six years after the Effective
Time. In the event of any such claim, action, suit, proceeding or investigation
(whether arising before or after the Effective Time) and subject to the specific
terms of any indemnification contract, (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 in each applicable jurisdiction 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
in each applicable jurisdiction.
(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) In addition, Parent shall provide, or cause the Surviving Corporation to
provide, for a period of not less than six years after the Effective Time, the
Company's current directors and officers with an insurance and indemnification
policy that provides coverage for events occurring at or prior to the Effective
Time (the "D&O INSURANCE") that is no less favorable than the existing policy
or, if substantially equivalent insurance coverage is unavailable, the best
available coverage; provided, however, that Parent and the Surviving Corporation
shall not be required to pay an annual premium for the D&O Insurance in excess
of 200% of the annual premium currently paid by the Company for such insurance,
but in such case shall purchase as much such coverage as possible for such
amount.
(e) From and after the Effective Time, Parent shall unconditionally
guarantee the timely payment of all funds owing by, and the timely performance
of all other obligations of, the Surviving Corporation under this Section 5.06.
(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 reasonably be expected 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.
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SECTION 5.08 FURTHER ACTION/TAX TREATMENT. Upon the terms and subject to the
conditions hereof, each of the parties hereto shall use all reasonable efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all
other things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement, to
obtain in a timely manner all necessary waivers, consents and approvals and to
effect all necessary registrations and filings, and otherwise to satisfy or
cause to be satisfied all conditions precedent to its obligations under this
Agreement. The foregoing covenant shall not include any obligation by Guarantor
to agree to divest, abandon, license, enter into, modify, maintain or renew any
contract arrangement regarding or take similar action with respect to any assets
(tangible or intangible) of Guarantor or the Company. Each of Parent, Merger Sub
and the Company shall, and Parent shall use its reasonable best efforts to cause
Guarantor to, use its reasonable best efforts to cause the Transaction to
qualify, and will not (either before or after consummation of the Merger) take
any actions, or fail to take any action, that might reasonably be expected to
prevent the Transaction from qualifying as a reorganization under the provisions
of Section 368 of the Code that is not subject to Section 367(a)(1) of the Code
pursuant to Treasury Regulation Section 1.367(a)-(3)(c) (other than with respect
to Company stockholders who are or will be "5% transferee stockholders" within
the meaning of Treasury Regulation Section 1.367(a)-3(c)(5)(ii)). Parent shall,
and shall use its reasonable best efforts to cause the Surviving Corporation and
Guarantor to, report, to the extent required by the Code or the regulations
thereunder, the Transaction for United States federal income tax purposes as a
reorganization within the meaning 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 or making any written public
statement with respect to the Transaction 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 either party may, without the prior consent of the other, 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 GUARANTOR COMMON SHARES. (a) Parent shall take all action
necessary so that Guarantor shall transfer to Parent the Guarantor Common Shares
to be delivered by Parent to the holders of Company Common Stock in the
Transaction.
(b) Parent will take all action necessary so that Guarantor will use its
best efforts to cause the Guarantor Common Shares to be delivered by Parent to
the holders of Company Common Stock in the Transaction 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 Company shall be
responsible for the payment of all such taxes and fees. In no event shall Parent
or any affiliate thereof reimburse the Company for the payment of such taxes and
fees.
SECTION 5.12 OPTION PLANS; ESPP; OTHER PROGRAMS. (a) Except as provided in
Paragraph (b) below, immediately prior to the Effective Time, or such earlier
date as required pursuant to the relevant Company Stock Option Plan, each
outstanding Company Stock Option shall become fully vested and immediately
exercisable and the holder of each such Company Stock Option shall be entitled
to exercise such option immediately prior to the Effective Time, or such earlier
date as required pursuant to the relevant Company Stock Option Plan. Except as
provided in Paragraph (b)
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below, any such outstanding Company Stock Option remaining unexercised as of the
Effective Time shall expire as of such time, and shall entitle the holder
thereof to an amount in cash equal to the amount by which (i) the product of the
Exchange Ratio and the Average Share Price, multiplied by the number of shares
of Company Common Stock for which the Company Stock Option was exercisable as of
the Effective Time exceeds (ii) the aggregate exercise price of the Company
Common Stock purchasable pursuant to such Company Stock Option.
(b) Each Company Stock Option issued after April 7, 1993 under the 1989 Plan
shall continue to have, and be subject to, the same terms and conditions set
forth in the relevant Company Stock Option Plan and applicable award agreement
immediately prior to the Effective Time; except that (i) each such Company Stock
Option will be exercisable (or will become exercisable in accordance with its
terms) for that number of whole Guarantor Common Shares equal to the product of
the number of shares of Company Common Stock that were issuable upon exercise of
such the Company Stock Option immediately prior to the Effective Time multiplied
by the Exchange Ratio, rounded down to the nearest whole number of Guarantor
Common Shares and (ii) the per share exercise price for the Guarantor Common
Shares issuable upon exercise of such Company Stock Option will be equal to the
quotient determined by dividing the exercise price per share of the Company
Common Stock at which such Company Stock option was exercisable immediately
prior to the Effective Time by the Exchange Ratio, rounded up to the nearest
whole cent; provided, however, that the holder of any such Company Stock Option
may agree that such option be treated under Section 5.12(a).
(c) Parent and the Company shall take such action as is necessary, including
action under the relevant Company Stock Option Plans, to effect the provisions
of this Section 5.12.
(d) The Company shall take such action as is necessary to cause the ending
date of the then current offering period under the Company ESPP to be prior to
the Effective Time and to terminate such plan as of the Effective Time.
(e) The severance and retention bonus programs described in Section 2.11(a)
of the Company Disclosure Schedule shall remain in effect without any
modification that would reduce benefits under such programs for at least one
year following the Closing Date.
SECTION 5.13 EMPLOYEE BENEFITS. (a) For purposes of any eligibility
requirements, waiting periods, vesting periods or, except with respect to
defined benefit pension plans, benefit accrual, that are based on length of
service under any employee benefit plan or arrangement maintained by Parent or
Merger Sub, including without limitation any pension benefit plan, as defined in
Section 3(2) of ERISA and any welfare benefit plan, as defined in Section 3(1)
of ERISA, Parent shall ensure that service with the Company prior to the Closing
by any individual who is employed by Parent or Merger Sub after the Closing
shall be treated as service with Parent and Merger Sub.
(b) Through December 31, 2001, Parent and Merger Sub shall, with respect to
all employees of the Company who become employees of Parent or Surviving
Corporation immediately following the Closing (the "TRANSFERRED EMPLOYEES"),
provide for their coverage under pension and welfare benefit plans, programs and
arrangements (the "CURRENT BENEFIT PLANS") providing benefits not substantially
less favorable in the aggregate to the Transferred Employees than the Current
Benefit Plans covering such Transferred Employees as in effect immediately prior
to the Closing, including group health plans which do not exclude or limit the
coverage of such Transferred Employees on account of waiting periods or
pre-existing conditions, and which have in all material respects identical or
superior coverage in terms of employee participation.
(c) It is expressly agreed that (i) the provisions of Sections 5.12(e) and
5.13 are not intended to be for the benefit of or otherwise enforceable by any
third party, including, without limitation, any Transferred Employees and
(ii) except as provided in Section 5.12(e), nothing herein shall prevent the
Surviving Corporation or any other subsidiary of Guarantor from amending or
modifying any employee
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benefit plan, program or arrangement in any respect or terminating or modifying
the terms and conditions of employment or other service of any particular
employee or any other person.
SECTION 5.14 RIGHTS AGREEMENT. The Board of Directors of the Company shall
take all further action (in addition to that referred to in Section 2.24), if
any, necessary in order to render the Rights inapplicable to the Merger and the
other transactions contemplated by this Agreement.
SECTION 5.15 ACCOUNTANT'S LETTERS. Upon reasonable notice from the other,
the Company shall use its best efforts to cause KPMG LLP to deliver to Parent,
and Parent shall use its best efforts to cause PricewaterhouseCoopers to deliver
to the Company, a letter covering such matters as are reasonably requested by
Parent or the Company, as the case may be, and as are customarily addressed in
accountants' "comfort letters."
SECTION 5.16 COMPLIANCE WITH STATE PROPERTY TRANSFER STATUTES. The Company
agrees that it shall use its reasonable commercial efforts to comply promptly
with all requirements of applicable state property transfer laws as may be
required by the relevant state agency and shall take all action necessary to
cause the transactions contemplated hereby to be effected in compliance with
applicable state property transfer laws. The Company, after consultation with
Parent, shall determine which actions must be taken prior to or after the
Effective Time to comply with applicable state property transfer laws. The
Company agrees to provide Parent with any documents required to be submitted to
the relevant state agency prior to submission, and the Company shall not take
any action to comply with applicable state property transfer laws without
Parent's prior consent, which consent shall not be unreasonably withheld or
delayed. Parent shall provide, and shall take all action necessary such that
Guarantor shall provide, to the Company any assistance reasonably requested by
the Company with respect to such compliance.
SECTION 5.17 AMENDMENT OF 401(K) PLAN.
(a) The Company shall amend, effective as of the Effective Time, the
InnerDyne, Inc. Defined Contribution Plan to be a non-standardized prototype
plan that limits participation to employees of the Company.
(b) The Company shall amend the InnerDyne, Inc. Defined Contribution Plan to
preclude any additional purchases of stock of the Company, as of the date
10 days prior to the Effective Date, and the Company shall communicate this
amendment to the participants in such plan.
SECTION 5.18 FORM 5500. The Company shall use all reasonable efforts to file
Form 5500 prior to the Effective Time for the Company Employee Plans for all
years for which such form was not filed, as set forth in Section 2.11(b) of the
Company Disclosure Schedule.
SECTION 5.19 WARRANTS. At the Effective Time, Parent shall cause Guarantor
to assume each warrant to purchase Company Common Stock issued under the
Representative's Warrant Agreement, dated as of May 15, 1996, between the
Company and Cruttenden Roth Incorporated, at a price per Company Common Stock of
$4.20 and which expire on May 14, 2001 (each a "WARRANT"), which thereupon shall
be deemed to constitute a warrant to acquire, on the same terms and conditions
as were applicable under such Warrant prior to the Effective Time, the number
(rounded to the nearest whole number) of Guarantor Common Shares as the holder
of such Warrant would have been entitled to receive pursuant to the Merger had
such holder exercised such Warrant in full immediately prior to the Effective
Time, at a price per Guarantor Common Share equal to (x) the aggregate exercise
price for Company Common Stock otherwise purchasable pursuant to such Warrant
divided by (y) the number of Guarantor Common Shares deemed purchasable pursuant
to such Warrant.
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ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.01 CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE MERGER.
The respective obligations of each party to effect the Merger shall be subject
to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) EFFECTIVENESS OF THE REGISTRATION STATEMENT. The Post-Effective
Amendment shall have been declared effective by the SEC under the Securities
Act. No stop order suspending the effectiveness of the Post-Effective Amendment
shall have been issued by the SEC and no proceedings for that purpose and no
similar proceeding in respect of the Proxy Statement/Prospectus shall have been
initiated or threatened by the SEC;
(b) STOCKHOLDER APPROVAL. Unless Section 5.01(c) shall apply, this Agreement
and the Merger shall have been approved by the requisite vote of the
stockholders of the Company;
(c) ANTITRUST. All waiting periods applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated, and all
clearances and approvals required to be obtained in respect of the Merger prior
to the Effective Time under any Non-U.S. Monopoly Laws shall have been obtained,
except where the failure to have obtained any such clearances or approvals with
respect to any Non-U.S. Monopoly Laws would not reasonably be expected to have a
Material Adverse Effect on the Company, Guarantor or Guarantor's healthcare
product business;
(d) GOVERNMENTAL ACTIONS. There shall not be in effect any judgment, decree
or order of any Governmental Authority, administrative agency or court of
competent jurisdiction preventing consummation of the Merger; and
(e) 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.
ARTICLE VII
TERMINATION
SECTION 7.01 TERMINATION. This Agreement may be terminated:
(a) prior to the initial acceptance of Shares for exchange in the Offer, by
mutual written consent duly authorized by the Boards of Directors of Parent and
the Company; or
(b) prior to the initial acceptance of Shares for exchange in the Offer, by
either Parent or the Company if the initial acceptance of Shares for exchange in
the Offer shall not have been consummated on or prior to April 30, 2001;
PROVIDED, HOWEVER, 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
of its obligations under this Agreement has been the cause of, or resulted in,
the failure of the acceptance of Shares for exchange in the Offer to occur on or
prior to such date; or
(c) by either Parent or the Company if the Offer shall have terminated or
expired in accordance with its terms without the exchange of Shares pursuant to
the Offer, provided that the right to terminate this Agreement under this
Section 7.01(c) shall not be available to any party whose failure to fulfill any
of its obligations under this Agreement has been the cause of, or resulted in
the failure of, any conditions to the Offer to be satisfied; or
(d) at any time prior to the Effective Time 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 nonappealable final action
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having the effect of permanently restraining, enjoining or otherwise prohibiting
the Offer or the Merger; or
(e) prior to the initial acceptance of Shares for exchange in the Offer, by
Parent, if, whether or not permitted to do so by this Agreement, the Board of
Directors of the Company or the Company shall (x) (i) withdraw, modify or change
its approval or recommendation of this Agreement, the Offer or the Merger in a
manner adverse to Parent, (ii) approve or recommend to the stockholders of the
Company an Acquisition Proposal or Alternative Transaction; or (iii) approve or
recommend that the stockholders of the Company tender their shares in any tender
or exchange offer that is an Alternative Transaction or (y) take any position or
make any disclosures to the Company's stockholders permitted pursuant to
Section 4.02(e) which has the effect of any of the foregoing; or
(f) prior to the initial acceptance of Shares for exchange in the Offer, 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 in
any material respect, or, in the case of such representations and warranties as
are qualified by materiality, in any respect (a "TERMINATING
MISREPRESENTATION"); provided that, if such Terminating Misrepresentation is
curable prior to the Designated Expiration Date 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(f); or
(g) prior to the initial acceptance of Shares for exchange in the Offer, by
Parent or the Company, if any representation or warranty of the Company or
Parent, respectively, set forth in this Agreement, shall have become untrue in
any material respect, or, in the case of such representations and warranties as
are qualified by materiality, in any respect a "TERMINATING CHANGE"), in either
case other than by reason of a Terminating Breach (as hereinafter defined);
provided that, if any such Terminating Change is curable prior to the Designated
Expiration Date 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) prior to the initial acceptance of Shares for exchange in the Offer, by
Parent or the Company, upon a material breach of any covenant or agreement on
the part of the Company or Parent, respectively, set forth in this Agreement (a
"TERMINATING BREACH"); provided that, except for any breach of the Company's
obligations under Section 4.02, if such Terminating Breach is curable prior to
the Designated Expiration Date by the Company or Parent, as the case may be,
through the exercise of its reasonable best efforts and for so long as the
Company or Parent, as the case may be, continues to exercise such reasonable
best efforts, neither Parent nor the Company, respectively, may terminate this
Agreement under this Section 7.01(h); or
(i) by the Company, in order to accept a Superior Proposal; provided that
(A) Parent shall not have accepted any Shares for exchange pursuant to the
Offer; (B) the Board of Directors of the Company determines (after due
consultation with independent counsel, which may be Orrick, Herrington &
Sutcliffe LLP) that it is or is reasonably likely to be required to accept such
proposal in order to discharge properly its fiduciary duties; (C) the Company
has given Parent two full business days' advance notice of the Company's
intention to accept such Superior Proposal; (D) the Company shall in fact
thereafter accept such proposal; (E) the Company shall have paid the Fee and
expenses pursuant to Section 7.03(b); and (F) the Company shall have complied in
all respects with the provisions of Section 4.02; PROVIDED, HOWEVER, that if
this Agreement is terminated pursuant to clause (b) or (c) of this
Section 7.01, but the Agreement could at the time also have been terminated
pursuant to any other clause of this Section 7.01, the Agreement shall also be
deemed to have been terminated pursuant to such other clauses.
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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 30% 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 30% of the outstanding equity
securities of the Company or the entity surviving such merger or business
combination, (iii) any transaction pursuant to which any Third Party acquires or
would acquire control of assets (including for this purpose the outstanding
equity securities of the entity surviving any merger or business combination) of
the Company having a fair market value (as determined by the Board of Directors
of the Company in good faith) equal to more than 30% of the fair market value of
all the assets of the Company, taken as a whole, immediately prior to such
transaction, or (iv) any other consolidation, business combination,
recapitalization or similar transaction involving the Company, other than the
transactions contemplated by this Agreement; 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 stockholders (i) except that the Company or
Parent or Merger Sub may have liability as set forth in Section 7.03 and
Section 8.01 hereof, and (ii) nothing herein shall relieve the Company, Parent
or Merger Sub from liability for any willful material breach hereof (it being
understood that the mere existence of a Material Adverse Effect, by itself,
shall not constitute such a willful material breach).
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 Offer or Merger is consummated; PROVIDED,
HOWEVER, that if the Offer or Merger is not consummated Parent and the Company
shall share equally all SEC filing fees and printing expenses incurred in
connection with the printing and filing of the Registration Statement (including
financial statements and exhibits), the Offer Documents, the Schedule 14D-9, the
Post-Effective Amendment (including financial statement and exhibits) and the
Proxy Statement/Prospectus (including any preliminary materials related thereto)
and any amendments or supplements thereto.
(b) The Company shall pay Guarantor a fee of $6,000,000.00 (the "FEE"), and
shall pay Parent's and Guarantor's respective 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, Guarantor or the Company), such payment of
Expenses not to exceed $600,000.00, upon the first to occur of any of the
following events:
(i) the termination of this Agreement by Parent or the Company pursuant
to 7.01(b) or Section 7.01(c); PROVIDED that (i) the Minimum Condition shall
not have been satisfied and no other condition to the Offer shall have been
unsatisfied at the time of termination (other than any condition that shall
not have been satisfied as a result of a Terminating Misrepresentation,
Terminating Change or a Terminating Breach on the part of the Company) and
(ii) (A) prior to such termination, there shall be outstanding a BONA FIDE
Acquisition Proposal which has been made directly to the stockholders of the
Company or has otherwise become publicly known or there shall be outstanding
an announcement by any credible third party of a BONA FIDE intention to make
an Acquisition Proposal (in each case whether or not conditional and whether
or not such proposal shall have been rejected by the Board of Directors of
the Company) or (B) an Alternative Transaction shall be publicly announced
by the Company or any third party within 9 months
A-40
<PAGE>
following the date of termination of this Agreement and such transaction
shall at any time thereafter be consummated on substantially the terms
theretofore announced; 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(i).
(c) Upon a termination of this Agreement by Parent pursuant to
Section 7.01(h), the Company shall pay to Guarantor and Parent their respective
Expenses relating to the transactions contemplated by this Agreement, but in no
event more than $600,000.00. In addition, the Company shall pay Guarantor the
Fee if (A) prior to such termination, there shall be outstanding a BONA FIDE
Acquisition Proposal which has been made directly to the stockholders of the
Company or has otherwise become publicly known or there shall be outstanding an
announcement by any credible third party of a BONA FIDE intention to make an
Acquisition Proposal (in each case whether or not conditional and whether or not
such proposal shall have been rejected by the Board of Directors of the Company)
or (B) an Alternative Transaction shall be publicly announced by the Company or
any third party within 9 months following the date of termination of this
Agreement and such transaction shall at any time thereafter be consummated on
substantially the terms theretofore announced. The remedies available pursuant
to this Section 7.03(c) shall be in addition to, but without duplication in any
way of, the remedies referred to in clause (ii) of Section 7.02.
(d) Upon a termination of this Agreement by Parent pursuant to
Section 7.01(f), the Company shall pay to Guarantor and Parent their respective
Expenses relating to the transactions contemplated by this Agreement, but in no
event more than $600,000.00. Upon a termination of this Agreement by the Company
pursuant to Section 7.01(f), Parent shall pay to the Company its Expenses
relating to the transactions contemplated by this Agreement, but in no event
more than $600,000.00.
(e) The Fee and/or Expenses payable pursuant to Section 7.03(b), 7.03(c) or
7.03(d) shall be paid within one business day after a demand for payment
following the first to occur of any of the events described in Section 7.03(b),
7.03(c) or 7.03(d) as applicable; 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
entities entitled thereto if, immediately prior to the termination of this
Agreement, the other entity 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.
(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 Sections 5.06 and 5.08 and any other agreement in this
Agreement which contemplates performance after the Effective Time shall survive
the Effective Time indefinitely and those set forth in Section 7.03 shall
survive termination indefinitely. The Confidentiality Agreement shall survive
termination of this Agreement.
(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. Disclosure of
any matter in the Company Disclosure Schedule or the Parent Disclosure Schedule
shall not be deemed an admission that such matter is material.
A-41
<PAGE>
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 Acquisition Corp. X/ VLMS, Inc.
c/o Tyco International (US) Inc.
One Tyco Park
Exeter, NH 03833
Attn: President
Telecopy: (603) 778-7330
Telephone: (603) 778-9700
With a copy (which shall not constitute notice) to:
Tyco International Ltd.
The Zurich Centre
90 Pitts Bay Road, 2nd Floor
Pembroke HM08 Bermuda
Attn: Chief Corporate Counsel
Telecopy: (441) 295-9647
Telephone: (441) 292-8674
and
Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, NY 10022
Attn: Abbe L. Dienstag, Esq.
Telecopy: (212) 715-8000
Telephone: (212) 715-9100
If to the Company:
InnerDyne, Inc.
1244 Reamwood Ave.
Sunnyvale, CA 94089
Attn: President and Chief Executive Officer
Telecopy: (408) 745-6570
Telephone: (408) 745-6010
With a copy (which shall not constitute notice) to:
Orrick, Herrington & Sutcliffe LLP
400 Sansome Street
San Francisco, CA 94111
Attn: Alan Talkington, Esq.
Telecopy: (415) 773-5759
Telephone: (415) 392-1122
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;
A-42
<PAGE>
(b) "BUSINESS DAY" means any day other than a day on which banks in New York
are required or authorized to be closed;
(c) "CONTROL" (including the terms "controlled by" and "under common control
with") means the possession, directly or indirectly or as trustee or executor,
of the power to direct or cause the direction of the management or policies of a
person, whether through the ownership of stock, as trustee or executor, by
contract or credit arrangement or otherwise;
(d) "DOLLARS" or "$" means United States dollars;
(e) "KNOWLEDGE" means with respect to (i) an individual, that such
individual will be considered to have " knowledge" of a fact or matter if the
individual is actually aware of the fact or matter or if the fact or matter is
what a senior executive or other person with primary responsibility for the
matter should reasonably know in the ordinary course of conducting business and
(ii) an entity, that such entity will be considered to have "knowledge" of a
fact or matter if any individual who is serving as a senior executive of that
entity or person employed by that entity with primary responsibility for the
matter in question has, or at any time had, knowledge of the fact or matter;
(f) "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
(g) "SUBSIDIARY" or "SUBSIDIARIES" of the Company, the Surviving
Corporation, Parent, Guarantor or any other person means any corporation,
partnership, joint venture or other legal entity of which the Company, the
Surviving Corporation, Parent, Guarantor 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 and this Agreement by the stockholders of the Company, no amendment may
be made which by law requires further approval by such stockholders without such
further approval. This Agreement may not be amended except by an instrument in
writing signed by the parties hereto.
SECTION 8.05 WAIVER. At any time prior to the Effective Time, any party
hereto may with respect to any other party hereto (a) extend the time for the
performance of any of the obligations or 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 a 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 each of the Fee provided in
Section 7.03(b) is fair and reasonable in the circumstances. If a court of
competent jurisdiction shall nonetheless, by a final,
A-43
<PAGE>
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 and the Guarantor's guarantees
thereof constitute the entire agreement and supersede all prior agreements and
undertakings (other than the Confidentiality Agreement, except to the extent
specifically superseded hereby), both written and oral, among the parties, or
any of them, with respect to the subject matters hereof and thereof, except as
otherwise expressly provided herein or therein.
SECTION 8.09 ASSIGNMENT. This Agreement shall not be assigned by operation
of law or otherwise, except that all or any of the rights of Parent and/or
Merger Sub hereunder may be assigned to Guarantor or any direct or indirect
wholly-owned subsidiary of Guarantor provided that no such assignment shall
relieve the assigning party of its obligations hereunder.
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) and Section 7.03 (which contains provisions intended to be
for the benefit of Guarantor and may be enforced by Guarantor).
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 state and federal courts of the United States 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 two 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.
A-44
<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 ACQUISITION CORP. X
By: /s/ IRVING GUTIN
---------------------------------------------
Name: Irving Gutin
Title: VICE PRESIDENT
VLMS, INC.
BY: /S/ IRVING GUTIN
---------------------------------------------
Name: Irving Gutin
Title: Vice President
INNERDYNE, INC.
BY: /S/ WILLIAM G. MAVITY
---------------------------------------------
Name: William G. Mavity
Title: President and Chief Executive Officer
</TABLE>
A-45
<PAGE>
GUARANTEE
Tyco International Ltd. ("GUARANTOR") guarantees each and every
representation, warranty, covenant, agreement and other obligation of Parent and
Merger Sub, and/or any of their respective permitted assigns (and where any such
representation or warranty is made to the knowledge of Parent or Merger Sub,
such guarantee shall be deemed made to the knowledge of Guarantor), and the full
and timely performance of their respective obligations under the provisions of
the foregoing Agreement. This is a guarantee of payment and performance, and not
of collection, and Guarantor acknowledges and agrees that this guarantee is
unconditional, and no release or extinguishment of Parent's and Merger Sub's
obligations or liabilities (other than in accordance with the terms of the
Agreement), whether by decree in any bankruptcy proceeding or otherwise, shall
affect the continuing validity and enforceability of this guarantee, as well as
any provision requiring or contemplating performance by Guarantor.
Without limiting in any way the foregoing guarantee, Guarantor covenants and
agrees to take all actions to enable Parent to adhere to the provisions of
Sections 1.06, 5.01 and 5.10 of the Agreement.
The provisions of ARTICLE VIII of the Agreement are incorporated herein,
MUTATIS MUTANDIS, except that notices and other communications hereunder to
Guarantor shall be delivered to Tyco International Ltd., The Zurich Centre, 90
Pitts Bay Road, 2d Floor, Pembroke HM08, Bermuda Attn: Executive Vice President
and Chief Corporate Counsel, Telecopy No. 441-295-9647, Confirm
No. 441-292-8674 (with a copy as provided therefor in Section 8.02(a)).
We understand that the Company is relying on this guarantee in entering into
the Agreement and may enforce this guarantee as if Guarantor were a party
thereto.
<TABLE>
<S> <C> <C>
TYCO INTERNATIONAL LTD.
BY: /S/ MARK H. SWARTZ
---------------------------------------------
Name: Mark H. Swartz
Title: Executive Vice President
</TABLE>
A-46
<PAGE>
ANNEX I
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, subject to the terms of
this Agreement, Parent shall not be required to accept for exchange or exchange
or deliver any Guarantor Common Shares for any Shares tendered (subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) under the
Exchange Act relating to Parent's obligation to pay for or return tendered
Shares after the termination or withdrawal of the Offer), if by the Designated
Expiration Date (as such date may be extended in accordance with the
requirements of Section 1.01), (1) the Minimum Condition shall not have been
satisfied, (2) the applicable waiting period under the HSR Act and any
applicable Non-U.S. Monopoly Laws shall not have expired or been terminated,
(3) the Registration Statement shall not have become effective under the
Securities Act or shall be the subject of any stop order or proceedings seeking
a stop order, (4) the Guarantor Common Shares to be issued in the Offer and the
Merger shall not have been approved for listing on the NYSE, subject to official
notice of issuance, (5) the tax opinion of PricewaterhouseCoopers LLP and
Orrick, Herrington & Sutcliffe LLP required to be filed as an exhibit to the
Registration Statement pursuant to Section 5.01(b) shall not have been filed or
shall have been withdrawn (the conditions set forth in clauses (1) through
(5) being referred to as the "BASIC CONDITIONS") or (6) at any time on or after
the date of this Agreement and prior to the acceptance for exchange of Shares
pursuant to the Offer, any of the following conditions exist:
(a) there shall be in effect an injunction or other order, decree, judgment
or ruling by a Governmental Authority of competent jurisdiction or a statute,
rule, regulation or order shall have been promulgated, or enacted by a
Governmental Authority of competent jurisdiction which in any such case
(i) restrains or prohibits the making or consummation of the Offer or the
consummation of the Merger, (ii) prohibits or restricts the ownership or
operation by Parent (or any of its affiliates or subsidiaries) of any portion of
the Company's business or assets, or any material portion of Guarantor's medical
device business or which would substantially deprive Parent and/or its
affiliates or subsidiaries of the benefit of ownership of the Company's business
or assets, or compels Parent (or any of its affiliates or subsidiaries) to
dispose of or hold separate any portion of the Company's business or assets, or
any material portion of Guarantor's medical device business or which would
substantially deprive Parent and/or its affiliates or subsidiaries of the
benefit of ownership of the Company's business or assets, (iii) imposes material
limitations on the ability of Purchaser effectively to acquire or to hold or to
exercise full rights of ownership of the Shares, including, without limitation,
the right to vote Shares exchanged by Purchaser pursuant to the Offer or the
Merger on all matters properly presented to the stockholders of the Company,
(iv) imposes any material limitations on the ability of Parent and/or its
affiliates or subsidiaries effectively to control in any material respect the
business and operations of the Company, or (v) seeks to materially restrict any
future business activity by Guarantor (or any of its affiliates) relating to the
healthcare business, including, without limitation, by requiring the prior
consent of any person or entity (including any Governmental Authority) to future
transactions by Guarantor (or any of its affiliates); or
(b) there shall have been instituted, pending or threatened an action by a
Governmental Authority seeking to restrain or prohibit the making or
consummation of the Offer, the consummation of the Merger or to impose any other
restriction, prohibition or limitation referred to in the foregoing
paragraph (a); or
(c) this Agreement shall have been terminated by the Company or Parent in
accordance with its terms; or
(d) there shall have occurred (i) any general suspension of, or limitation
on prices for, trading in the Shares on NASDAQ or the trading of the Guarantor
Common Shares on the NYSE, (ii) a declaration of a banking moratorium or any
general suspension of payments in respect of banks in the United States or
(iii) in the case of any of the foregoing existing at the time of the execution
of this Agreement, a material acceleration or worsening thereof; or
A-I-1
<PAGE>
(e) Parent and the Company shall have agreed that Parent shall amend the
Offer to terminate the Offer or postpone the exchange of Shares pursuant
thereto; or
(f) any of the representations and warranties made by the Company in the
Merger Agreement shall not have been true and correct when made, or shall
thereafter have ceased to be true and correct as if made as of such later date
(other than representations and warranties made as of a specified date) in any
material respect or in the case of such representations and warranties as are
qualified as to materiality, in any respect such that any such breach,
individually or in the aggregate, has had or could reasonably be expected to
have a Material Adverse Effect on the Company; or the Company shall not have
performed each obligation and agreement and complied with each covenant to be
performed and complied with by it under this Agreement in all material respects
such that any such breach, individually or in the aggregate, has had or could
reasonably be expected to have a Material Adverse Effect on the Company,
PROVIDED, HOWEVER, that such breach or failure to perform is incapable of being
cured or has not been cured within 5 days after the giving of written notice
thereof to the Company, PROVIDED, HOWEVER, that no such 5-day cure period shall
require extension of the Offer beyond the twenty (20) business days provided
under Section 1.01 of the Agreement; or
(g) the Company's Board of Directors shall have modified or amended its
recommendation of the Offer in any manner adverse to Parent or shall have
withdrawn its recommendation of the Offer, or shall have recommended acceptance
of any Acquisition Proposal or Alternative Transaction or shall have resolved to
do any of the foregoing; or
(h) (i) any corporation, entity or "group" (as defined in Section 13(d)(3)
of the Securities Exchange Act) ("PERSON/GROUP"), other than Parent and its
affiliates, shall have acquired beneficial ownership of more than 15% of the
outstanding Shares, or shall have been granted any options or rights,
conditional or otherwise, to acquire a total of more than 15% of the outstanding
Shares and which, in each case, does not tender the Shares beneficially owned by
it in the Offer; (ii) any new group shall have been formed which beneficially
owns more than 15% of the outstanding Shares and which does not tender the
Shares beneficially owned by it in the Offer; or (iii) any person/group (other
than Parent or one or more of its affiliates) shall have entered into an
agreement in principle or definitive agreement with the Company with respect to
a tender or exchange offer for any Shares or a merger, consolidation or other
business combination with or involving the Company; or
(i) any change, development, effect or circumstance shall have occurred or
be threatened that would reasonably be expected to have a Material Adverse
Effect on the Company; or
(j) the Company shall commence a case under any chapter of Title XI of the
United States Code or any similar law or regulation; or a petition under any
chapter of Title XI of the United States Code or any similar law or regulation
is filed against the Company which is not dismissed within 2 business days;
which, in the good faith judgment of Parent in any such case, and regardless of
the circumstances (including any action or omission by Parent or its affiliates)
giving rise to any such condition, makes it inadvisable to proceed with such
acceptance for exchange or exchange.
The foregoing conditions are for the sole benefit of Parent and may be
asserted by Parent regardless of the circumstances (including any action or
omission by Parent or its affiliates) giving rise to any such condition or
(other than the Basic Conditions) may, subject to the terms of this Agreement,
be waived by Parent in its reasonable discretion in whole at any time or in part
from time to time. The failure by Parent at any time to exercise its rights
under any of the foregoing conditions shall not be deemed a waiver of any such
right; the waiver of any such right with respect to particular facts and
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances, and each such right shall be deemed an ongoing right which may be
asserted at any time or from time to time.
Should the Offer be terminated pursuant to the foregoing provisions, all
tendered Shares not theretofore accepted for exchange shall forthwith be
returned to the tendering stockholders.
A-I-2
<PAGE>
ANNEX II
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
PAGE
------------
<S> <C>
$.................................... A-43
1989 PLAN............................ A-5
2000 BALANCE SHEET................... A-13
ACQUISITION PROPOSAL................. A-29
AFFILIATE AGREEMENT.................. A-33
AFFILIATES........................... A-42
AGREEMENT............................ A-1
ALTERNATIVE TRANSACTION.............. A-48
APPOINTMENT TIME..................... A-4
AVERAGE SHARE PRICE.................. A-1
BASIC CONDITIONS..................... A-1
BLUE SKY LAWS........................ A-11
BUSINESS DAY......................... A-43
CERCLA............................... A-20
CERTIFICATE OF MERGER................ A-4
CERTIFICATES......................... A-6
CLOSING.............................. A-4
CLOSING DATE......................... A-4
COBRA................................ A-14
CODE................................. A-1
COMPANY.............................. A-1
COMPANY AFFILIATE LETTER............. A-33
COMPANY CHARTER DOCUMENTS............ A-10
COMPANY COMMON STOCK................. A-1
COMPANY DISCLOSURE SCHEDULE.......... A-9
COMPANY EMPLOYEE PLANS............... A-13
COMPANY ERISA AFFILIATE.............. A-13
COMPANY ESPP......................... A-5
COMPANY FINANCIAL ADVISOR............ A-3
COMPANY INTELLECTUAL PROPERTY
ASSETS............................. A-21
COMPANY PERMITS...................... A-12
COMPANY PREFERRED STOCK.............. A-10
COMPANY SEC DOCUMENTS................ A-12
COMPANY STOCK OPTION PLANS........... A-5
COMPANY STOCK OPTIONS................ A-5
COMPANY STOCKHOLDERS MEETING......... A-11
CONFIDENTIALITY AGREEMENT............ A-33
CONTINUING DIRECTOR.................. A-4
CONTROL.............................. A-43
CONTROLLED BY........................ A-43
CURRENT BENEFIT PLANS................ A-36
D&O INSURANCE........................ A-34
DAILY PER SHARE PRICE................ A-1
DESIGNATED EXPIRATION DATE........... A-2
DGCL................................. A-1
DOLLARS.............................. A-43
EFFECTIVE TIME....................... A-4
</TABLE>
<TABLE>
ENVIRONMENTAL CLAIM.................. A-20
ENVIRONMENTAL LAWS................... A-20
<CAPTION>
PAGE
------------
<S> <C>
ERISA................................ A-13
EXCHANGE ACT......................... A-2
EXCHANGE AGENT....................... A-6
EXCHANGE FUND........................ A-6
EXCHANGE RATIO....................... A-2
EXPENSES............................. A-40
FEE.................................. A-40
FULLY DILUTED SHARES................. A-2
GAAP................................. A-1
GOVERNMENTAL AUTHORITY............... A-11
GROUP................................ A-2
GUARANTEE............................ A-1
GUARANTOR............................ A-1
GUARANTOR 1999 FORM 10-K............. A-23
GUARANTOR 2000 BALANCE SHEET......... A-25
GUARANTOR CHARTER DOCUMENTS.......... A-23
GUARANTOR COMMON SHARES.............. A-1
GUARANTOR PREFERRED SHARES........... A-23
GUARANTOR SEC DOCUMENTS.............. A-25
HSR ACT.............................. A-11
INDEMNIFIED PARTIES.................. A-33
INTELLECTUAL PROPERTY ASSETS......... A-21
IRS.................................. A-14
ISO.................................. A-14
KNOWLEDGE............................ A-43
MATERIAL ADVERSE EFFECT.............. A-9
MATERIALS OF ENVIRONMENTAL CONCERN... A-20
MERGER............................... A-1
MERGER CONSIDERATION................. A-5
MERGER PRICE......................... A-2
MERGER SUB........................... A-1
MERGER SUB COMMON STOCK.............. A-5
MINIMUM CONDITION.................... A-2
NASDAQ............................... A-2
NON-U.S. MONOPOLY LAWS............... A-11
NYSE................................. A-2
OFFER................................ A-1
OFFER DOCUMENTS...................... A-3
OFFICER EMPLOYEES.................... A-34
OSHA................................. A-20
PARENT............................... A-1
PARENT DISCLOSURE SCHEDULE........... A-23
PENSION PLANS........................ A-13
PERSON............................... A-43
PERSON/GROUP......................... A-2
</TABLE>
A-II-1
<PAGE>
<TABLE>
<CAPTION>
PAGE
------------
<S> <C>
POST-EFFECTIVE AMENDMENT............. A-31
PRELIMINARY PROSPECTUS............... A-3
PROXY STATEMENT/PROSPECTUS........... A-17
RCRA................................. A-20
RECOMMENDATIONS...................... A-3
REGISTRATION STATEMENT............... A-3
RIGHTS............................... A-30
RIGHTS AGREEMENT..................... A-30
RIGHTS EVENT......................... A-22
RULE 145............................. A-33
SCHEDULE 14D-9....................... A-3
SEC.................................. A-3
SECURITIES ACT....................... A-11
SHARES............................... A-1
SUBSIDIARIES......................... A-43
SUBSIDIARY........................... A-43
</TABLE>
<TABLE>
SUPERIOR PROPOSAL.................... A-29
SURVIVING CORPORATION................ A-4
<CAPTION>
PAGE
------------
<S> <C>
TAX.................................. A-19
TAX RETURN........................... A-19
TERMINATING BREACH................... A-39
TERMINATING CHANGE................... A-39
TERMINATING MISREPRESENTATION........ A-39
THIRD PARTY.......................... A-40
THIRD PARTY INTELLECTUAL PROPERTY
ASSETS............................. A-21
TO THE KNOWLEDGE OF THE COMPANY...... A-19
TRANSACTION.......................... A-1
TRANSACTION CHANGES.................. A-9
TRANSFERRED EMPLOYEES................ A-36
TSCA................................. A-20
UNDER COMMON CONTROL WITH............ A-52
WARRANT.............................. A-37
</TABLE>
A-II-2
<PAGE>
ANNEX B
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE
SECTION262 APPRAISAL RIGHTS.
(a) Any stockholder of a corporation of this State who holds shares of stock
on the date of the making of a demand pursuant to subsection (d) of this section
with respect to such shares, who continuously holds such shares through the
effective date of the merger or consolidation, who has otherwise complied with
subsection (d) of this section and who has neither voted in favor of the merger
or consolidation nor consented thereto in writing pursuant to Section228 of this
title shall be entitled to an appraisal by the Court of Chancery of the fair
value of the stockholder's shares of stock under the circumstances described in
subsections (b) and (c) of this section. As used in this section, the word
"stockholder" means a holder of record of stock in a stock corporation and also
a member of record of a nonstock corporation; the words "stock" and "share" mean
and include what is ordinarily meant by those words and also membership or
membership interest of a member of a nonstock corporation; and the words
"depository receipt" mean a receipt or other instrument issued by a depository
representing an interest in one or more shares, or fractions thereof, solely of
stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to Section251 (other than a merger effected pursuant to
Section251(g) of this title), Section252, Section254, Section257, Section258,
Section263 or Section264 of this title:
(1) Provided, however, that no appraisal rights under this section shall
be available for the shares of any class or series of stock, which stock, or
depository receipts in respect thereof, at the record date fixed to
determine the stockholders entitled to receive notice of and to vote at the
meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no appraisal
rights shall be available for any shares of stock of the constituent
corporation surviving a merger if the merger did not require for its
approval the vote of the stockholders of the surviving corporation as
provided in subsection (f) of Section251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required by
the terms of an agreement of merger or consolidation pursuant to
SectionSection251, 252, 254, 257, 258, 263 and 264 of this title to accept
for such stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock (or depository receipts in
respect thereof) or depository receipts at the effective date of the
merger or consolidation will be either listed on a national securities
exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities
Dealers, Inc. or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this paragraph.
<PAGE>
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under Section253 of this title is not owned by
the parent corporation immediately prior to the merger, appraisal rights
shall be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections
(d) and (e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a meeting of
stockholders, the corporation, not less than 20 days prior to the meeting,
shall notify each of its stockholders who was such on the record date for
such meeting with respect to shares for which appraisal rights are available
pursuant to subsections (b) or (c) hereof that appraisal rights are
available for any or all of the shares of the constituent corporations, and
shall include in such notice a copy of this section. Each stockholder
electing to demand the appraisal of his shares shall deliver to the
corporation, before the taking of the vote on the merger or consolidation, a
written demand for appraisal of his shares. Such demand will be sufficient
if it reasonably informs the corporation of the identity of the stockholder
and that the stockholder intends thereby to demand the appraisal of his
shares. A proxy or vote against the merger or consolidation shall not
constitute such a demand. A stockholder electing to take such action must do
so by a separate written demand as herein provided. Within 10 days after the
effective date of such merger or consolidation, the surviving or resulting
corporation shall notify each stockholder of each constituent corporation
who has complied with this subsection and has not voted in favor of or
consented to the merger or consolidation of the date that the merger or
consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to Section228
or Section253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days thereafter,
shall notify each of the holders of any class or series of stock of such
constituent corporation who are entitled to appraisal rights of the approval
of the merger or consolidation and that appraisal rights are available for
any or all shares of such class or series of stock of such constituent
corporation, and shall include in such notice a copy of this section;
provided that, if the notice is given on or after the effective date of the
merger or consolidation, such notice shall be given by the surviving or
resulting corporation to all such holders of any class or series of stock of
a constituent corporation that are entitled to appraisal rights. Such notice
may, and, if given on or after the effective date of the merger or
consolidation, shall, also notify such stockholders of the effective date of
the merger or consolidation. Any stockholder entitled to appraisal rights
may, within 20 days after the date of mailing of such notice, demand in
writing from the surviving or resulting corporation the appraisal of such
holder's shares. Such demand will be sufficient if it reasonably informs the
corporation of the identity of the stockholder and that the stockholder
intends thereby to demand the appraisal of such holder's shares. If such
notice did not notify stockholders of the effective date of the merger or
consolidation, either (i) each such constituent corporation shall send a
second notice before the effective date of the merger or consolidation
notifying each of the holders of any class or series of stock of such
constituent corporation that are entitled to appraisal rights of the
effective date of the merger or consolidation or (ii) the surviving or
resulting corporation shall send such a second notice to all such holders on
or within 10 days after such effective date; provided, however, that if such
second notice is sent more than 20 days following the sending of the first
notice, such second notice need only to be sent to each stockholder who is
entitled to appraisal rights and who has demanded appraisal of
B-2
<PAGE>
such holder's shares in accordance with this subsection. An affidavit of the
secretary or assistant secretary or of the transfer agent of the corporation
that is required to give either notice that such notice has been given
shall, in the absence of fraud, be prima facie evidence of the facts stated
therein. For purposes of determining the stockholders entitled to receive
either notice, each constituent corporation may fix, in advance, a record
date that shall be not more than 10 days prior to the date the notice is
given, provided, that if the notice is given on or after the effective date
of the merger or consolidation, the record date shall be such effective
date. If no record date is fixed and the notice is given prior to the
effective date, the record date shall be the close of business on the next
day preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger or consolidation,
the surviving or resulting corporation or any stockholder who has complied with
subsections (a) and (d) hereof and who is otherwise entitled to appraisal
rights, may file a petition in the Court of Chancery demanding a determination
of the value of the stock of all such stockholders. Notwithstanding the
foregoing, at any time within 60 days after the effective date of the merger or
consolidation, any stockholder shall have the right to withdraw his demand for
appraisal and to accept the terms offered upon the merger or consolidation.
Within 120 days after the effective date of the merger or consolidation, any
stockholder who has complied with the requirements of subsections (a) and
(d) hereof, upon written request, shall be entitled to receive from the
corporation surviving the merger or resulting from the consolidation a statement
setting forth the aggregate number of shares not voted in favor of the merger or
consolidation and with respect to which demands for appraisal have been received
and the aggregate number of holders of such shares. Such written statement shall
be mailed to the stockholder within 10 days after his written request for such a
statement is received by the surviving or resulting corporation or within 10
days after expiration of the period for delivery of demands for appraisal under
subsection (d) hereof, whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall
within 20 days after such service file in the office of the Register in Chancery
in which the petition was filed a duly verified list containing the names and
addresses of all stockholders who have demanded payment for their shares and
with whom agreements as to the value of their shares have not been reached by
the surviving or resulting corporation. If the petition shall be filed by the
surviving or resulting corporation, the petition shall be accompanied by such a
duly verified list. The Register in Chancery, if so ordered by the Court, shall
give notice of the time and place fixed for the hearing of such petition by
registered or certified mail to the surviving or resulting corporation and to
the stockholders shown on the list at the addresses therein stated. Such notice
shall also be given by 1 or more publications at least 1 week before the day of
the hearing, in a newspaper of general circulation published in the City of
Wilmington, Delaware or such publication as the Court deems advisable. The forms
of the notices by mail and by publication shall be approved by the Court, and
the costs thereof shall be borne by the surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have
B-3
<PAGE>
had to pay to borrow money during the pendency of the proceeding. Upon
application by the surviving or resulting corporation or by any stockholder
entitled to participate in the appraisal proceeding, the Court may, in its
discretion, permit discovery or other pretrial proceedings and may proceed to
trial upon the appraisal prior to the final determination of the stockholder
entitled to an appraisal. Any stockholder whose name appears on the list filed
by the surviving or resulting corporation pursuant to subsection (f) of this
section and who has submitted his certificates of stock to the Register in
Chancery, if such is required, may participate fully in all proceedings until it
is finally determined that he is not entitled to appraisal rights under this
section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection
(d) of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of his demand for
an appraisal and an acceptance of the merger or consolidation, either within 60
days after the effective date of the merger or consolidation as provided in
subsection (e) of this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery
shall be dismissed as to any stockholder without the approval of the Court, and
such approval may be conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the shares
of such objecting stockholders would have been converted had they assented to
the merger or consolidation shall have the status of authorized and unissued
shares of the surviving or resulting corporation.
B-4
<PAGE>
THE EXCHANGE AGENT FOR THE OFFER IS:
[LOGO]
<TABLE>
<S> <C> <C>
By Mail: By Overnight Delivery: By Hand Delivery:
Reorganization Department Reorganization Department Reorganization Department
P.O. Box 3301 85 Challenger Road 120 Broadway
South Hackensack, New Jersey Mail Stop -- Reorg 13th Floor
07606 Ridgefield Park, New Jersey New York, New York 10271
07660
</TABLE>
FACSIMILE TRANSMISSION (FOR ELIGIBLE INSTITUTIONS ONLY):
(201) 296-4293
CONFIRM RECEIPT OF FACSIMILE BY TELEPHONE ONLY:
(201) 296-4860
------------------------
Questions and requests for assistance may be directed to the information
agent at the address and telephone numbers listed below. Additional copies of
this offer to exchange, the letter of transmittal and other tender offer
materials may be obtained from the information agent as set forth below, and
will be furnished promptly at our expense. Facsimile copies of the letter of
transmittal, properly completed and duly executed, will be accepted. The letter
of transmittal, certificates for shares and any other required documents should
be sent or delivered by each stockholder of InnerDyne or his broker, dealer,
commercial bank, trust company or other nominee to the exchange agent at one of
its addresses set forth above. You may also contact your broker, dealer,
commercial bank, trust company or other nominee for assistance concerning the
offer.
THE INFORMATION AGENT FOR THE OFFER AND THE MERGER IS:
[LOGO]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
E-mail: [email protected]
or
CALL TOLL-FREE (800) 322-2885
<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 of Bermuda. Section 98 of the Companies Act 1981 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 $100,000,000 of insurance to reimburse the
directors and officers of Tyco and its subsidiaries 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>
<C> <S>
2.1 Agreement and Plan of Merger, dated as of October 3, 2000,
among Tyco Acquisition Corp. X, VLMS, Inc., InnerDyne, Inc.
and guaranteed by Tyco International Ltd. (included as Annex
A to the Prospectus which forms a part of this Registration
Statement)
5 Opinion of Appleby Spurling & Kempe regarding the validity
of the Tyco common shares registered hereunder
8.1 Tax Opinion of PricewaterhouseCoopers LLP
8.2 Tax Opinion of Orrick, Herrington & Sutcliffe LLP
8.3 Tax Opinion of Appleby Spurling & Kempe
23.1 Consent of PricewaterhouseCoopers
23.2 Consent of Deloitte & Touche LLP
23.3 Consent of Arthur Andersen LLP
23.4 Consent of KPMG LLP
23.7 Consent of Appleby Spurling & Kempe (contained in Exhibit 5
and Exhibit 8.3)
23.8 Consent of PricewaterhouseCoopers LLP (contained in Exhibit
8.1)
23.9 Consent of Orrick Herrington & Sutcliffe LLP (contained in
Exhibit 8.2)
24.1 Power of Attorney (contained on the signature page hereto)
99.1 Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery
99.3 Form of Letter from Tyco Acquisition to Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees
99.4 Form of Letter from Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees to Clients
99.5 Form of Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9
99.6 Summary Advertisement as published in THE WALL STREET
JOURNAL on October 18, 2000
</TABLE>
II-1
<PAGE>
ITEM 22. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of this Registration Statement (or most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the maximum aggregate offering price
may be reflected in the form of a prospectus filed with the SEC
pursuant to Rule 424(b) under the Securities Act, if in the aggregate,
the changes in volume and price represent no more than a 20% change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or
any material change to such information in this Registration Statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) of this section
do not apply if the registration statement is on Form S-3, Form S-8, or Form
F-3, and the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed with or
furnished to the commission by the registrant pursuant to section 13 or
section 15(d) of the Exchange Act that are incorporated by reference in the
registration statement.
(2) That, for the 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; and
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of
the offering.
The Registrant undertakes that, for purposes of determining any liability
under the Securities Act, each filing of the Registrant's annual report pursuant
to Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to Section 15(d) of
the Exchange Act) 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), 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 Securities Act and is used in connection
with an offering of securities subject to Rule 415, will be filed as a part of
an amendment to the Registration Statement and will not be used until such
amendment is
II-2
<PAGE>
effective, and that, for purposes of determining any liability under the
Securities Act, 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
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 SEC such indemnification is against
public policy as expressed in the Securities 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 Securities Act and will be governed by the final
adjudication of such issue.
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 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 18th day of
October, 2000.
<TABLE>
<S> <C> <C>
TYCO INTERNATIONAL LTD.
By: /s/ MARK H. SWARTZ
-----------------------------------------
Mark H. Swartz
EXECUTIVE VICE PRESIDENT AND CHIEF
FINANCIAL OFFICER (PRINCIPAL FINANCIAL AND
ACCOUNTING OFFICER)
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned constitutes and
appoints L. Dennis Kozlowski and Mark H. Swartz, and each of them, his true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign this registration statement (including all pre-effective and
post-effective amendments thereto and all registration statements filed pursuant
to Rule 426(b) which incorporate this registration statement by reference), and
to file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully for all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on October 18,
2000 in the capacities indicated below.
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<C> <S>
/s/ L. DENNIS KOZLOWSKI Chairman of the Board, President, Chief
------------------------------------------- Executive Officer and Director (Principal
L. Dennis Kozlowski Executive Officer)
/s/ MICHAEL A. ASHCROFT
------------------------------------------- Director
Michael A. Ashcroft
/s/ JOSHUA M. BERMAN
------------------------------------------- Director and Vice President
Joshua M. Berman
/s/ RICHARD S. BODMAN
------------------------------------------- Director
Richard S. Bodman
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
NAME TITLE
---- -----
<C> <S>
/s/ JOHN F. FORT
------------------------------------------- Director
John F. Fort
/s/ STEPHEN W. FOSS
------------------------------------------- Director
Stephen W. Foss
/s/ PHILIP M. HAMPTON
------------------------------------------- Director
Philip M. Hampton
------------------------------------------- Director
Wendy E. Lane
/s/ JAMES S. PASMAN, JR.
------------------------------------------- Director
James S. Pasman, Jr.
/s/ W. PETER SLUSSER
------------------------------------------- Director
W. Peter Slusser
/s/ MARK H. SWARTZ Executive Vice President and Chief Financial
------------------------------------------- Officer (Principal Financial and Accounting
Mark H. Swartz Officer)
/s/ FRANK E. WALSH, JR.
------------------------------------------- Director
Frank E. Walsh, Jr.
</TABLE>
<TABLE>
<S> <C> <C> <C>
*By: /s/ MARK H. SWARTZ
--------------------------------------
Mark H. Swartz
ATTORNEY-IN-FACT
</TABLE>
II-5
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF DOCUMENT
--------------------- -----------------------
<C> <S>
2.1 Agreement and Plan of Merger, dated as of October 3, 2000,
among Tyco Acquisition Corp. X, VLMS, Inc., InnerDyne, Inc.
and guaranteed by Tyco International Ltd. (included as Annex
A to the Prospectus which forms a part of this Registration
Statement)
5 Opinion of Appleby Spurling & Kempe regarding the validity
of the Tyco common shares registered hereunder
8.1 Tax Opinion of PricewaterhouseCoopers LLP
8.2 Tax Opinion of Orrick, Herrington & Sutcliffe LLP
8.3 Tax Opinion of Appleby Spurling & Kempe
23.1 Consent of PricewaterhouseCoopers
23.2 Consent of Deloitte & Touche LLP
23.3 Consent of Arthur Andersen LLP
23.4 Consent of KPMG LLP
23.7 Consent of Appleby Spurling & Kempe (contained in Exhibit 5
and Exhibit 8.3)
23.8 Consent of PricewaterhouseCoopers LLP (contained in Exhibit
8.1)
23.9 Consent of Orrick Herrington & Sutcliffe LLP (contained in
Exhibit 8.2)
24.1 Power of Attorney (contained on the signature page hereto)
99.1 Letter of Transmittal
99.2 Form of Notice of Guaranteed Delivery
99.3 Form of Letter from Tyco Acquisition to Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees
99.4 Form of Letter from Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees to Clients
99.5 Form of Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9
99.6 Summary Advertisement as published in THE WALL STREET
JOURNAL on October 18, 2000
</TABLE>
