<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
May 12, 1997
INBRAND CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 0-22144 58-113677
--------------- ------------ -------------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
1169 Canton Road, Marietta, Georgia 30066
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (770) 422-3036
Page 1 of 5
<PAGE> 2
Item 5. Other Events.
On May 12, 1997, INBRAND Corporation ("INBRAND") entered into
an Agreement and Plan of Merger (the "Merger Agreement") by and among Tyco
International Ltd. ("Tyco"), a Massachusetts corporation, T5 Acquisition Corp.,
a Georgia corporation and a direct, wholly-owned subsidiary of Tyco ("Merger
Sub"), pursuant to which Merger Sub will merge with and into INBRAND. INBRAND
shareholders will receive .43 shares of New Tyco Common Stock (as hereinafter
defined) (or .43 shares of Tyco Common Stock if the ADT Merger (as hereinafter
defined) is not consummated) for each INBRAND share. "New Tyco Common Stock"
means the common shares of ADT Limited, a Bermuda corporation ("ADT" and,
following the ADT Merger, "New Tyco"), outstanding following the merger (the
"ADT Merger") of Limited Apache ("Apache"), a Massachusetts corporation and a
wholly-owned subsidiary of ADT, with and into Tyco, pursuant to the terms of a
Merger Agreement, dated March 17, 1997, among ADT, Apache and Tyco (the "ADT
Merger Agreement"). Following the Merger, INBRAND shall continue as the
surviving corporation and shall be a wholly-owned subsidiary of New Tyco (or of
Tyco if the ADT Merger is not consummated).
Consummation of the Merger is subject to approval by the
shareholders of INBRAND, consummation or termination of the ADT Merger,
regulatory approvals and other conditions normally associated with such
transaction.
The foregoing description is qualified in its entirety by
reference to the full text of the Merger Agreement which is filed herewith as
Exhibit 2 and is incorporated by reference.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(c) Exhibits.
<TABLE>
<CAPTION>
Exhibit No. Title
----------- -----
<S> <C>
2 Agreement and Plan of Merger, dated as of May 12, 1997, by
and among INBRAND Corporation, Tyco International Ltd. and
T5 Acquisition Corp.
99 Press Release of INBRAND Corporation, dated as of May 13, 1997.
</TABLE>
Page 2 of 5
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
INBRAND CORPORATION
By: /S/Garnett A. Smith
-------------------------------------
Garnett A. Smith, Chairman
and Chief Executive Officer
Dated: May 16, 1997
Page 3 of 5
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
INBRAND CORPORATION
By: /S/Garnett A. Smith
-------------------------------------
Garnett A. Smith, Chairman
and Chief Executive Officer
Dated: May 16, 1997
Page 4 of 5
<PAGE> 5
Exhibit Index
<TABLE>
<CAPTION>
Exhibit No. Description Page No.
- ----------- ----------- --------
<S> <C> <C>
2 Agreement and Plan of Merger, dated as
of May 12, 1997, by and among INBRAND
Corporation, Tyco International Ltd.
and T5 Acquisition Corp.
99 Press Release of INBRAND Corporation
dated as of May 13, 1997
</TABLE>
Page 5 of 5
<PAGE> 1
EXHIBIT NO. 2
AGREEMENT AND PLAN OF MERGER
DATED AS OF MAY 12, 1997
<PAGE> 2
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
TYCO INTERNATIONAL LTD.,
T5 ACQUISITION CORP.
and
INBRAND CORPORATION
Dated as of May 12, 1997
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE I
THE MERGER
<S> <C> <C>
SECTION 1.01. The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.02. Effective Time. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.03. Effect of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.04. Articles of Incorporation; By-Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.05. Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.06. Effect on Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
SECTION 1.07. Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 1.08. Stock Transfer Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 1.09. No Further Ownership Rights in Company Common Stock . . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 1.10. Lost, Stolen or Destroyed Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 1.11. Tax and Accounting Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 1.12. Taking of Necessary Action; Further Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 1.13. Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
SECTION 1.14. Termination of ADT Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 2.01. Organization and Qualification; Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.02. Articles of Incorporation and By-Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 2.03. Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.04. Authority Relative to this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SECTION 2.05. No Conflict; Required Filings and Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.06. Compliance; Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.07. SEC Filings; Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
SECTION 2.08. Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.09. No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.10. Absence of Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.11. Employee Benefit Plans; Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.12. Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.13. Registration Statement; Proxy Statement/Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 2.14. Restrictions on Business Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.15. Title to Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.16. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.17. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 2.18. Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 2.19. Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.20. Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.21. Interested Party Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
-i-
<PAGE> 4
<TABLE>
<S> <C> <C>
SECTION 2.22. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.23. Product Liability and Recalls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.24 Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.25. Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.26. Pooling Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
SECTION 3.01. Organization and Qualification; Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.02. Articles of Organization and By-Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 3.03. Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 3.04. Authority Relative to this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.05. No Conflict; Required Filings and Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.06. Compliance; Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 3.07. SEC Filings; Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 3.08. Absence of Certain Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 3.09. No Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 3.10. Absence of Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 3.11. Employee Benefit Plans; Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 3.12. Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 3.13. Registration Statement; Proxy Statement/Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 3.14. Restrictions on Business Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 3.15. Title to Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 3.16. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 3.17. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 3.18. Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 3.19. Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 3.20. Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 3.21. Interested Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 3.22. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 3.23. Product Liability and Recalls . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 3.24. Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 3.25. Ownership of Merger Sub; No Prior Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 3.26. Pooling Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 4.01. Conduct of Business by the Company Pending the Merger . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 4.02. No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 4.03. Conduct of Business by Parent Pending the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . 39
</TABLE>
-ii-
<PAGE> 5
ARTICLE V
ADDITIONAL AGREEMENTS
<TABLE>
<S> <C> <C>
SECTION 5.01. Proxy Statement/Prospectus; Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 5.02. Company Shareholders Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 5.03. Access to Information; Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 5.04. Consents; Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 5.05. Agreements with Respect to Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 5.06. Indemnification and Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 5.07. Notification of Certain Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 5.08. Further Action/Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 5.09. Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 5.10. Listing of Parent Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 5.11. Conveyance Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 5.12. Accountant's Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 5.13. Pooling Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.01. Conditions to Obligation of Each Party to Effect the Merger . . . . . . . . . . . . . . . . . . . . 44
SECTION 6.02. Additional Conditions to Obligations of Parent and Merger Sub . . . . . . . . . . . . . . . . . . . 45
SECTION 6.03. Additional Conditions to Obligation of the Company . . . . . . . . . . . . . . . . . . . . . . . . . 46
ARTICLE VII
TERMINATION
SECTION 7.01. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 7.02. Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 7.03. Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. Effectiveness of Representations, Warranties and
Agreements; Knowledge, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 8.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 8.03. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 8.04. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 8.05. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
</TABLE>
-iii-
<PAGE> 6
<TABLE>
<S> <C> <C>
SECTION 8.06. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 8.07. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 8.08. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 8.09. Assignment; Merger Sub. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 8.10. Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 8.11. Failure or Indulgence Not Waiver; Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 8.12. Governing Law; Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 8.13. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 8.14. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
</TABLE>
-iv-
<PAGE> 7
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 12, 1997 (this
"Agreement"), among TYCO INTERNATIONAL LTD., a Massachusetts corporation
("Parent"), T5 ACQUISITION CORP., a Georgia corporation and a direct,
wholly-owned subsidiary of Parent ("Merger Sub"), and INBRAND CORPORATION, a
Georgia corporation (the "Company").
WITNESSETH:
WHEREAS, the Boards of Directors of Parent, Merger Sub and the
Company have each determined that it is advisable and in the best interests of
their respective shareholders for Parent to cause Merger Sub to merge with and
into the Company upon the terms and subject to the conditions set forth herein;
WHEREAS, in furtherance of such combination, the Boards of
Directors of Parent, Merger Sub and the Company have each approved the merger
(the "Merger") of Merger Sub with and into the Company in accordance with the
applicable provisions of the Georgia Business Corporation Code (the "GBCC"),
and upon the terms and subject to the conditions set forth herein;
WHEREAS, Parent, Merger Sub and the Company intend, by
approving resolutions authorizing this Agreement, to adopt this Agreement as a
plan of reorganization within the meaning of Section 368 of the Internal
Revenue Code of 1986, as amended (the "Code"), and the regulations promulgated
thereunder;
WHEREAS, Parent, Merger Sub and the Company intend that the
Merger be accounted for as a pooling-of- interests for financial reporting
purposes; and
WHEREAS, pursuant to the Merger, each outstanding share (a
"Share") of the Company's Common Stock, par value $.10 per share (the "Company
Common Stock"), shall be converted into the right to receive the Merger
Consideration (as defined in Section 1.07(b)), upon the terms and subject to
the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained, and intending to be legally
bound hereby, Parent, Merger Sub and the Company hereby agree as follows:
<PAGE> 8
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. (a) Effective Time. At the
Effective Time (as defined in Section 1.02 hereof), and subject to and upon the
terms and conditions of this Agreement and the GBCC, Merger Sub shall be merged
with and into the Company, the separate corporate existence of Merger Sub shall
cease, and the Company shall continue as the surviving corporation. The
Company as the surviving corporation after the Merger is hereinafter sometimes
referred to as the "Surviving Corporation."
(b) Closing. Unless this Agreement shall have been
terminated and the transactions herein contemplated shall have been abandoned
pursuant to Section 7.01 and subject to the satisfaction or waiver of the
conditions set forth in Article VI, the consummation of the Merger will take
place as promptly as practicable (and in any event within two business days)
after satisfaction or waiver of the conditions set forth in Article VI, at the
offices of Kramer, Levin, Naftalis & Frankel, 919 Third Avenue, New York, New
York, unless another date, time or place is agreed to in writing by the parties
hereto.
SECTION 1.02. Effective Time. As promptly as practicable
after the satisfaction or waiver of the conditions set forth in Article VI, the
parties hereto shall cause the Merger to be consummated by filing articles of
merger as contemplated by the GBCC (the "Articles of Merger"), together with
any required related certificates, with the Secretary of State of the State of
Georgia, in such form as required by, and executed in accordance with the
relevant provisions of, the GBCC (the time of such filing being the "Effective
Time").
SECTION 1.03. Effect of the Merger. At the Effective Time,
the effect of the Merger shall be as provided in this Agreement, the Articles
of Merger and the applicable provisions of the GBCC. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time all the
property, rights, privileges, powers and franchises of the Company and Merger
Sub shall vest in the Surviving Corporation, and all debts, liabilities and
duties of the Company and Merger Sub shall become the debts, liabilities and
duties of the Surviving Corporation.
SECTION 1.04. Articles of Incorporation; By-Laws. (a)
Articles of Incorporation. Unless otherwise determined by Parent prior to the
Effective Time, at the Effective Time the Certificate of Incorporation of the
Company, as in effect immediately prior to the Effective Time, shall be the
Articles of Incorporation of the Surviving Corporation until thereafter amended
as provided by the GBCC and such Articles of Incorporation; provided, however,
that Article 2 shall be amended and restated in its entirety to provide that
the capital stock of the Surviving Corporation shall consist of 100 shares of
Common Stock, par value $.01 per share.
(b) By-Laws. The By-Laws of the Company, as in effect
immediately prior to the Effective Time, shall be the By-Laws of the Surviving
Corporation until
-2-
<PAGE> 9
thereafter amended as provided by the GBCC, the Articles of Incorporation of
the Surviving Corporation and such By-Laws.
SECTION 1.05. Directors and Officers. The directors of
Merger Sub immediately prior to the Effective Time shall be the initial
directors of the Surviving Corporation, each to hold office in accordance with
the Certificate of Incorporation and By-Laws of the Surviving Corporation, and
the officers of the Company immediately prior to the Effective Time shall be
the initial officers of the Surviving Corporation, in each case until their
respective successors are duly elected or appointed and qualified.
SECTION 1.06. Effect on Capital Stock. At the Effective
Time, by virtue of the Merger and without any action on the part of the Parent,
Merger Sub, the Company or the holders of any of the following securities:
(a) Conversion of Securities. The Shares issued and
outstanding immediately prior to the Effective Time (excluding any Shares to be
canceled pursuant to Section 1.06(b)) shall be converted, subject to Section
1.06(f), into the right to receive shares of validly issued, fully paid and
nonassessable shares New Tyco Common Stock in the ratio (the "Exchange Ratio")
of .43 a share of New Tyco Common Stock for each such issued and outstanding
Share. "New Tyco Common Stock" means the common shares of ADT Limited, a
Bermuda corporation ("ADT"), par value $.10 per share, outstanding following
the merger (the "ADT Merger") of Limited Apache ("Apache"), a Massachusetts
corporation and a wholly-owned subsidiary of ADT, with and into Parent,
pursuant to the terms of a Merger Agreement, dated March 17, 1997, among ADT,
Apache and Parent (the "ADT Merger Agreement"). The ADT Merger Agreement
provides, among other things, that (i) Apache will be merged with Parent, with
Parent being the surviving company in such merger, (ii) each share of common
stock of Parent, par value $.50 per share ("Parent Common Stock"), will be
exchanged in the ADT Merger for one share of New Tyco Common Stock (the ratio
of such exchange being referred to as the "ADT/Tyco Exchange Ratio"), (iii)
each common share of ADT, par value $.20 per share, outstanding prior to the
ADT Merger, as a result of a reverse stock split to occur immediately prior to
the ADT Merger, will be exchanged for 0.48133 shares of New Tyco Common Stock
(the ratio of such reverse stock split being referred to as the "ADT Reverse
Stock Split Ratio"), and (iv) the name of ADT will changed to Tyco
International Ltd. (ADT, following consummation of the ADT Merger, being
referred to as "New Tyco").
(b) Cancellation. Each Share held in the treasury of the
Company and each Share owned by Parent, Merger Sub or any direct or indirect
wholly owned subsidiary of the Company or Parent immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the
part of the holder thereof, cease to be outstanding, be canceled and retired
without payment of any consideration therefor and cease to exist.
(c) Assumption of Outstanding Stock Options. Each option
outstanding at the Effective Time to purchase shares of Company Common Stock (a
"Stock Option") granted under (i) the Inbrand Corporation Stock Incentive Plan
(the "Company Stock Option Plan"), or (ii) any other stock plan or agreement
of the Company, which by its terms is not extinguished in the Merger, shall be
deemed assumed by Parent and deemed to constitute an
-3-
<PAGE> 10
option to acquire, on the same terms and conditions mutatis mutandis as were
applicable under such Stock Option prior to the Effective Time, the number of
shares of New Tyco Common Stock as the holder of such Stock Option would have
been entitled to receive pursuant to the Merger had such holder exercised such
option in full immediately prior to the Effective Time (not taking into account
whether or not such option was in fact exercisable), at a price per share equal
to (x) the aggregate exercise price for Company Common Stock otherwise
purchasable pursuant to such Stock Option divided by (y) the number of shares
of New Tyco Common Stock deemed purchasable pursuant to such Stock Option;
provided, however, that the number of shares of New Tyco Common Stock that may
be purchased upon exercise of any such Stock Option shall not include any
fractional share and, upon exercise of the Stock Option, a cash payment shall
be made for any fractional share based upon the Closing Price (as hereinafter
defined) of a share of New Tyco Common Stock on the trading day immediately
preceding the date of exercise. "Closing Price" shall mean, on any day, the
last reported sale price of one share of New Tyco Common Stock on the New York
Stock Exchange ("NYSE").
As soon as practicable after the Effective Time, Parent shall
cause to be delivered to each holder of an outstanding Stock Option an
appropriate notice setting forth such holder's rights pursuant thereto, and
such Stock Option shall continue in effect on the same terms and conditions.
Parent shall cause to be taken all corporate action necessary
to reserve for issuance a sufficient number of shares of New Tyco Common Stock
for delivery upon exercise of Stock Options in accordance with this Section
1.06(c). As soon as practicable after the Effective Time, Parent shall cause
the New Tyco Common Stock subject to the Stock Options to be registered under
the Securities Act of 1933, as amended and the SEC's rules thereunder (the
"Securities Act") pursuant to a registration statement on Form S-8, as the case
may be (or any successor or other appropriate forms), and shall use its best
efforts to cause the effectiveness of such registration statement or
registration statements (and the current status of the prospectus or
prospectuses contained therein) to be maintained for so long as the Stock
Options remain outstanding.
(d) Capital Stock of Merger Sub. Each share of common
stock, $.01 par value, of Merger Sub issued and outstanding immediately prior
to the Effective Time shall be converted into and exchanged for one validly
issued, fully paid and nonassessable share of common stock, $0.01 par value, of
the Surviving Corporation.
(e) Adjustments to Exchange Ratio. The Exchange Ratio
shall be appropriately adjusted to reflect fully the effect of any stock split,
reverse split, stock dividend (including any dividend or distribution of
securities convertible into Parent Common Stock), reorganization,
recapitalization or other like change with respect to Parent Common Stock
occurring after the date hereof and prior to the consummation of the ADT Merger
and any such change with respect to the New Tyco Common Stock occurring after
the consummation of the ADT Merger and prior to the Effective Time or any
change in the ADT/Tyco Exchange Ratio or the ADT Reverse Stock Split Ratio.
-4-
<PAGE> 11
(f) Fractional Shares. No certificates or scrip
representing less than one Parent Share shall be issued upon the surrender for
exchange of a certificate or certificates which immediately prior to the
Effective Time represented outstanding Shares (the "Certificates"). In lieu of
any such fractional share, each holder of Shares who would otherwise have been
entitled to a fraction of a share of New Tyco Common Stock upon surrender of
Certificates for exchange shall be paid upon such surrender cash (without
interest) in an amount equal to such fraction multiplied by the closing price
per share of New Tyco Common Stock on the NYSE on the date of the Effective
Time.
SECTION 1.07. Exchange of Certificates. (a) Exchange Agent.
Parent shall cause to be supplied, to or for such bank or trust company as
shall be mutually designated by the Company and Parent (the "Exchange Agent"),
in trust for the benefit of the holders of Company Common Stock, for exchange
in accordance with this Section 1.07, through the Exchange Agent, certificates
evidencing the shares of New Tyco Common Stock issuable pursuant to Section
1.06 in exchange for outstanding Shares.
(b) Exchange Procedures. As soon as reasonably
practicable after the Effective Time, Parent will instruct the Exchange Agent
to mail to each holder of record of Certificates (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Exchange Agent and shall be in such form and have such
other provisions as Parent may reasonably specify), and (ii) instructions to
effect the surrender of the Certificates in exchange for the certificates
evidencing shares of New Tyco Common Stock. Upon surrender of a Certificate
for cancellation to the Exchange Agent together with such letter of
transmittal, duly executed, and such other customary documents as may be
required pursuant to such instructions, the holder of such Certificate shall
be entitled to receive in exchange therefor (A) certificates evidencing that
number of whole shares of New Tyco Common Stock which such holder has the right
to receive in accordance with the Exchange Ratio in respect of the Shares
formerly evidenced by such Certificate, (B) any dividends or other
distributions to which such holder is entitled pursuant to Section 1.07(c), and
(C) cash in respect of fractional shares as provided in Section 1.06(f) (the
shares of New Tyco Common Stock and cash being, collectively, the "Merger
Consideration"), and the Certificate so surrendered shall forthwith be
canceled. In the event of a transfer of ownership of Shares which is not
registered in the transfer records of the Company as of the Effective Time,
shares of New Tyco Common Stock, dividends, distributions, and cash in respect
of fractional shares, may be issued and paid in accordance with this Article I
to a transferee if the Certificate evidencing such Shares is presented to the
Exchange Agent, accompanied by all documents required to evidence and effect
such transfer pursuant to this Section 1.07(b) and by evidence that any
applicable stock transfer taxes have been paid. Until so surrendered, each
outstanding Certificate that, prior to the Effective Time, represented Shares
of the Company Common Stock will be deemed from and after the Effective Time,
for all corporate purposes, other than the payment of dividends and subject to
Section 1.06(f), to evidence the ownership of the number of full shares of New
Tyco Common Stock, and cash in respect of fractional shares, into which such
shares of the Company Common Stock shall have been so converted.
-5-
<PAGE> 12
(c) Distributions With Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the Effective Time with
respect to shares of New Tyco Common Stock with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate
with respect to the shares of New Tyco Common Stock they are entitled to
receive until the holder of such Certificate shall surrender such Certificate.
Subject to applicable law, following surrender of any such Certificate, there
shall be paid to the record holder of the certificates representing whole
shares of New Tyco Common Stock issued in exchange therefor, without interest,
at the time of such surrender, the amount of dividends or other distributions
with a record date after the Effective Time theretofore paid with respect to
such whole shares of New Tyco Common Stock.
(d) Transfers of Ownership. If any certificate for
shares of New Tyco Common Stock is to be issued in a name other than that in
which the Certificate surrendered in exchange therefor is registered, it will
be a condition of the issuance thereof that the Certificate so surrendered will
be properly endorsed and otherwise in proper form for transfer and that the
person requesting such exchange will have paid to New Tyco or any agent
designated by it any transfer or other taxes required by reason of the issuance
of a certificate for shares of New Tyco Common Stock in any name other than
that of the registered holder of the certificate surrendered, or established to
the satisfaction of New Tyco or any agent designated by it that such tax has
been paid or is not payable.
(e) No Liability. Neither Parent, Merger Sub, the
Company nor New Tyco shall be liable to any holder of Company Common Stock for
any Merger Consideration delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
(f) Withholding Rights. New Tyco or the Exchange Agent
shall be entitled to deduct and withhold from the Merger Consideration
otherwise payable pursuant to this Agreement to any holder of Company Common
Stock such amounts as New Tyco or the Exchange Agent is required to deduct and
withhold with respect to the making of such payment under the Code, or any
provision of state, local or foreign tax law. To the extent that amounts are
so withheld by New Tyco or the Exchange Agent, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
the Shares in respect of which such deduction and withholding was made by New
Tyco or the Exchange Agent.
SECTION 1.08. Stock Transfer Books. At the Effective Time,
the stock transfer books of the Company shall be closed, and there shall be no
further registration of transfers of the Company Common Stock thereafter on the
records of the Company.
SECTION 1.09. No Further Ownership Rights in Company Common
Stock. The Merger Consideration delivered upon the surrender for exchange of
Shares in accordance with the terms hereof shall be deemed to have been issued
in full satisfaction of all rights pertaining to such Shares, and there shall
be no further registration of transfers on the records of the Surviving
Corporation of Shares which were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates are presented to the
-6-
<PAGE> 13
Surviving Corporation for any reason, they shall be canceled and exchanged as
provided in this Article I.
SECTION 1.10. Lost, Stolen or Destroyed Certificates. In the
event any Certificates shall have been lost, stolen or destroyed, the Exchange
Agent shall issue in exchange for such lost, stolen or destroyed Certificates,
upon the making of an affidavit of that fact by the holder thereof, such shares
of New Tyco Common Stock as may be required pursuant to Section 1.06; provided,
however, that Parent may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
Certificates to deliver a bond in such sum as it may reasonably direct as
indemnity against any claim that may be made against Parent or the Exchange
Agent with respect to the Certificates alleged to have been lost, stolen or
destroyed.
SECTION 1.11. Tax and Accounting Consequences. It is
intended by the parties hereto that the Merger shall (i) constitute a
reorganization within the meaning of Section 368 of the Code and (ii) subject
to applicable accounting standards, qualify for accounting treatment as a
pooling of interests. The parties hereto hereby adopt this Agreement as a
"plan of reorganization" within the meaning of Sections 1.368-2(g) and
1.368-3(a) of the United States Treasury Regulations.
SECTION 1.12. Taking of Necessary Action; Further Action.
Each of Parent, Merger Sub and the Company will take all such reasonable and
lawful action as may be necessary or appropriate in order to effectuate the
Merger in accordance with this Agreement as promptly as possible. If, at any
time after the Effective Time, any such further action is necessary or
desirable to carry out the purposes of this Agreement and to vest the Surviving
Corporation with full right, title and possession to all assets, property,
rights, privileges, powers and franchises of the Company and Merger Sub, the
officers and directors of the Company and Merger Sub immediately prior to the
Effective Time are fully authorized in the name of their respective
corporations or otherwise to take, and will take, all such lawful and necessary
action.
SECTION 1.13. Material Adverse Effect. When used in
connection with the Company or any of its subsidiaries, Parent or any of its
subsidiaries or New Tyco or any of its subsidiaries, as the case may be, the
term "Material Adverse Effect" means any change, effect or circumstance that,
individually or when taken together with all other such changes, effects or
circumstances that have occurred prior to the date of determination of the
occurrence of the Material Adverse Effect, is or is reasonably likely to be
materially adverse to the business, assets (including intangible assets),
financial condition or results of operations of the Company and its
subsidiaries, Parent and its subsidiaries, or New Tyco and its subsidiaries as
the case may be, in each case taken as a whole.
SECTION 1.14 Termination of the ADT Merger. In the event
that the ADT Merger Agreement is terminated such that the consummation of the
ADT Merger shall cease to be a condition to the consummation of the Merger as
provided in Section 6.01(h), all references in this Agreement to ADT or New
Tyco (other than in the second and third sentences of Section 1.06(a)) shall be
deemed references to Parent and all references to New
-7-
<PAGE> 14
Tyco Common Stock (other than in the second and third sentences of Section
1.06(a)) shall be deemed references to Parent Common Stock.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and
Merger Sub that, except as set forth in the written disclosure schedule
previously delivered (or, to the extent set forth below, to be delivered) by
the Company to Parent (the "Company Disclosure Schedule"):
SECTION 2.01. Organization and Qualification; Subsidiaries.
Each of the Company and each of its subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite corporate power and
authority and is in possession of all franchises, grants, authorizations,
licenses, permits, easements, consents, certificates, approvals and orders
("Approvals") necessary to own, lease and operate the properties it purports to
own, operate or lease and to carry on its business as it is now being
conducted, except where the failure to be so organized, existing and in good
standing or to have such power, authority and Approvals could not reasonably be
expected to have a Material Adverse Effect. Each of the Company and its
subsidiaries is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
its properties owned, leased or operated by it or the nature of its activities
makes such qualification or licensing necessary, except for such failures to be
so duly qualified or licensed and in good standing that could not reasonably be
expected to have a Material Adverse Effect. A true and complete list of all of
the Company's subsidiaries, together with the jurisdiction of incorporation of
each subsidiary and the percentage of each subsidiary's outstanding capital
stock owned by the Company or another subsidiary, is set forth in Section 2.01
of the Company Disclosure Schedule. Except as set forth in Section 2.01 of the
Company Disclosure Schedule or the Company SEC Reports (as defined below), the
Company does not directly or indirectly own any equity or similar interest in,
or any interest convertible into or exchangeable or exercisable for, any equity
or similar interest in, any corporation, partnership, joint venture or other
business association or entity, with respect to which interest the Company has
invested or is required to invest $100,000 or more, excluding securities in any
publicly traded company held for investment by the Company and comprising less
than five percent of the outstanding stock of such company.
SECTION 2.02. Articles of Incorporation and By-Laws. The
Company has heretofore furnished to Parent a complete and correct copy of its
Articles of Incorporation and By-Laws as most recently restated and
subsequently amended to date, and has furnished or made available to Parent the
Articles of Incorporation and By-Laws (or equivalent organizational documents)
of each of its subsidiaries (the "Subsidiary Documents"). Such Articles of
Incorporation, By- Laws and Subsidiary Documents are in full force and effect.
-8-
<PAGE> 15
Neither the Company nor any of its subsidiaries is in violation of any of the
provisions of its Certificate of Incorporation or By-Laws or Subsidiary
Documents, except for immaterial violations of the Subsidiary Documents which
may exist.
SECTION 2.03. Capitalization. The authorized capital stock
of the Company consists of 49,000,000 shares of Company Common Stock and
1,000,000 shares of Preferred Stock, par value $.01 (the "Company Preferred
Stock"). As of May 1, 1997, (i) 11,766,323 shares of Company Common Stock were
issued and outstanding, all of which are validly issued, fully paid and
nonassessable, and no such shares were held in treasury, (ii) no shares of
Company Preferred Stock were outstanding or held in treasury, (iii) no shares
of Company Common Stock or Company Preferred Stock were held by subsidiaries of
the Company, and (iv) 1,750,000 shares of Company Common Stock were reserved
for existing and future grants pursuant to the Company Stock Option Plan. No
material change in such capitalization has occurred between May 1, 1997 and the
date hereof. Except as set forth in Section 2.01, this Section 2.03 or Section
2.11 or in Section 2.03 or Section 2.11 of the Company Disclosure Schedule or
the Company SEC Reports, there are no options, warrants or other rights,
agreements, arrangements or commitments of any character relating to the issued
or unissued capital stock of the Company or any of its subsidiaries or
obligating the Company or any of its subsidiaries to issue or sell any shares
of capital stock of, or other equity interests in, the Company or any of its
subsidiaries. All shares of Company Common Stock subject to issuance as
aforesaid, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, shall be duly authorized,
validly issued, fully paid and nonassessable. Except as disclosed in Section
2.03 of the Company Disclosure Schedule or the Company SEC Reports, there are
no obligations, contingent or otherwise, of the Company or any of its
subsidiaries to repurchase, redeem or otherwise acquire any shares of Company
Common Stock or the capital stock of any subsidiary or to provide funds to or
make any investment (in the form of a loan, capital contribution or otherwise)
in any such subsidiary or any other entity other than guarantees of bank
obligations of subsidiaries entered into in the ordinary course of business.
Except as set forth in Sections 2.01 and 2.03 of the Company Disclosure
Schedule, all of the outstanding shares of capital stock (other than directors'
qualifying shares) of each of the Company's subsidiaries is duly authorized,
validly issued, fully paid and nonassessable, and all such shares (other than
directors' qualifying shares and a de minimis number of shares owned by
employees of such subsidiaries) are owned by the Company or another subsidiary
free and clear of all security interests, liens, claims, pledges, agreements,
limitations in the Company's voting rights, charges or other encumbrances of
any nature whatsoever.
SECTION 2.04. Authority Relative to this Agreement. The
Company has all necessary corporate power and authority to execute and deliver
this Agreement and to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action, and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or to consummate the transactions so
contemplated (other than the adoption of this Agreement by the holders of at
least a majority of the outstanding shares of Company Common Stock entitled to
vote in accordance with the GBCC and the Company's Articles of Incorporation
and By-Laws). The Board of Directors
-9-
<PAGE> 16
of the Company has determined that it is advisable and in the best interest of
the Company's shareholders for the Company to enter into this Agreement and to
consummate upon the terms and subject to the conditions of this Agreement.
This Agreement has been duly and validly executed and delivered by the Company
and, assuming the due authorization, execution and delivery by Parent and
Merger Sub, as applicable, constitutes a legal, valid and binding obligation of
the Company.
SECTION 2.05. No Conflict; Required Filings and Consents.
(a) Section 2.05(a) of the Company Disclosure Schedule includes a list of (i)
all loan agreements, indentures, mortgages, pledges, conditional sale or title
retention agreements, security agreements, equipment obligations, guaranties,
standby letters of credit, equipment leases or lease purchase agreements, each
in an amount equal to or exceeding $500,000, to which the Company or any of its
subsidiaries is a party or by which any of them is bound; (ii) all contracts,
agreements, commitments or other understandings or arrangements to which the
Company or any of its subsidiaries is a party or by which any of them or any of
their respective properties or assets are bound or affected, but excluding
contracts, agreements, commitments or other understandings or arrangements
entered into in the ordinary course of business and involving, in each case,
payments or receipts by the Company or any of its subsidiaries of less than
$250,000 in any single instance but not more than $1,000,000 in the aggregate;
and (iii) all agreements which, as of the date hereof, are required to be filed
as "material contracts" with the Securities and Exchange Commission ("SEC")
pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, and the SEC's rules thereunder (the "Exchange Act").
(b) Except as set forth in Section 2.05(b) of the Company
Disclosure Schedule, the execution and delivery of this Agreement by the
Company does not, and the performance of this Agreement by the Company will
not, (i) conflict with or violate the Certificate of Incorporation or By-Laws
of the Company, (ii) conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to the Company or any of its subsidiaries or by
which its or any of their respective properties is bound or affected, or (iii)
result in any breach of or constitute a default (or an event that with notice
or lapse of time or both would become a default), or impair the Company's or
any of its subsidiaries' rights or alter the rights or obligations of any third
party under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or
encumbrance on any of the properties or assets of the Company or any of its
subsidiaries pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries or its or any of their respective properties
is bound or affected, except in any such case for any such conflicts,
violations, breaches, defaults or other occurrences that would not reasonably
be expected to have a Material Adverse Effect.
(c) The execution and delivery of this Agreement by the
Company does not, and the performance of this Agreement by the Company will
not, require any consent, approval, authorization or permit of, or filing with
or notification to, any governmental or regulatory authority, domestic or
foreign, except (i) for applicable requirements, if any, of the Securities Act,
the Exchange Act, state securities laws ("Blue Sky Laws"), the pre-
-10-
<PAGE> 17
merger notification requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations thereunder
(the "HSR Act"), filings and consents as may be required under any
environmental, health or safety law or regulation pertaining to any
notification, disclosure or required approval triggered by the Merger or the
transactions contemplated by this Agreement, and the filing and recordation of
appropriate merger or other documents as required by the GBCC, and (ii) where
the failure to obtain such consents, approvals, authorizations or permits, or
to make such filings or notifications, would not prevent or delay consummation
of the Merger, or otherwise prevent or delay the Company from performing its
obligations under this Agreement, or would not otherwise reasonably be expected
to have a Material Adverse Effect.
SECTION 2.06. Compliance; Permits. (a) Except as disclosed
in Section 2.06 of the Company Disclosure Schedule, neither the Company nor any
of its subsidiaries is in conflict with, or in default or violation of, (i) any
law, rule, regulation, order, judgment or decree applicable to the Company or
any of its subsidiaries or by which its or any of their respective properties
is bound or affected or (ii) any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries or its or any of their respective properties
is bound or affected, except for any such conflicts, defaults or violations
which would not reasonably be expected to have a Material Adverse Effect.
(b) Except as disclosed in Section 2.06 of the Company
Disclosure Schedule, the Company and its subsidiaries hold all permits,
licenses, easements, variances, exemptions, consents, certificates, orders and
approvals from governmental authorities which are material to the operation of
the business of the Company and its subsidiaries taken as a whole as it is now
being conducted (collectively, the "Company Permits"). The Company and its
subsidiaries are in compliance with the terms of the Company Permits, except
where the failure to so comply would not reasonably be expected to have a
Material Adverse Effect.
SECTION 2.07. SEC Filings; Financial Statements. (a) The
Company has filed all forms, reports and documents required to be filed with
the SEC since July 1, 1993 and has made available to Parent (i) its Annual
Reports on Form 10-K for the fiscal years ended July 2, 1994, July 1, 1995 and
June 29, 1996, (ii) its Quarterly Report on Form 10-Q for the quarterly periods
ended September 28, 1996 and December 28, 1996, and, (iii) all proxy statements
relating to the Company's meetings of shareholders (whether annual or special)
held since July 1, 1993, (iv) all other reports or registration statements
(other than Reports on Form 10-Q not referred to in clause (ii) above) filed by
the Company with the SEC since July 1, 1993, and (v) all amendments and
supplements to all such reports and registration statements filed by the
Company with the SEC (collectively, the "Company SEC Reports"). Except as
disclosed in Section 2.07 of the Company Disclosure Schedule, the Company SEC
Reports (i) were prepared in all material respects in accordance with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
(ii) did not at the time they were filed (or if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such filing)
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
-11-
<PAGE> 18
misleading. None of the Company's subsidiaries is required to file any forms,
reports or other documents with the SEC.
(b) Each of the consolidated financial statements
(including, in each case, any related notes thereto) contained in the Company
SEC Reports and the Company's 1996 Annual Report to Shareholders was prepared
in accordance with generally accepted accounting principles ("GAAP") applied on
a consistent basis throughout the periods involved (except as may be indicated
in the notes thereto), and each fairly in all material respects presents the
consolidated financial position of the Company and its subsidiaries as at the
respective dates thereof and the consolidated results of its operations and
cash flows for the periods indicated, except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be material in amount. The
monthly consolidated income statements for January 1997 through March 1997
furnished by the Company to Parent was prepared in a manner consistent with the
consolidated financial statements contained in the Company SEC Reports, and
fairly in all material respects presents the consolidated results of its
operations for the period indicated, except that such statement is subject to
normal and recurring quarterly and year-end adjustments, which were not or are
not expected to be material in amount.
SECTION 2.08. Absence of Certain Changes or Events. Except
as set forth in Section 2.08 of the Company Disclosure Schedule or the Company
SEC Reports, since June 28, 1996, the Company has conducted its business in the
ordinary course and there has not occurred: (i) any Material Adverse Effect;
(ii) any amendments or changes in the Articles of Incorporation or By-laws of
the Company; (iii) any damage to, destruction or loss of any asset of the
Company (whether or not covered by insurance) that could reasonably be expected
to have a Material Adverse Effect; (iv) any material change by the Company in
its accounting methods, principles or practices; (v) any material revaluation
by the Company of any of its assets, including, without limitation, writing
down the value of inventory or writing off notes or accounts receivable other
than in the ordinary course of business; (vi) any sale of a material amount of
property of the Company, except in the ordinary course of business, or (vii)
any other action or event that would have required the consent of Parent
pursuant to Section 4.01 had such action or event occurred after the date of
this Agreement.
SECTION 2.09. No Undisclosed Liabilities. Except as set
forth in Section 2.09 of the Company Disclosure Schedule or the Company SEC
Reports, neither the Company nor any of its subsidiaries has any liabilities
(absolute, accrued, contingent or otherwise), except liabilities (a) in the
aggregate adequately provided for in the Company's audited balance sheet
(including any related notes thereto) for the fiscal year ended June 29, 1996
included in the Company's 1996 Annual Report to Shareholders (the "1996 Balance
Sheet"), (b) incurred in the ordinary course of business and not required under
GAAP to be reflected on the 1996 Balance Sheet, (c) incurred since June 29,
1996 in the ordinary course of business consistent with past practice, (d)
incurred in connection with this Agreement, or (e) which would not reasonably
be expected to have a Material Adverse Effect.
SECTION 2.10. Absence of Litigation. Except as set forth in
Section 2.10 of the Company Disclosure Schedule or the Company SEC Reports,
there are no claims, actions, suits, proceedings or investigations pending or,
to the knowledge of the Company,
-12-
<PAGE> 19
overtly threatened against the Company or any of its subsidiaries, or any
properties or rights of the Company or any of its subsidiaries, before any
court, arbitrator or administrative, governmental or regulatory authority or
body, domestic or foreign, that would reasonably be expected to have a Material
Adverse Effect.
SECTION 2.11. Employee Benefit Plans; Employment Agreements.
(a) Section 2.11(a) of the Company Disclosure Schedule lists all employee
pension benefit plans (as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), all employee welfare
benefit plans (as defined in Section 3(1) of ERISA, and all other bonus, stock
option, stock purchase, incentive, deferred compensation, supplemental
retirement, severance and other similar fringe or employee benefit plans,
programs or arrangements, and any employment, executive compensation or
severance agreements, written or otherwise, as amended, modified or
supplemented, for the benefit of, or relating to, any former or current
employee, officer or consultant (or any of their beneficiaries) of the Company
or any other entity (whether or not incorporated) which is a member of a
controlled group including the Company or which is under common control with
the Company (an "ERISA Affiliate") within the meaning of Sections 414(b), (c),
(m) or (o) of the Code or Section 4001(a) (14) or (b) of ERISA, or any
subsidiary of the Company, as well as each plan with respect to which the
Company or an ERISA Affiliate could incur liability under Title IV of ERISA or
Section 412 of the Code (together for the purposes of this Section 2.11, the
"Employee Plans"). Prior to the date of this Agreement, the Company has
provided to Parent copies of (i) each such written Employee Plan (or a written
description of any Employee Plan which is not written) and all related trust
agreements, insurance and other contracts (including policies), summary plan
descriptions, summaries of material modifications and communications
distributed to plan participants, (ii) the three most recent annual reports on
Form 5500 series, with accompanying schedules and attachments, filed with
respect to each Employee Plan required to make such a filing, (iii) the most
recent actuarial valuation for each Employee Plan subject to Title IV of ERISA,
(iv) the latest reports which have been filed with the Department of Labor with
respect to each Employee Plan required to make such filing and (v) the most
recent favorable determination letters issued for each Employee Plan and
related trust which is subject to Parts 1, 2 and 4 of the Subtitle B of Title I
of ERISA (and, if an application for such determination is pending, a copy of
the application for such determination). For purposes of this Section 2.11,
the term "material," when used with respect to (i) any Employee Plan, shall
mean that the Company or an ERISA Affiliate has incurred or may incur
obligations in an amount exceeding $100,000 with respect to such Employee Plan,
and (ii) any liability, obligation, breach or non-compliance, shall mean that
the Company or an ERISA Affiliate has incurred or may incur obligations in an
amount exceeding $50,000, with respect to any one such or series of related
liabilities, obligations, breaches, defaults, violations or instances of
non-compliance.
(b) Except as set forth in Section 2.11(b) of the Company
Disclosure Schedule, (i) none of the Employee Plans promises or provides
retiree medical or other retiree welfare benefits to any person, and none of
the Employee Plans is a "multiemployer plan" as such term is defined in Section
3(37) of ERISA; (ii) no party in interest or disqualified person (as defined in
Section 3(14) of ERISA and Section 4975 of the Code) has at any time engaged in
a transaction with respect to any Employee Plan which could subject the Company
or any ERISA Affiliate, directly or indirectly, to a tax, penalty or other
-13-
<PAGE> 20
material liability for prohibited transactions under ERISA or Section 4975 of
the Code; (iii) no fiduciary of any Employee Plan has breached any of the
responsibilities or obligations imposed upon fiduciaries under Title I of
ERISA, which breach could result in any material liability to the Company or
any ERISA Affiliate; (iv) all Employee Plans have been established and
maintained substantially in accordance with their terms and have operated in
compliance in all material respects with the requirements prescribed by any and
all statutes (including ERISA and the Code), orders, or governmental rules and
regulations currently in effect with respect thereto (including all applicable
requirements for notification to participants or the Department of Labor,
Internal Revenue Service (the "IRS") or Secretary of the Treasury), and may by
their terms be amended and/or terminated at any time subject to applicable law,
and the Company and each of its subsidiaries have performed all material
obligations required to be performed by them under, are not in any material
respect in default under or violation of, and have no knowledge of any default
or violation by any other party to, any of the Employee Plans; (v) each
Employee Plan which is subject to Parts 1, 2 and 4 of Subtitle B of ERISA is
the subject of a favorable determination letter from the IRS, and nothing has
occurred which may reasonably be expected to impair such determination; (vi)
all contributions required to be made with respect to any Employee Plan
pursuant to Section 412 of the Code, or the terms of the Employee Plan or any
collective bargaining agreement, have been made on or before their due dates;
(vii) with respect to each Employee Plan, no "reportable event" within the
meaning of Section 4043 of ERISA (excluding any such event for which the 30 day
notice requirement has been waived under the regulations to Section 4043 of
ERISA) or any event described in Section 4062, 4063 or 4041 of ERISA has
occurred for which there is any material outstanding liability to the Company
or any ERISA Affiliate nor would the consummation of the transaction
contemplated hereby (including the execution of this agreement) constitute a
reportable event for which the 30-day requirement has not been waived; and
(viii) neither the Company nor any ERISA Affiliate has incurred or reasonably
expects to incur any liability under Title IV of ERISA (other than liability
for premium payments to the Pension Benefit Guaranty Corporation (the "PBGC")
arising in the ordinary course).
(c) Section 2.11(c) of the Company Disclosure Schedule
sets forth a true and complete list of each current or former employee, officer
or director of the Company or any of its subsidiaries who holds (i) any option
to purchase Company Common Stock as of the date hereof, together with the
number of shares of Company Common Stock subject to such option, the option
price of such option (to the extent determined as of the date hereof), whether
such option is intended to qualify as an incentive stock option within the
meaning of Section 422(b) of the Code (an "ISO"), and the expiration date of
such option; (ii) any shares of Company Common Stock that are restricted; and
(iii) any other right, directly or indirectly, to receive Company Common Stock,
together with the number of shares of Company Common Stock subject to such
right. Section 2.11(c) of the Company Disclosure Schedule also sets forth the
total number of any such ISOs and any such nonqualified options and other such
rights.
(d) Section 2.11(d) of the Company Disclosure Schedule
sets forth a true and complete list of (i) all employment agreements with
officers of the Company or any of its subsidiaries; (ii) all agreements with
consultants who are individuals obligating the Company or any of its
subsidiaries to make annual cash payments in an amount exceeding
-14-
<PAGE> 21
$50,000; (iii) all agreements with respect to the services of independent
contractors or leased employees whether or not they participate in any of the
Employee Plans; (iv) all officers of the Company or any of its subsidiaries who
have executed a non-competition agreement with the Company or any of its
subsidiaries; (v) all severance agreements, programs and policies of the
Company or any of its subsidiaries with or relating to its employees, in each
case with outstanding commitments exceeding $100,000, excluding programs and
policies required to be maintained by law; and (v) all plans, programs,
agreements and other arrangements of Company which contain change in control
provisions.
(e) Except as set forth in Section 2.11(e) of the Company
Disclosure Schedule, no employee of the Company or any of its subsidiaries has
participated in any employee pension benefit plans (as defined in Section 3(2)
of ERISA) maintained by or on behalf of the Company. The PBGC has not
instituted proceedings to terminate any Employee Benefit Plan that is subject
to Title IV of ERISA (each, a "Defined Benefit Plan"). The Defined Benefit
Plans have no accumulated or waived funding deficiencies within the meaning of
Section 412 of the Code nor have any extensions of any amortization period
within the meaning of Section 412 of the Code or 302 of ERISA been applied for
with respect thereto. The present value of the benefit liabilities (within the
meaning of Section 4041 of ERISA) of the Defined Benefit Plans, determined on a
termination basis using actuarial assumptions that would be used by the PBGC
does not exceed by more than $1,000,000 the value of the Plans' assets. All
applicable premiums required to be paid to the PBGC with respect to the Defined
Benefit Plans have been paid. No facts or circumstances exist with respect to
any Defined Benefit Plan which would give rise to a lien on the assets of the
Company under Section 4068 of ERISA or otherwise. All the assets of the
Defined Benefit Plans are readily marketable securities or insurance contracts.
(f) Except as provided in Schedule 2.11(f) of the Company
Disclosure Schedule, (i) the Company has never maintained an employee stock
ownership plan (within the meaning of Section 4975(e)(7) of the Code) or any
other Employee Plan that invests in Company stock; (ii) the Company has not
proposed nor agreed to any increase in benefits under any Employee Plan (or the
creation of new benefits) or change in employee coverage which would increase
the expense of maintaining any Employee Plan; (iii) the consummation of the
transactions contemplated by this Agreement will not result in an increase in
the amount of compensation or benefits or accelerate the vesting or timing of
payment of any benefits or compensation payable in respect of any employee;
(iv) no person will be entitled to any severance benefits under the terms of
any Employee Plan solely by reason of the consummation of this transaction
contemplated by this Agreement. All actions required to be taken by a
fiduciary of any Employee Plan in order to effectuate the transaction
contemplated by this Agreement shall comply with the terms of such Plan, ERISA
and other applicable laws. All actions required to be taken by a trustee of
any Employee Plan that owns Company stock shall have been duly authorized by
the appropriate fiduciaries of such Plan, and shall comply with the terms of
such Plan, ERISA and other applicable laws.
(g) Each Employee Plan covering non-U.S. employees (an
"International Plan") has been maintained in substantial compliance with its
terms and with the requirements prescribed by any and all applicable Laws
(including any special provisions relating to registered or qualified plans
where such International Plan was intended to so
-15-
<PAGE> 22
qualify) and has been maintained in good standing with applicable regulatory
authorities. The fair market value of the assets of each funded International
Plan (or the liability of each funded International Plan funded through
insurance) is sufficient to procure or provide for the benefits accrued
thereunder through the Closing Date according to the actuarial assumptions and
valuations most recently used to determine employer contributions to the
International Plan.
(h) The Company has fiduciary liability insurance of at
least $1,000,000 in effect covering the fiduciaries of the Employee Plans
(including the Company) with respect to whom the Company may have liability.
SECTION 2.12. Labor Matters. Except as set forth in Section
2.12 of the Company Disclosure Schedule or the Company SEC Reports, (i) there
are no controversies pending or, to the knowledge of the Company or any of its
subsidiaries, threatened, between the Company or any of its subsidiaries and
any of their respective employees, which controversies have had, or would
reasonably be expected to have, a Material Adverse Effect; (ii) neither the
Company nor any of its subsidiaries is a party to any material collective
bargaining agreement or other labor union contract applicable to persons
employed by the Company or its subsidiaries, nor does the Company or any of its
subsidiaries know of any activities or proceedings of any labor union to
organize any such employees; and (iii) neither the Company nor any of its
subsidiaries has any knowledge of any strikes, slowdowns, work stoppages,
lockouts, or threats thereof, by or with respect to any employees of the
Company or any of its subsidiaries which would reasonably be expected to have a
Material Adverse Effect.
SECTION 2.13. Registration Statement; Proxy
Statement/Prospectus. Subject to the accuracy of the representations of Parent
in Section 3.13, the information supplied by the Company for inclusion in the
Registration Statement (as defined in Section 3.13) shall not at the time the
Registration Statement is declared effective by the SEC contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. The
information supplied by the Company for inclusion in the proxy
statement/prospectus to be sent to the shareholders of the Company in
connection with the meeting of the shareholders of the Company to consider the
Merger (the "Company Shareholders Meeting") (such proxy statement/prospectus as
amended or supplemented is referred to herein as the "Proxy
Statement/Prospectus") will not, on the date the Proxy Statement/Prospectus (or
any amendment thereof or supplement thereto) is first mailed to shareholders,
at the time of the Company Shareholders Meeting, or at the Effective Time,
contain any statement which, at such time and in light of the circumstances
under which it shall be made, is false or misleading with respect to any
material fact, or shall omit to state any material fact necessary in order to
make the statements made therein not false or misleading; or omit to state any
material fact necessary to correct any statement in any earlier communication
with respect to the solicitation of proxies for the Company Shareholders
Meeting which has become false or misleading. If at any time prior to the
Effective Time any event relating to the Company or any of its respective
affiliates, officers or directors should be discovered by the Company which
should be set forth in an amendment to the Registration Statement or a
supplement to the Proxy Statement/Prospectus, the
-16-
<PAGE> 23
Company shall promptly inform Parent and Merger Sub. The Proxy
Statement/Prospectus shall comply in all material respects with the
requirements of the Securities Act, the Exchange Act and the rules and
regulations thereunder. Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to any information supplied by Parent
or Merger Sub which is contained or incorporated by reference in, or furnished
in connection with the preparation of, the Registration Statement or the Proxy
Statement/Prospectus.
SECTION 2.14. Restrictions on Business Activities. Except
for this Agreement or as set forth in Section 2.14 of the Company Disclosure
Schedule or the Company SEC Reports, to the best of the Company's knowledge,
there is no agreement, judgement, injunction, order or decree binding upon the
Company or any of its subsidiaries which has or would reasonably be expected to
have the effect of prohibiting or impairing any business practice of the
Company or any of its subsidiaries, acquisition of property by the Company or
any of its subsidiaries or the conduct of business by the Company or any of its
subsidiaries as currently conducted or as proposed to be conducted by the
Company, except for any prohibition or impairment as would not reasonably be
expected to have a Material Adverse Effect.
SECTION 2.15. Title to Property. Except as set forth in
Section 2.15 of the Company Disclosure Schedule, the Company and each of its
subsidiaries have good and defensible title to all of their properties and
assets, free and clear of all liens, charges and encumbrances, except liens for
taxes not yet due and payable and such liens or other imperfections of title,
if any, as do not materially detract from the value of or interfere with the
present use of the property affected thereby or which could not reasonably be
expected to have a Material Adverse Effect; and, to the knowledge of the
Company, all leases pursuant to which the Company or any of its subsidiaries
lease from others material amounts of real or personal property, are in good
standing, valid and effective in accordance with their respective terms, and
there is not, to the knowledge of the Company, under any of such leases, any
existing material default or event of default (or event which with notice or
lapse of time, or both, would constitute a material default), except where the
lack of such good standing, validity and effectiveness or the existence of such
default or event of default could not reasonably be expected to have a Material
Adverse Effect.
SECTION 2.16. Taxes. (a) For purposes of this Agreement,
"Tax" or "Taxes" shall mean taxes, fees, levies, duties, tariffs, imposts, and
governmental impositions or charges of any kind in the nature of (or similar
to) taxes, payable to any federal, state, local or foreign taxing authority,
including (without limitation) (i) income, franchise, profits, gross receipts,
ad valorem, net worth, value added, sales, use, service, real or personal
property, special assessments, capital stock, license, payroll, withholding,
employment, social security, workers' compensation, unemployment compensation,
utility, severance, production, excise, stamp, occupation, premiums, windfall
profits, transfer and gains taxes, and (ii) interest, penalties, additional
taxes and additions to tax imposed with respect thereto; and "Tax Returns"
shall mean returns, reports, and information statements with respect to Taxes
required to be filed with the IRS or any other taxing authority, domestic or
foreign, including, without limitation, consolidated, combined and unitary tax
returns (including returns required in connection with any Employee Plan).
-17-
<PAGE> 24
(b) The Company on behalf of itself and all of its
subsidiaries hereby represents that, other than as disclosed in Section 2.16(b)
of the Company Disclosure Schedule or the Company SEC Reports: The Company and
its subsidiaries have timely and accurately completed and filed all United
States federal income Tax Returns and all other material Tax Returns required
to be filed by them, and the Company and its subsidiaries have timely paid and
discharged all Taxes due in connection with or with respect to the periods or
transactions covered by such Tax Returns and have paid all other Taxes as are
due, except such as are being contested in good faith by appropriate
proceedings (to the extent that any such proceedings are required), and there
are no other Taxes that would be due if asserted by a taxing authority, except
with respect to which the Company is maintaining reserves unless the failure to
do so would not reasonably be expected to have a Material Adverse Effect.
Except as does not involve or would not result in liability to the Company or
any of its subsidiaries that would reasonably be expected to have a Material
Adverse Effect, (i) there are no tax liens on any assets of the Company or any
subsidiary thereof; (ii) neither the Company nor any of its subsidiaries has
granted any waiver of any statute of limitations with respect to, or any
extension of a period for the assessment of, any Tax; (iii) no unpaid (or
unreserved) deficiencies for Taxes have been claimed, proposed or assessed by
any taxing or other governmental authority with respect to the Company or any
of its subsidiaries; (iv) there are no pending or threatened audits,
investigations or claims for or relating to any liability in respect of Taxes
of the Company or any of its subsidiaries; and (v) neither the Company nor any
of its subsidiaries has requested any extension of time within which to file
any currently unfiled returns in respect of any Taxes. The accruals and
reserves for Taxes (including deferred taxes) reflected in the 1996 Balance
Sheet are in all material respects adequate to cover all Taxes accruable
through the date thereof (including Taxes being contested) in accordance with
GAAP.
(c) The Company on behalf of itself and all its
subsidiaries hereby represents that, other than as disclosed in Section 2.16(c)
of the Company Disclosure Schedule or the Company SEC Reports, and other than
with respect to items the inaccuracy of which would not reasonably be expected
to have a Material Adverse Effect: (i) neither the Company nor any of its
subsidiaries is obligated under any agreement with respect to industrial
development bonds or other obligations with respect to which the excludability
from gross income of the holder for federal or state income tax purposes could
be affected by the transactions contemplated hereunder; (ii) neither the
Company nor any of its subsidiaries is, or has been, a United States real
property holding corporation (as defined in Section 897(c)(2) of the Code)
during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code;
(iii) to the best knowledge of the Company, neither the Company nor any of its
subsidiaries owns any property of a character the indirect transfer of which
pursuant to this Agreement, would give rise to any material documentary, stamp
or other transfer tax; (iv) neither the Company nor any of its subsidiaries has
filed or been included in a combined, consolidated or unitary return (or
substantial equivalent thereof) of any Person other than the Company and its
subsidiaries; (v) neither the Company nor any of its subsidiaries is liable for
Taxes of any Person other than the Company and its subsidiaries, or currently
under any contractual obligation to indemnify any Person with respect to Taxes,
or a party to any tax sharing agreement or any other agreement providing for
payments by the Company or any of its subsidiaries with respect to Taxes; (vi)
neither the Company nor any of its subsidiaries is a party to any joint
venture, partnership or other arrangement or contract
-18-
<PAGE> 25
which could be treated as a partnership for United States federal income tax
purposes; (vii) neither the Company nor any of its subsidiaries is a party to
any agreement, contract, arrangement or plan that would result (taking into
account the transactions contemplated by this Agreement), separately or in the
aggregate, in the payment of any "excess parachute payments" within the meaning
of Section 280G of the Code; (viii) the prices for any property or services (or
for the use of property) provided by the Company or any of its subsidiaries to
any other subsidiary or to the Company have been arm's length prices determined
using a method permitted by the Treasury Regulations under Section 482 of the
Code; (ix) neither the Company nor any of its subsidiaries is a "consenting
corporation" under Section 341 (f) of the Code or any corresponding provision
of state, local or foreign law; and (x) neither the Company nor any of its
subsidiaries has made an election or is required to treat any of its assets as
owned by another Person for federal income tax purposes or as tax-exempt bond
financed property or tax-exempt use property within the meaning of Section 168
of the Code (or any corresponding provision of state, local or foreign law).
SECTION 2.17. Environmental Matters. Except as set forth in
Section 2.17 of the Company Disclosure Schedule or the Company SEC Reports, and
except in all cases as, in the aggregate, have not had and would not reasonably
be expected to have a Material Adverse Effect, to the best of the Company's
knowledge, the Company and each of its subsidiaries (i) have obtained all
applicable permits, licenses and other authorization which are required to be
obtained under all applicable federal, state or local laws or any regulation,
code, plan, order, decree, judgment, notice or demand letter issued, entered,
promulgated or approved thereunder ("Environmental Laws") relating to pollution
or protection of the environment, including laws relating to emissions,
discharges, releases or threatened releases of pollutants, contaminants, or
hazardous or toxic materials or wastes into ambient air, surface water, ground
water, or land or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants or hazardous or toxic materials or wastes by the
Company or its subsidiaries (or their respective agents); (ii) are in
compliance with all terms and conditions of such required permits, licenses and
authorization, and also are in compliance with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in applicable Environmental Laws; (iii) as
of the date hereof, are not aware of nor have received notice of any past or
present violations of Environmental Laws or any event, condition, circumstance,
activity, practice, incident, action or plan which is reasonably likely to
interfere with or prevent continued compliance with or which would give rise to
any common law or statutory liability, or otherwise form the basis of any
claim, action, suit or proceeding, against the Company or any of its
subsidiaries based on or resulting from the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling, or the
emission, discharge or release into the environment, of any pollutant,
contaminant or hazardous or toxic material or waste; and (iv) have taken all
actions necessary under applicable Environmental Laws to register any products
or materials required to be registered by the Company or its subsidiaries (or
any of their respective agents) thereunder.
SECTION 2.18. Brokers. No broker, finder or investment
banker (other than Salomon Brothers Inc, the fees and expenses of whom will be
paid by the Company) is
-19-
<PAGE> 26
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Company. The Company has heretofore furnished to
Parent a complete and correct copy of all agreements between the Company and
Salomon Brothers Inc pursuant to which such firm would be entitled to any
payment relating to the transactions contemplated hereunder.
SECTION 2.19. Full Disclosure. No statement contained in any
certificate or schedule furnished or to be furnished by the Company or its
subsidiaries to Parent or Merger Sub in, or pursuant to the provisions of, this
Agreement contains or shall contain any untrue statement of a material fact or
omits or will omit to state any material fact necessary, in the light of the
circumstances under which it was made, in order to make statements herein or
therein not misleading.
SECTION 2.20. Intellectual Property. (a) The Company and/or
each of its subsidiaries owns, or is licensed or otherwise possesses legally
enforceable rights to use all patents, trademarks, trade names, service marks,
copyrights, and any applications therefor, technology, know-how, computer
software programs or applications, and tangible or intangible proprietary
information or material that are used in the business of the Company and its
subsidiaries as currently conducted, except as would not reasonably be expected
to have a Material Adverse Effect.
(b) Except as disclosed in Section 2.20(b) of the Company
Disclosure Schedule or the Company SEC Reports or as could not reasonably be
expected to have a Material Adverse Effect: The Company is not, nor will it be
as a result of the execution and delivery of this Agreement or the performance
of its obligations hereunder, in violation of any licenses, sublicenses and
other agreements as to which the Company is a party and pursuant to which the
Company is authorized to use any third-party patents, trademarks, service marks
and copyrights ("Third-Party Intellectual Property Rights"). No claims with
respect to the patents, registered and material unregistered trademarks and
service marks, registered copyrights, trade names and any applications therefor
owned by the Company or any of its subsidiaries (the "Company Intellectual
Property Rights"), any trade secret material to the Company, or Third Party
Intellectual Property Rights to the extent arising out of any use, reproduction
or distribution of such Third Party Intellectual Property Rights by or through
the Company or any of its subsidiaries, are currently pending or, to the
knowledge of the Company, are overtly threatened by any person. The Company
does not know of any valid grounds for any bona fide claims (i) to the effect
that the manufacture, sale, licensing or use of any product as now used, sold
or licensed or proposed for use, sale or license by Company or any of its
subsidiaries, infringes on any copyright, patent, trademark, service mark or
trade secret; (ii) against the use by the Company or any of its subsidiaries,
of any trademarks, trade names, trade secrets, copyrights, patents, technology,
know-how or computer software programs and applications used in the business of
the Company or any of its subsidiaries as currently conducted or as proposed to
be conducted; (iii) challenging the ownership, validity or effectiveness of any
of the Company Intellectual Property Rights or other trade secret material to
the Company; or (iv) challenging the license or legally enforceable right to
use of the Third Party Intellectual Rights by the Company or any of its
subsidiaries.
-20-
<PAGE> 27
(c) To the Company's knowledge, all material patents,
registered trademarks, service marks and copyrights held by the Company are
valid and subsisting. Except as set forth in Section 2.20(c) of the Company
Disclosure Schedule or the Company SEC Reports, to the Company's knowledge,
there is no material unauthorized use, infringement or misappropriation of any
of the Company Intellectual Property by any third party, including any employee
or former employee of the Company or any of its subsidiaries.
SECTION 2.21. Interested Party Transactions. Except as set
forth in Section 2.21 of the Company Disclosure Schedule or the Company SEC
Reports or for events as to which the amounts involved do not, in the
aggregate, exceed $100,000, since the date of the Company's proxy statement
dated September 25, 1996 (the "1996 Company Proxy Statement"), no event has
occurred that would be required to be reported as a Certain Relationship or
Related Transaction, pursuant to Item 404 of Regulation S-K promulgated by the
SEC.
SECTION 2.22. Insurance. Except as disclosed in Section 2.22
of the Company Disclosure Schedule, all material fire and casualty, general
liability, business interruption, product liability and sprinkler and water
damage insurance policies maintained by the Company or any of its subsidiaries
are with reputable insurance carriers, provide full and adequate coverage for
all normal risks incident to the business of the Company and its subsidiaries
and their respective properties and assets and are in character and amount at
least equivalent to that carried by persons engaged in similar businesses and
subject to the same or similar perils or hazards, except as could not
reasonably be expected to have a Material Adverse Effect.
SECTION 2.23. Product Liability and Recalls. (a) Except as
disclosed in Section 2.23(a) of the Company Disclosure Schedule or the Company
SEC Reports, the Company is not aware of any claim, or the basis of any claim,
against the Company or any of its subsidiaries for injury to person or property
of employees or any third parties suffered as a result of the sale of any
product or performance of any service by the Company or any of its
subsidiaries, including claims arising out of the defective or unsafe nature of
its products or services, which would reasonably be expected to have a Material
Adverse Effect.
(b) Except as disclosed in Section 2.23(b) of the Company
Disclosure Schedule or the Company SEC Reports, there is no pending or, to the
knowledge of the Company, threatened recall or investigation of any product
sold by the Company, which recall or investigation would reasonably be expected
to have a Material Adverse Effect.
SECTION 2.24. Inventory. The inventories of the Company and
its subsidiaries as reflected in the most recent financial statements contained
in the Company SEC Reports, or acquired by the Company or any of its
subsidiaries after the date thereof, (i) are carried at an amount not in excess
of the lower of cost or net realizable value, and (ii) do not include any
material amounts of inventory which is obsolete, surplus or not usable or
saleable in the lawful and ordinary course of business of the Company and its
subsidiaries as heretofore conducted, in each case net of reserves provided
therefor.
-21-
<PAGE> 28
SECTION 2.25. Opinion of Financial Advisor. The Company has
been advised by its financial advisor, Salomon Brothers Inc, to the effect that
in its opinion, as of the date hereof, the Exchange Ratio is fair from a
financial point of view to the holders of Shares. It is agreed and understood
that such opinion is for the benefit of the Board of Directors of the Company
and may not be relied upon by Parent, Merger Sub or their affiliates.
SECTION 2.26. Pooling Matters. To the Company's knowledge
and based upon consultation with its independent accountants, the Company has
provided to Parent and its independent accountants all information concerning
actions taken or agreed to be taken by the Company or any of its affiliates on
or before the date of this Agreement that could reasonably be expected to
adversely affect the ability of Parent to account for the business combination
to be effected by the Merger as a pooling of interests. For purposes of this
Section 2.26, "to the Company's knowledge" means to the actual knowledge of the
Company's Chairman, Chief Executive Officer or Chief Financial Officer.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby, jointly and severally, represent
and warrant to the Company that, except as set forth in the written disclosure
schedule previously delivered or, to the extent set forth below, to be
delivered, by Parent to the Company (the "Parent Disclosure Schedule"):
SECTION 3.01. Organization and Qualification; Subsidiaries.
Each of Parent and its subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the requisite corporate power and authority and is in
possession of all Approvals necessary to own, lease and operate the properties
it purports to own, operate or lease and to carry on its business as it is now
being conducted, except where the failure to be so organized, existing and in
good standing or to have such power, authority and Approvals could not
reasonably be expected to have a Material Adverse Effect. Each of Parent and
its subsidiaries is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
its properties owned, leased or operated by it or the nature of its activities
makes such qualification or licensing necessary, except for such failures to be
so duly qualified or licensed and in good standing that could not reasonably be
expected to have a Material Adverse Effect. A true and complete list of all of
Parent's subsidiaries, together with the jurisdiction of incorporation of each
subsidiary and the percentage of each subsidiary's outstanding capital stock
owned by Parent or another subsidiary, is set forth in Section 3.01 of Parent
Disclosure Schedule. Except as set forth in Section 3.01 of the Parent
Disclosure Schedule or the Parent SEC Reports (as defined below), Parent does
not directly or indirectly own any equity or similar interest in, or any
interest convertible into or exchangeable or exercisable for, any equity or
similar interest in, any corporation, partnership, joint venture or other
business association or entity, with respect to which Parent has invested or is
-22-
<PAGE> 29
required to invest $1,000,000 or more, excluding securities in any publicly
traded company held for investment by Parent and comprising less than five
percent of the outstanding capital stock of such company.
SECTION 3.02. Articles of Organization and By-Laws. Parent
has heretofore furnished to the Company a complete and correct copy of its
Articles of Organization and the By-Laws, as amended to date. Such Articles of
Organization and By-Laws are in full force and effect. Neither Parent nor
Merger Sub is in violation of any of the provisions of its Articles of
Organization (or Certificate of Incorporation) or By-Laws.
SECTION 3.03. Capitalization. (a) The authorized capital
stock of Parent consists of 500,000,000 shares of Parent Common Stock and
2,000,000 shares of Preferred Stock, $1 par value ("Parent Preferred Stock").
As of April 25, 1997, (i) 168,341,585 shares of Parent Common Stock were issued
and outstanding, all of which are validly issued, fully paid and
non-assessable, and 12,992,640 shares were held in treasury, (ii) no shares of
Parent Preferred Stock were outstanding or held in treasury, (iii) no shares of
Parent Common Stock or Parent Preferred Stock were held by subsidiaries of the
Parent, (iv) 1,606,065 shares of Parent Common Stock were reserved for future
issuance under Parent's 1994 Restricted Stock Ownership Plan, (v) 210,178
shares of Parent Common Stock were reserved for issuance upon exercise of
Warrants issued by Kendall International, Inc. and assumed by Parent, (vi)
7,983,727 shares of Parent Common Stock were reserved for issuance upon
exercise of stock options issued under the Tyco International Ltd. 1995 Stock
Option Plan, and (viii) 26,084 shares of Parent Common Stock were reserved for
issuance upon exercise of stock options issued under the stock incentive plans
maintained by Kendall International, Inc. No material change in such
capitalization has occurred between April 25, 1997 and the date hereof. Except
as set forth in Section 3.03 of the Parent Disclosure Schedule or the Parent
SEC Reports, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character relating to the issued or unissued
capital stock of Parent or any of its subsidiaries or obligating Parent or any
of its subsidiaries to issue or sell any shares of capital stock of, or other
equity interests in, Parent or any of its subsidiaries. Except as set forth in
Section 3.03 of the Parent Disclosure Schedule or the Parent SEC Reports, there
are no obligations, contingent or otherwise, of Parent or any of its
subsidiaries to repurchase, redeem or otherwise acquire any shares of Parent
Common Stock or the capital stock of any subsidiary or to provide funds to or
make any investment (in the form of a loan, capital contribution or otherwise)
in any such subsidiary other than guarantees of bank obligations of
subsidiaries entered into in the ordinary course of business. Except as set
forth in Section 3.01 or 3.03 of the Parent Disclosure Schedule, all of the
outstanding shares of capital stock (other than directors' qualifying shares)
of each of Parent's subsidiaries is duly authorized, validly issued, fully paid
and nonassessable and all such shares (other than directors' qualifying shares)
are owned by Parent or another subsidiary free and clear of all security
interests, liens, claims, pledges, agreements, limitations in Parent's voting
rights, charges or other encumbrances of any nature whatsoever.
(b) The shares of New Tyco Common Stock to be issued
pursuant to the Merger will be duly authorized, validly issued, fully paid and
nonassessable and shall be listed, upon official notice of issuance, for
trading on the NYSE.
-23-
<PAGE> 30
SECTION 3.04. Authority Relative to this Agreement. (a) Each
of Parent and Merger Sub has all necessary corporate power and authority to
execute and deliver this Agreement and to perform its obligations hereunder and
to consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by Parent and Merger Sub and the consummation by Parent and
Merger Sub of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of Parent and Merger
Sub, and no other corporate proceedings on the part of Parent or Merger Sub are
necessary to authorize this Agreement or to consummate the transactions
contemplated thereby. The Board of Directors of Parent has determined that it
is advisable and in the best interest of Parent's shareholders for Parent to
enter into this Agreement and to consummate the Merger upon the terms and
subject to the conditions of this Agreement. This Agreement has been duly and
validly executed and delivered by Parent and Merger Sub and, assuming the due
authorization, execution and delivery by the Company, constitutes a legal,
valid and binding obligation of Parent and Merger Sub.
(b) At or prior to the filing of the Registration
Statement of which the Proxy Statement/Prospectus forms a part, ADT or New Tyco
will have duly and validly authorized the issuance of the New Tyco Common Stock
in the Merger in accordance with the terms of this Agreement.
SECTION 3.05. No Conflict; Required Filings and Consents.
(a) Section 3.05(a) of the Parent Disclosure Schedule includes a list of (i)
all loan agreements, indentures, mortgages, pledges, conditional sale or title
retention agreements, security agreements, equipment obligations, guaranties,
standby letters of credit, equipment leases or lease purchase agreements to
which Parent or any of its subsidiaries is a party or by which any of them is
bound, each in an amount exceeding $25,000,000, but excluding any such
agreement between Parent and its wholly-owned subsidiaries or between two or
more wholly-owned subsidiaries of Parent; (ii) all contracts, agreements,
commitments or other understandings or arrangements to which Parent or any of
its subsidiaries is a party or by which any of them or any of their respective
property or assets are bound or affected, but excluding contracts, agreements,
commitments or other understandings or arrangements entered into in the
ordinary course of business and involving, in each case, payments or receipts
by Parent or any of its subsidiaries of less than $10,000,000 in any single
instance; and (iii) all agreements which, as of the date hereof, are required
to be filed with the SEC pursuant to the requirements of the Exchange Act as
"material contracts."
(b) Except as set forth in Section 3.05(b) of the Parent
Disclosure Schedule, the execution and delivery of this Agreement by Parent and
Merger Sub do not, and the performance of this Agreement by Parent and Merger
Sub will not, (i) conflict with or violate the Articles of Organization or
By-Laws of Parent or Merger Sub, (ii) conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to Parent or any of its
subsidiaries or by which its or their respective properties are bound or
affected, or (iii) result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
impair Parent's or any of its subsidiaries' rights or alter the rights or
obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of Parent
or any of its subsidiaries pursuant
-24-
<PAGE> 31
to, any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Parent or any of
its subsidiaries is a party or by which Parent or any of its subsidiaries or
its or any of their respective properties are bound or affected, except in any
such case for any such conflicts, violations, breaches, defaults or other
occurrences that would not reasonably be expected to have a Material Adverse
Effect and except possibly with respect to the ADT Merger Agreement, as to
which any necessary consents have heretofore been obtained by Parent.
(c) Except as set forth in Section 3.05(c) of the Parent
Disclosure Schedule, the execution and delivery of this Agreement by Parent
will not, and the performance of this Agreement by Parent will not, at the
Effective Time (i) conflict with or violate the Memorandum of Association or
Bye-Laws of New Tyco, (ii) conflict with or violate any law, rule, regulation,
order, judgment or decree applicable to New Tyco or any of its subsidiaries or
by which its or their respective properties are bound or affected, or (iii)
result in any breach of or constitute a default (or an event which with notice
or lapse of time or both would become a default) under, or impair New Tyco's or
any of its subsidiaries' rights or alter the rights or obligations of any third
party under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or
encumbrance on any of the properties or assets of New Tyco or any of its
subsidiaries pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which New Tyco or any of its subsidiaries is a party or by which New Tyco or
any of its subsidiaries or its or any of their respective properties are bound
or affected, except in any such case for any such conflicts, violations,
breaches, defaults or other occurrences that would not reasonably be expected
to have a Material Adverse Effect.
(d) The execution and delivery of this Agreement by
Parent and Merger Sub does not, and the performance of this Agreement by Parent
and Merger Sub will not, require any consent, approval, authorization or permit
of, or filing with or notification to, any governmental or regulatory
authority, domestic or foreign, except (i) for applicable requirements, if any,
of the Securities Act, the Exchange Act, the Blue Sky Laws, the pre-merger
notification requirements of the HSR Act, and the filing and recordation of
appropriate merger or other documents as required by the GBCC, and (ii) where
the failure to obtain such consents, approvals, authorizations or permits, or
to make such filings or notifications, would not prevent or delay consummation
of the Merger, or otherwise prevent Parent or Merger Sub from performing their
respective obligations under this Agreement, and would not otherwise be
reasonably expected to have a Material Adverse Effect.
SECTION 3.06. Compliance; Permits. (a) Except as disclosed
in Section 3.06(a) of the Parent Disclosure Schedule, neither Parent nor any of
its subsidiaries is in conflict with, or in default or violation of, (i) any
law, rule, regulation, order, judgment or decree applicable to Parent or any of
its subsidiaries or by which its or any of their respective properties is bound
or affected or (ii) any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which
Parent or any of its subsidiaries is a party or by which Parent or any of its
subsidiaries or its or any of their respective properties is bound or affected,
except for any such conflicts,
-25-
<PAGE> 32
defaults or violations which would not reasonably be expected to have a
Material Adverse Effect.
(b) Except as disclosed in Section 3.06(b) of the Parent
Disclosure Schedule, Parent and its subsidiaries hold all permits, licenses,
easements, variances, exemptions, consents, certificates, orders and approvals
from governmental authorities which are material to the operation of the
business of the Parent and its subsidiaries taken as a whole as it is now being
conducted (collectively, the "Parent Permits"). Parent and its subsidiaries
are in compliance with the terms of Parent Permits, except where the failure to
so comply would not reasonably be expected to have a Material Adverse Effect.
SECTION 3.07. SEC Filings; Financial Statements. (a) Parent
has filed all forms, reports and documents required to be filed with the SEC
since June 30, 1994, and has heretofore delivered to the Company, in the form
filed with the SEC, (i) its Annual Reports on Form 10-K for the fiscal years
ended June 30, 1994, 1995 and 1996, (ii) its Quarterly Reports on Form 10-Q for
the quarterly periods ending September 30, 1996 and December 31, 1996, (iii)
all proxy statements relating to Parent's meetings of shareholders (whether
annual or special) held since June 30, 1994, (iv) all other reports or
registration statements (other than Reports on Form 10-Q not referred to in
clause (ii) above) filed by Parent with the SEC since June 30, 1993, and (v)
all amendments and supplements to all such reports and registration statements
filed by Parent with the SEC (collectively, the "Parent SEC Reports"). The
Parent SEC Reports (i) were prepared in all material respects in accordance
with the requirements of the Securities Act or the Exchange Act, as the case
may be, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. None of Parent's subsidiaries is required to file any
forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements
(including, in each case, any related notes thereto) contained in the Parent
SEC Reports has been prepared in accordance with GAAP applied on a consistent
basis throughout the periods involved (except as may be indicated in the notes
thereto) and each fairly presents the consolidated financial position of Parent
and its subsidiaries as at the respective dates thereof and the consolidated
results of its operations and cash flows for the periods indicated, except that
the unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments which were not or are not expected to be
material in amount.
SECTION 3.08. Absence of Certain Changes or Events. Except
as set forth in Section 3.08 of the Parent Disclosure Schedule or the Parent
SEC Reports, since June 30, 1996, Parent has conducted its business in the
ordinary course and there has not occurred: (i) any Material Adverse Effect;
(ii) any amendments or changes in the Articles of Organization or By-Laws of
Parent; (iii) any damage to, destruction or loss of any assets of the Parent
(whether or not covered by insurance) that could reasonably be expected to have
a Material Adverse Effect; (iv) any material change by Parent in its accounting
methods; (v) any material revaluation by Parent of any of its assets, including
without limitation,
-26-
<PAGE> 33
writing down the value of inventory or writing off notes or accounts receivable
other than in the ordinary course of business; (vi) any sale of a material
amount of assets of Parent, except in the ordinary course of business, or (vii)
any other action or event that would have required the consent of the Company
pursuant to Section 4.03 had such action or event occurred after the date of
this Agreement.
SECTION 3.09. No Undisclosed Liabilities. Except as is
disclosed in Section 3.09 of the Parent Disclosure Schedule and the Parent SEC
Reports, neither the Parent nor any of its subsidiaries has any liabilities
(absolute, accrued, contingent or otherwise), except liabilities (a) adequately
provided for in the Parent's balance sheet (including any related notes
thereto) as of June 30, 1996 included in Parent's Annual Report on Form 10-K
for the fiscal year ended June 30, 1996 (the "June 1996 Balance Sheet"), (b)
incurred in the ordinary course of business and not required under GAAP to be
reflected on the June 1996 Balance Sheet, (c) incurred since June 30, 1996 in
the ordinary course of business and consistent with past practice, (d) incurred
in connection with this Agreement, or (e) which would not reasonably be
expected to have a Material Adverse Effect.
SECTION 3.10. Absence of Litigation. Except as set forth in
Section 3.10 of the Parent Disclosure Schedule, there are no claims, actions,
suits, proceedings or investigations pending or, to the knowledge of the
Parent, threatened against the Parent or any of its subsidiaries, or any
properties or rights of the Parent or any of its subsidiaries, before any
court, arbitrator or administrative, governmental or regulatory authority or
body, domestic or foreign, that would reasonably be expected to have a Material
Adverse Effect.
SECTION 3.11. Employee Benefit Plans; Employment Agreements.
(a) Section 3.11(a) of the Parent Disclosure Schedule lists all employee
pension benefit plans (as defined in Section 3(2) of ERISA), all employee
welfare benefit plans (as defined in Section 3(1) of ERISA) and all other
bonus, stock option, stock purchase, incentive, deferred compensation,
supplemental retirement, severance and other similar fringe or employee benefit
plans, programs or arrangements, and any employment, executive compensation or
severance agreements, written or otherwise, as amended, modified or
supplemented, for the benefit of, or relating to, any former or current
employee, officer or consultant (or any of their beneficiaries) of Parent or
any other entity (whether or not incorporated) which is a member of a
controlled group including Parent or which is under common control with Parent
(an "ERISA Affiliate") within the meaning of Section 414(b), (c), (m) or (o) of
the Code or Section 4001(a) (14) or (b) of ERISA, or any subsidiary of Parent,
as well as each plan with respect to which Parent or an ERISA Affiliate could
incur liability under Title IV of ERISA or Section 412 of the Code (together
for the purposes of this Section 5.11, the "Employee Plans"). Prior to the
date of this Agreement, the Parent has provided to the Company copies of (i)
each such written Employee Plan or a written description of any Employee Plan
which is not written and all related trust agreements, insurance and other
contracts (including policies), summary plan descriptions, summaries of
material modifications and communications distributed to plan participants,
(ii) the three most recent annual reports on Form 5500 series, with
accompanying schedules and attachments, filed with respect to each Employee
Plan required to make such a filing, and (iii) the most recent actuarial
valuation for each Employee Plan subject to Title IV of ERISA, (iv) the latest
reports which have been filed with the department of Labor with respect to each
Employee
-27-
<PAGE> 34
Plan required to make such a filing and (v) the most recent favorable
determination letters issued for each Employee Plan and related trust that is
subject to Parts 1, 2, and 4 of Subtitle B of Title I of ERISA (and, if an
application for such determination is pending, a copy of the application). For
purposes of this Section 3.11(a) the term "material", when used with respect to
(i) any Employee Plan, shall mean that Parent or an ERISA Affiliate has
incurred or may incur obligations in an amount exceeding $5,000,000 with
respect to such Employee Plan, and (ii) any liability, obligation, breach or
non-compliance, shall mean that the Company or an ERISA Affiliate has incurred
or may incur obligations in an amount exceeding $1,000,000 with respect to any
one such or series of related liabilities, obligations, breaches, defaults,
violations or instances of non-compliance.
(b) (i) Except as set forth in Section 3.11(b) of the Parent
Disclosure Schedule, none of the Employee Plans promises or provides retiree
medical or other retiree welfare benefits to any person, and none of the
Employee Plans is a "multiemployer plan" as such term is defined in Section
3(37) of ERISA; (ii) no party in interest or disqualified person (as defined in
Section 3(14) of ERISA and Section 4975 of the Code) has at any time engaged in
a transaction with respect to any Employee Plan which could subject Parent or
any ERISA Affiliate, directly or indirectly, to a tax, penalty or other
material liability for prohibited transactions under ERISA or Section 4975 of
the Code; (iii) no fiduciary of any Employee Plan has breached any of the
responsibilities or obligations imposed upon fiduciaries under Title I of
ERISA, which breach could result in any material liability to Parent or any
ERISA Affiliate; (iv) all Employee Plans have been established and maintained
substantially in accordance with their terms and have operated in compliance in
all material respects with the requirements prescribed by any and all statutes
(including ERISA and the Code), orders, or governmental rules and regulations
currently in effect with respect thereto (including all applicable requirements
for notification to participants or the Department of Labor, IRS or Secretary
of the Treasury), and may by their terms be amended and/or terminated at any
time subject to applicable law and Parent and each of its subsidiaries have
performed all material obligations required to be performed by them under, are
not in any material respect in default under or violation of, and have no
knowledge of any default or violation by any other party to, any of the
Employee Plans; (v) each Employee Plan which is subject to Parts 1, 2 and 4 of
Subtitle B of ERISA is the subject of a favorable determination letter from the
IRS, and nothing has occurred which may reasonably be expected to impair such
determination; (vi) all contributions required to be made with respect to any
Employee Plan pursuant to Section 412 of the Code, or the terms of the Employee
Plan or any collective bargaining agreement, have been made on or before their
due dates; (vii) with respect to each Employee Plan, no "reportable event"
within the meaning of Section 4043 of ERISA (excluding any such event for which
the 30 day notice requirement has been waived under the regulations to Section
4043 of ERISA) or any event described in Section 4062, 4063 or 4041 of ERISA
has occurred for which there is any material outstanding liability to the
Parent or any ERISA Affiliates; nor would the consummation of the transaction
contemplated hereby (including the execution of this agreement) constitute a
reportable event for which the 30-day requirement has not been waived; and
(viii) neither Parent nor any ERISA Affiliate has incurred, or reasonably
expects to incur, any liability under Title IV of ERISA (other than liability
for premium payments to the PBGC arising in the ordinary course).
-28-
<PAGE> 35
(c) Section 3.11(c) of the Parent Disclosure Schedule
sets forth a true and complete list of each current or former employee, officer
or director of Parent or any of its subsidiaries who holds (i) any option to
purchase Parent Common Stock as of the date hereof, together with the number of
shares of Parent Common Stock subject to such option, the option price of such
option (to the extent determined as of the date hereof), whether such option is
intended to qualify as an incentive stock option within the meaning of Section
422(b) of the Code (an "ISO"), and the expiration date of such option; and (ii)
any shares of Parent stock that are restricted (iii) any other right, directly
or indirectly, to receive Parent Common Stock, together with the number of
shares of Parent Common Stock subject to such right. Section 3.11(c) of the
Parent Disclosure Schedule also sets forth the total number of any such ISOs
and any, such nonqualified options and such other rights.
(d) Section 3.11(d) of the Parent Disclosure Schedule
sets forth a true and complete list of (i) all employment agreements with
officers of Parent or any of its subsidiaries; (ii) all agreements with
consultants who are individuals obligating Parent or any of its subsidiaries to
make annual cash payments in an amount exceeding $1,000,000; (iii) all
agreements with respect to the services of independent contractors or leased
employees whether or not they participate in any of the Employee Plans; (iv)
all officers of Parent or any of its subsidiaries who have executed a
non-competition agreement with Parent or any of its subsidiaries; (v) all
severance agreements, programs and policies of Parent or any of its
subsidiaries with or relating to its employees in each case with outstanding
commitments exceeding $1,000,000, excluding programs and policies required to
be maintained by law; and (vi) all plans, programs, agreements and other
arrangements of Parent or any of its subsidiaries with or relating to its
employees which contain change in control provisions.
(e) Except as set forth in Section 3.11(e) of the Parent
Disclosure Schedule, no employee of Parent or any of its subsidiaries has
participated in any employee pension benefit plans (as defined in Section 3(2)
of ERISA) maintained by or on behalf of Parent. The PBGC has not instituted
proceedings to terminate any Employee Plan that is subject to Title IV of ERISA
(each, a "Defined Benefit Plan"). The Defined Benefit Plans have no
accumulated or waived funding deficiencies within the meaning of Section 412 of
the Code nor have any extensions of any amortization period within the meaning
of Section 412 of the Code or 302 of ERISA been applied for with respect
thereto. As of June 30, 1996, the funded ratio of the Defined Benefit Plans
was approximately 100%. This funded ratio was determined based on the
Accumulated Benefit Obligation (utilizing disclosure assumptions used by Parent
in its consolidated financial statements) and the fair market value of the
Defined Benefit Plans' assets as of June 30, 1996. All applicable premiums
required to be paid to the PBGC with respect to the Defined Benefit Plans have
been paid. No facts or circumstances exist with respect to any Defined Benefit
Plan which would give rise to a lien on the assets of Parent under Section 4068
of ERISA or otherwise. All the assets of the Defined Benefit Plans are readily
marketable securities or insurance contracts.
(f) Except as provided in Schedule 3.11(f) of the Parent
Disclosure Schedule, the Parent has never maintained an employee stock
ownership plan (within the meaning of Section 4975(e)(7) of the Code) or any
other Employee Plan that invests in Parent stock. All actions required to be
taken by a fiduciary of any Employee Plan in order to effectuate the
transaction contemplated by this Agreement shall comply with the terms of
-29-
<PAGE> 36
such Plan, ERISA and other applicable laws. All actions required to be taken
by a trustee of any Employee Plan that owns Parent stock shall have been duly
authorized by the appropriate fiduciaries of such Plan, and shall comply with
the terms of such Plan, ERISA and other applicable laws.
(g) Each Employee Plan covering non-U.S. employees (an
"International Plan") has been maintained in substantial compliance with its
terms and with the requirements prescribed by any and all applicable Laws
(including any special provisions relating to registered or qualified plans
where such International Plan was intended to so qualify) and has been
maintained in good standing with applicable regulatory authorities. The
benefit liabilities of the International Plans are adequately provided for on
the consolidated financial statements of Parent.
(h) Parent has fiduciary liability insurance of at least
$15,000,000 in effect covering the fiduciaries of the Employee Plans (including
Parent) with respect to whom Parent may have liability.
SECTION 3.12. Labor Matters. Except as set forth in Section
3.12 of the Parent Disclosure Schedule or the Parent SEC Reports, (i) there are
no controversies pending or, to the knowledge of Parent or any of its
subsidiaries, threatened, between Parent or any of its subsidiaries and any of
their respective employees, which controversies have or would reasonably be
expected to have a Material Adverse Effect; (ii) neither Parent nor any of its
subsidiaries is a party to any material collective bargaining agreement or
other labor union contract applicable to persons employed by Parent or its
subsidiaries, nor does Parent or any of its subsidiaries know of any activities
or proceedings of any labor union to organize any such employees; and (iii)
neither Parent nor any of its subsidiaries has any knowledge of any strikes,
slowdowns, work stoppages, lockouts, or threats thereof, by or with respect to
any employees of Parent or any of its subsidiaries which would reasonably be
expected to have a Material Adverse Effect.
SECTION 3.13. Registration Statement; Proxy
Statement/Prospectus. Subject to the accuracy of the representations of the
Company in Section 2.13, the registration statement (the "Registration
Statement") pursuant to which the New Tyco Common Stock to be issued in the
Merger will be registered with the SEC shall not, at the time the Registration
Statement (including any amendments or supplements thereto) is declared
effective by the SEC, contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements included
therein, in light of the circumstances under which they were made, not
misleading. The information supplied by Parent for inclusion in the Proxy
Statement/Prospectus will not, on the date the Proxy Statement/Prospectus is
first mailed to shareholders, at the time of the Company Shareholders Meeting
and at the Effective Time, contain any statement which, at such time and in
light of the circumstances under which it shall be made, is false or misleading
with respect to any material fact, or will omit to state any material fact
necessary in order to make the statements therein not false or misleading; or
omit to state any material fact necessary to correct any statement in any
earlier communication with respect to the solicitation of proxies for the
Company Shareholders Meeting which has become false or misleading. If at any
-30-
<PAGE> 37
time prior to the Effective Time any event relating to Parent, Merger Sub or
any of their respective affiliates, officers or directors should be discovered
by Parent or Merger Sub which should be set forth in an amendment to the
Registration Statement or a supplement to the Proxy Statement/Prospectus,
Parent or Merger Sub will promptly inform the Company. The Registration
Statement and Proxy Statement/Prospectus shall comply in all material respects
with the requirements of the Securities Act, the Exchange Act and the rules and
regulations thereunder. Notwithstanding the foregoing, Parent and Merger Sub
make no representation or warranty with respect to any information supplied by
the Company which is contained or incorporated by reference in, or furnished in
connection with the preparation of, the Registration Statement or the Proxy
Statement/Prospectus.
SECTION 3.14. Restrictions on Business Activities. Except
for this Agreement, to the best of Parent's knowledge, there is no agreement,
judgment, injunction, order or decree binding upon Parent or any of its
subsidiaries which has or would reasonably be expected to have the effect of
prohibiting or materially impairing any business practice of Parent or any of
its subsidiaries, any acquisition of property by Parent or any of its
subsidiaries or the conduct of business by Parent or any of its subsidiaries as
currently conducted or as proposed to be conducted by Parent, except for any
prohibition or impairment as would not reasonably be expected to have a
Material Adverse Effect.
SECTION 3.15. Title to Property. Parent and each of its
subsidiaries have good and defensible title to all of their properties and
assets, free and clear of all liens, charges and encumbrances, except liens for
taxes not yet due and payable and such liens or other imperfections of title,
if any, as do not materially detract from the value of or interfere with the
present use of the property affected thereby or which could not reasonably be
expected to have a Material Adverse Effect; and, to Parent's knowledge, all
leases pursuant to which Parent or any of its subsidiaries lease from other
material amounts of real or personal property are in good standing, valid and
effective in accordance with their respective terms, and there is not, to the
knowledge of Parent, under any of such leases, any existing material default or
event of default (or event which with notice or lapse of time, or both, would
constitute a material default) except where the lack of such good standing,
validity and effectiveness, or the existence of such default or event of
default would not reasonably be expected to have a Material Adverse Effect.
SECTION 3.16. Taxes. (a) Parent on behalf of itself and all
its subsidiaries hereby represents that, other than as disclosed in Section
3.16(a) of the Parent Disclosure Schedule or the Parent SEC Reports: Parent and
its subsidiaries have timely and accurately completed and filed all United
States federal income Tax Returns and all other material Tax Returns required
to be filed by them, and Parent and its subsidiaries have timely paid and
discharged all Taxes due in connection with or with respect to the periods or
transactions covered by such Tax Returns and have paid all other Taxes as are
due, except such as are being contested in good faith by appropriate
proceedings (to the extent that any such proceedings are required) and there
are no other Taxes that would be due if asserted by a taxing authority, except
with respect to which Parent is maintaining reserves unless the failure to do
so would not reasonably be expected to have a Material Adverse Effect. Except
as does not involve or would not result in liability to Parent that would
reasonably be expected to have a Material Adverse Effect, (i) there are no tax
liens on any assets of Parent
-31-
<PAGE> 38
or any subsidiary thereof; (ii) neither Parent nor any of its subsidiaries has
granted any waiver of any statute of limitations with respect to, or any
extension of a period for the assessment of, any Tax; (iii) no unpaid (or
unreserved) deficiencies for Taxes have been claimed, proposed or assessed by
any taxing or other governmental authority with respect to Parent or any of its
subsidiaries; (iv) there are no pending or threatened audits, investigations or
claims for or relating to any liability in respect of Taxes of Parent or any of
its subsidiaries; and (v) neither Parent nor any of its subsidiaries has
requested any extension of time within which to file any currently unfiled
returns in respect of any Taxes. The accruals and reserves for taxes
(including deferred taxes) reflected in the June 1996 Balance Sheet are in all
material respects adequate to cover all Taxes accruable through the date
thereof (including Taxes being contested) in accordance with GAAP.
(b) Parent on behalf of itself and all its subsidiaries
hereby represents that, other than as disclosed on Section 3.16(b) of the
Parent Disclosure Schedule or the Parent SEC Reports, and other than with
respect to items the inaccuracy of which could not reasonably be expected to
have a Material Adverse Effect: (i) neither Parent nor any of its subsidiaries
is obligated under any agreement with respect to industrial development bonds
or other obligations with respect to which the excludability from gross income
of the holder for federal or state income tax purposes could be affected by the
transactions contemplated hereunder; (ii) neither Parent nor any of its
subsidiaries has filed or been included in a combined, consolidated or unitary
return (or substantial equivalent thereof) of any Person other than Parent and
its subsidiaries; (iii) neither Parent nor any of its subsidiaries is liable
for Taxes of any Person nor any of its subsidiaries; (iv) neither Parent nor
any of its subsidiaries is liable for Taxes of any Person other than Parent and
its subsidiaries, or currently under any contractual obligation to indemnify
any Person with respect to Taxes, or a party to any tax sharing agreement or
any other agreement providing for payments by Parent or any of its subsidiaries
with respect to Taxes; (v) neither Parent nor any of its subsidiaries is a
party to any joint venture, partnership or other arrangement or contract which
could be treated as a partnership for United States federal income tax
purposes; (vi) neither Parent nor any of its subsidiaries is a party to any
agreement, contract, arrangement or plan that would result (taking into account
the transactions contemplated by this Agreement), separately or in the
aggregate, in the payment of any "excess parachute payments" within the meaning
of Section 280G of the Code; (vii) the prices for any property or services (or
for the use of property) provided by Parent or any of its subsidiaries to any
other subsidiary or to Parent have been arm's length prices determined using a
method permitted by the Treasury Regulations under Section 482 of the Code;
(viii) neither Parent nor any of its subsidiaries is a "consenting corporation"
under Section 341(f) of the Code or any corresponding provision of state, local
or foreign law; and (ix) neither Parent nor any of its subsidiaries has made an
election or is required to treat any of its assets as owned by another Person
for federal income tax purposes or as tax-exempt bond financed property or
tax-exempt use property within the meaning of Section 168 of the Code (or any
corresponding provision of state, local or foreign law).
SECTION 3.17. Environmental Matters. Except as set forth in
Section 3.17 of the Parent Disclosure Schedule, and except in all cases as, in
the aggregate, have not had and would not reasonably be expected to have a
Material Adverse Effect, Parent and each of its subsidiaries to the best of
Parent's knowledge (i) have obtained all applicable permits,
-32-
<PAGE> 39
licenses and other authorization which are required to be obtained under all
applicable Environmental Laws by Parent or its subsidiaries (or their
respective agents); (ii) are in compliance with all terms and conditions of
such required permits, licenses and authorization, and also are in compliance
with all other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in applicable
Environmental Laws; (iii) as of the date hereof, are not aware of nor have
received notice of any past or present violations of Environmental Laws, or any
event, condition, circumstance, activity, practice, incident, action or plan
which is reasonably likely to interfere with or prevent continued compliance
with or which would give rise to any common law or statutory liability, or
otherwise form the basis of any claim, action, suit or proceeding, against
Parent or any of its subsidiaries based on or resulting from the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling, or the emission, discharge or release into the environment, of any
pollutant, contaminant or hazardous or toxic material or waste; and (iv) have
taken all actions necessary under applicable Environmental Laws to register any
products or materials required to be registered by Parent or its subsidiaries
(or any of their respective agents) thereunder.
SECTION 3.18. Brokers. No broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Parent or Merger Sub.
SECTION 3.19. Full Disclosure. No statement contained in any
certificate or schedule furnished or to be furnished by Parent or Merger Sub to
the Company in, or pursuant to the provisions of, this Agreement contains or
will contain any untrue statement of a material fact or omits or shall omit to
state any material fact necessary, in the light of the circumstances under
which it was made, in order to make the statements herein or therein not
misleading.
SECTION 3.20. Intellectual Property. (a) Parent and/or each
of its subsidiaries owns, or is licensed or otherwise possesses legally
enforceable rights to use all patents, trademarks, trade names, service marks,
copyrights, and any applications therefor, technology, know-how, computer
software programs or applications, and tangible or intangible proprietary
information or material that are used in the business of Parent and its
subsidiaries as currently conducted, except as would not reasonably be expected
to have a Material Adverse Effect.
(b) Except as disclosed in Section 3.20(b) of the Parent
Disclosure Schedule or the Parent SEC Reports or as could not reasonably be
expected to have a Material Adverse Effect: Parent is not, nor will it be as a
result of the execution and delivery of this Agreement or the performance of
its obligations hereunder, in violation of any licenses, sublicenses and other
agreements as to which Parent is a party and pursuant to which Parent is
authorized to use any third-party patents, trademarks, service marks and
copyrights ("Third-Party Intellectual Property Rights"). No claims with
respect to the patents, registered and material unregistered trademarks and
service marks, registered copyrights, trade names and any applications therefor
owned by Parent or any of its subsidiaries (the "Parent Intellectual Property
Rights"), any trade secret material to the
-33-
<PAGE> 40
Parent, or Third Party Intellectual Property Rights to the extent arising out
of any use, reproduction or distribution of such Third Party Intellectual
Property Rights by or through Parent or any of its subsidiaries, are currently
pending or, to the knowledge of Parent, are overtly threatened by any person.
Parent does not know of any valid grounds for any bona fide claims (i) to the
effect that the manufacture, sale, licensing or use of any product as now used,
sold or licensed or proposed for use, sale or license by Parent or any of its
subsidiaries infringes on any copyright, patent, trademark, service mark or
trade secret; (ii) against the use by Parent or any of its subsidiaries of any
trademarks, trade names, trade secrets, copyrights, patents, technology,
know-how or computer software programs and applications used in the business of
Parent or any of its subsidiaries as currently conducted or as proposed to be
conducted; (iii) challenging the ownership, validity or effectiveness of any
part of the Parent Intellectual Property Rights or other trade secret material
to Parent; or (iv) challenging the license or legally enforceable right to use
of the Third Party Intellectual Rights by Parent or any of its subsidiaries.
(c) To Parent's knowledge, all patents, registered
trademarks and copyrights held by Parent are valid and subsisting. Except as
set forth in Section 3.20(c) of the Parent Disclosure Schedule or the Parent
SEC Reports, to the Parent's knowledge, there is no material unauthorized use,
infringement or misappropriation of any of the Parent Intellectual Property by
any third party, including any employee or former employee of Parent or any of
its subsidiaries.
SECTION 3.21. Interested Party Transactions. Except as set
forth in Section 3.21 of the Parent Disclosure Schedule or the Parent SEC
Reports, since the date of Parent's proxy statement dated September 20, 1996,
no event has occurred that would be required to be reported as a Certain
Relationship or Related Transaction, pursuant to Item 404 of Regulation S-K
promulgated by the SEC.
SECTION 3.22. Insurance. Except as disclosed in Section 3.22
of the Parent Disclosure Schedule, all material fire and casualty, general
liability, business interruption, product liability and sprinkler and water
damage insurance policies maintained by Parent or any of its subsidiaries are
with reputable insurance carriers, provide full and adequate coverage for all
normal risks incident to the business of Parent and its subsidiaries and their
respective properties and assets and are in character and amount at least
equivalent to that carried by entities engaged in similar businesses and
subject to the same or similar perils or hazards, except as could not
reasonably be expected to have a Material Adverse Effect.
SECTION 3.23. Product Liability and Recalls. (a) Except as
disclosed in Section 3.23(a) of the Parent Disclosure Schedule or the Parent
SEC Reports, Parent is not aware of any claim, or the basis of any claim,
against Parent or any of its subsidiaries for injury to person or property of
employees or any third parties suffered as a result of the sale of any product
or performance of any service by Parent or any of its subsidiaries, including
claims arising out of the defective or unsafe nature of its products or
services, which would reasonably be expected to have a Material Adverse Effect.
(b) Except as disclosed in Section 3.23(b) of the Parent
Disclosure Schedule or the Parent SEC Reports, there is no pending or, to the
knowledge of Parent,
-34-
<PAGE> 41
threatened, recall or investigation of any product sold by Parent, which recall
or investigation would reasonably be expected to have a Material Adverse
Effect.
SECTION 3.24. Inventory. The inventories of Parent and its
subsidiaries as reflected in the most recent financial statements contained in
the Parent SEC Reports, or acquired by Parent or any of its subsidiaries after
the date thereof, (i) are carried at an amount not in excess of the lower of
cost or net realizable value, and (ii) do not include any inventory which is
obsolete, surplus or not usable or saleable in the lawful and ordinary course
of business of Parent and its subsidiaries as heretofore conducted, in each
case net of reserves provided therefor.
SECTION 3.25. Ownership of Merger Sub; No Prior Activities.
(a) Merger Sub is a direct, wholly-owned subsidiary of Parent and was formed
solely for the purpose of engaging in the transactions contemplated by this
Agreement.
(b) As of the date hereof and the Effective Time, except
for obligations or liabilities incurred in connection with its incorporation or
organization and the transactions contemplated by this Agreement and except for
this Agreement and any other agreements or arrangements contemplated by this
Agreement, Merger Sub has not and will not have incurred, directly or
indirectly, through any subsidiary or affiliate, any obligations or liabilities
or engaged in any business activities of any type or kind whatsoever or entered
into any agreements or arrangements with any person.
SECTION 3.26. Pooling Matters. To the Parent's knowledge and
based upon consultation with its independent accountants, the Parent has
provided to the Company and its independent accountants all information
concerning actions taken or agreed to be taken by Parent or any of its
affiliates on or before the date of this Agreement that could reasonably be
expected to adversely affect the ability of Parent to account for the business
combination to be effected by the Merger as a pooling of interests. For
purposes of this Section 3.26, "to the Parent's knowledge" means to the actual
knowledge of Parent's Chief Executive Officer or Chief Financial Officer.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 4.01. Conduct of Business by the Company Pending the
Merger. During the period from the date of this Agreement and continuing until
the earlier of the termination of this Agreement or the Effective Time, the
Company covenants and agrees that, unless Parent shall otherwise agree in
writing, and except as set forth in Section 4.01 of the Company Disclosure
Schedule, the Company shall conduct its business and shall cause the businesses
of its subsidiaries to be conducted only in, and the Company and its
subsidiaries shall not take any action except in, the ordinary course of
business and in a manner consistent with past practice; and the Company shall
use reasonable commercial efforts to preserve substantially intact the business
organization of the Company and its
-35-
<PAGE> 42
subsidiaries, to keep available the services of the present officers, employees
and consultants of the Company and its subsidiaries and to preserve the present
relationships of the Company and its subsidiaries with customers, suppliers and
other persons with which the Company or any of its subsidiaries has significant
business relations. By way of amplification and not limitation, except as
contemplated by this Agreement, neither the Company nor any of its subsidiaries
shall, during the period from the date of this Agreement and continuing until
the earlier of the termination of this Agreement or the Effective Time, and
except as set forth in Section 4.01 of the Company Disclosure Schedule,
directly or indirectly do, or propose to do, any of the following without the
prior written consent of Parent:
(a) amend or otherwise change the Company's Articles of
Incorporation or By-Laws;
(b) issue, sell, pledge, dispose of or encumber, or
authorize the issuance, sale, pledge, disposition or encumbrance of,
any shares of capital stock of any class, or any options, warrants,
convertible securities or other rights of any kind to acquire any
shares of capital stock, or any other ownership interest (including,
without limitation, any phantom interest) in the Company, any of its
subsidiaries or affiliates (except for the issuance of shares of
Company Common Stock issuable pursuant to Stock Options under the
Company Stock Option Plan, which options are outstanding on the date
hereof);
(c) sell, pledge, dispose of or encumber any assets of
the Company or any of its subsidiaries (except for (i) sales of assets
in the ordinary course of business and in a manner consistent with
past practice, (ii) dispositions of obsolete or worthless assets, and
(iii) sales of immaterial assets not in excess of $500,000);
(d) (i) declare, set aside, make or pay any dividend or
other distribution (whether in cash, stock or property or any
combination thereof) in respect of any of its capital stock, except
that a wholly owned subsidiary of the Company may declare and pay a
dividend to its parent, (ii) split, combine or reclassify any of its
capital stock or issue or authorize or propose the issuance of any
other securities in respect of, in lieu of or in substitution for
shares of its capital stock, or (iii) amend the terms or change the
period of exercisability of, purchase, repurchase, redeem or otherwise
acquire, or permit any subsidiary to purchase, repurchase, redeem or
otherwise acquire, any of its securities or any securities of its
subsidiaries, including, without limitation, shares of Company Common
Stock or any option, warrant or right, directly or indirectly, to
acquire shares of Company Common Stock, or propose to do any of the
foregoing;
(e) (i) acquire (by merger, consolidation, or acquisition
of stock or assets) any corporation, partnership or other business
organization or division thereof other than those listed on Section
4.01(e) of the Company Disclosure Schedule; (ii) incur any
indebtedness for borrowed money, except for borrowings and reborrowing
under the Company's existing credit facilities or issue any debt
securities or assume, guarantee (other than guarantees of bank debt of
the Company's subsidiaries entered into in the ordinary course of
business) or endorse or otherwise as an accommodation
-36-
<PAGE> 43
become responsible for, the obligations of any person, or make any
loans or advances, except in the ordinary course of business
consistent with past practice; (iii) authorize any capital
expenditures or purchase of fixed assets which are, in the aggregate,
in excess of the amount set forth in Section 4.01 of the Company
Disclosure Schedule for the Company and its subsidiaries taken as a
whole; or (iv) enter into or amend any contract, agreement,
commitment or arrangement to effect any of the matters prohibited by
this Section 4.01(e);
(f) increase the compensation payable or to become
payable to its officers or employees, except for increases in salary
or wages of employees of the Company or its subsidiaries in accordance
with past practices, or grant any severance or termination pay to, or
enter into any employment or severance agreement, in excess of
$100,000 with any director, officer or other employee of the Company
or any of its subsidiaries, or establish, adopt, enter into or amend
any collective bargaining, agreement, Employee Plan (within the
meaning of Section 2.11 of this Agreement), trust, fund, policy or
arrangement for the benefit of any current or former directors,
officers or employees or any of their beneficiaries, except, in each
case, as may be required by law;
(g) take any action to change accounting policies or
procedures (including, without limitation, procedures with respect to
revenue recognition, payments of accounts payable and collection of
accounts receivable);
(h) make any material tax election inconsistent with past
practice or settle or compromise any material federal, state, local or
foreign tax liability or agree to an extension of a statute of
limitations, except to the extent the amount of any such settlement
has been reserved for in the financial statements contained in the
Company SEC Reports filed prior to the date of this Agreement;
(i) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the
ordinary course of business and consistent with past practice of
liabilities reflected or reserved against in the financial statements
contained in the Company SEC Reports filed prior to the date of this
Agreement or incurred in the ordinary course of business and
consistent with past practice; or
(j) take, or agree in writing or otherwise to take, any
of the actions described in Sections 4.01(a) through (i) above, or any
action which would make any of the representations or warranties of
the Company contained in this Agreement untrue or incorrect or prevent
the Company from performing or cause the Company not to perform its
covenants hereunder.
SECTION 4.02. No Solicitation. (a) The Company shall not,
directly or indirectly, through any officer, director, employee, representative
or agent of the Company or any of its subsidiaries, solicit or encourage the
initiation of any inquiries or proposals regarding any merger, sale of
substantial assets, sale of shares of capital stock (including without
limitation by way of a tender offer) or similar transactions involving the
Company or
-37-
<PAGE> 44
any subsidiaries of the Company (any of the foregoing inquiries or proposals
being referred to herein as an "Acquisition Proposal"). Nothing contained in
this Section 4.02(a) shall prevent the Board of Directors of the Company from
(i) considering, negotiating, approving and recommending to the shareholders of
the Company a bona fide Acquisition Proposal not solicited in violation of this
Agreement, (ii) taking and disclosing to its shareholders a position
contemplated by Exchange Act Rule 14e-2 or (iii) making any disclosure to its
shareholders; provided that, as to each of clauses (i), (ii) and (iii), the
Board of Directors of the Company determines in good faith (upon advice of
independent counsel) that it is required to do so in order to discharge
properly its fiduciary duties.
(b) The Company shall immediately notify Parent after
receipt of any Acquisition Proposal, or any modification of or amendment to any
Acquisition Proposal, or any request for nonpublic information relating to the
Company or any of its subsidiaries in connection with an Acquisition Proposal
or for access to the properties, books or records of the Company or any
subsidiary by any person or entity that informs the Board of Directors of the
Company or such subsidiary that it is considering making, or has made, an
Acquisition Proposal. Such notice to Parent shall be made orally and in
writing, and shall indicate the identity of the person making the Acquisition
Proposal or intending to make an Acquisition Proposal or requesting non-public
information or access to the books and records of Parent, the terms of any such
Acquisition Proposal or modification or amendment to an Acquisition Proposal,
and whether the Company is providing or intends to provide the person making
the Acquisition Proposal with access to information concerning the Company as
provided in Section 4.02(c).
(c) If the Board of Directors of the Company receives a
request for material nonpublic information by a person who makes a bona fide
Acquisition Proposal, and the Board of Directors determines in good faith and
upon the advice of independent counsel that it is required to cause the Company
to act as provided in this Section 4.02(c) in order to discharge properly the
directors' fiduciary duties, then, provided the person making the Acquisition
Proposal has executed a confidentiality agreement substantially similar to the
one then in effect between the Company and Parent, the Company may provide such
person with access to information regarding the Company.
(d) Anything to the contrary in this Section or elsewhere
in this Agreement notwithstanding, the Board of Directors of the Company shall
not (i) withdraw or modify, or propose to withdraw or modify, in a manner
adverse to Parent, the approval or recommendation by such Board of Directors of
the matters set forth in Section 5.02, (ii) approve or recommend, or propose to
approve or recommend, any Acquisition Proposal or (iii) cause the Company to
enter into any agreement with respect to any Acquisition Proposal, except (x)
upon the advice of independent counsel that it is required to cause the Company
to act as provided in this Section 4.02(d) in order for the Board of Directors
to act in a manner consistent with its fiduciary duties and (y) with respect to
the approval or recommendation of any Acquisition Proposal or entering into any
agreement with respect to any Acquisition Proposal, after the third business
day following Parent's receipt of written notice of the information with
respect to such Acquisition Proposal, and, if applicable, the second business
day after Parent's receipt of written notice of the information with respect to
-38-
<PAGE> 45
all material amendments or modifications thereto, in each case as contemplated
by Section 4.02(b) above.
(e) The Company shall immediately cease and cause to be
terminated any existing discussions or negotiations with any persons (other
than Parent and Merger Sub) conducted heretofore with respect to any of the
foregoing. The Company agrees not to release any third party from the
confidentiality provisions of any confidentiality agreement to which the
Company is a party.
(f) The Company shall ensure that the officers, directors
and employees of the Company and its subsidiaries and any investment banker or
other advisor or representative retained by the Company are aware of the
restrictions described in this Section 4.02.
SECTION 4.03. Conduct of Business by Parent Pending the
Merger. During the period from the date of this Agreement and continuing until
the earlier of the termination of this Agreement or the Effective Time, Parent
covenants and agrees that, except as set forth in Section 4.03 of Parent
Disclosure Schedule or as contemplated by the ADT Merger Agreement or unless
the Company shall otherwise agree in writing, Parent shall conduct its
business, and cause the businesses of its subsidiaries to be conducted, in the
ordinary course of business and consistent with past practice, other than
actions taken by Parent or its subsidiaries in contemplation of the Merger, and
shall not directly or indirectly do, or propose to do, any of the following
without the prior written consent of the Company:
(a) amend or otherwise change Parent's Articles of
Organization or By-Laws;
(b) acquire or agree to acquire, by merging or
consolidating with, by purchasing an equity interest in or a portion
of the assets of, or by any other manner, any business or any
corporation, partnership, association or other business organization
or division thereof, or otherwise acquire or agree to acquire any
assets of any other person, which, in any such case, would materially
delay or prevent the consummation of the transactions contemplated by
this Agreement;
(c) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of any of its capital stock, except that a wholly
owned subsidiary of Parent may declare and pay a dividend to its
parent, and except that Parent may declare and pay cash dividends of
$0.05 per quarter consistent with past practice; or
(d) take or agree in writing or otherwise to take any
action which would make any of the representations or warranties of
Parent contained in this Agreement untrue or incorrect or prevent
Parent from performing or cause Parent not to perform its covenants
hereunder.
-39-
<PAGE> 46
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. Proxy Statement/Prospectus; Registration
Statement. As promptly as practicable after the execution of this Agreement,
the Company shall prepare and file with the SEC preliminary proxy materials
which shall constitute the Proxy Statement/Prospectus. As promptly as
practicable after comments are received from the SEC thereon and after the
furnishing by the Company and Parent of all information required to be
contained therein, the Company shall file and Parent shall cause ADT or New
Tyco to file with the SEC a combined proxy and Registration Statement on Form
S-4 (or on such other form as shall be appropriate) relating to the adoption of
this Agreement and approval of the transactions contemplated hereby by the
shareholders of the Company pursuant to this Agreement, and shall use all
reasonable efforts to cause the Registration Statement to become effective as
soon thereafter as practicable. The Proxy Statement/Prospectus shall include
the recommendation of the Board of Directors of the Company in favor of the
Merger, subject to the last sentence of Section 5.02.
SECTION 5.02. Company Shareholders Meeting. The Company
shall call the Company Shareholders Meeting as promptly as practicable for the
purpose of voting upon the approval of the Merger, and the Company shall use
its reasonable best efforts to hold the Company Shareholders Meeting as soon as
practicable after the date on which the Registration Statement becomes
effective. Unless otherwise required under the applicable fiduciary duties of
the directors of the Company, as determined by such directors in good faith
after consultation with and based upon the advice of independent legal counsel,
the Company shall solicit from its shareholders proxies in favor of adoption of
this Agreement and approval of the transactions contemplated thereby, and shall
take all other action necessary or advisable to secure the vote or consent of
shareholders to obtain such approvals.
SECTION 5.03. Access to Information; Confidentiality. Upon
reasonable notice and subject to restrictions contained in confidentiality
agreements to which such party is subject (from which such party shall use
reasonable efforts to be released), the Company and Parent shall each (and
shall cause each of their subsidiaries to) afford to the officers, employees,
accountants, counsel and other representatives of the other, reasonable access,
during the period prior to the Effective Time, to all its properties, books,
contracts, commitments and records and, during such period, the Company and
Parent each shall (and shall cause each of their subsidiaries to) furnish
promptly to the other all information concerning its business, properties and
personnel as such other party may reasonably request, and each shall make
available to the other the appropriate individuals (including attorneys,
accountants and other professionals) for discussion of the other's business,
properties and personnel as either Parent or the Company may reasonably
request. Each party shall keep such information confidential in accordance
with the terms of the confidentiality letter, dated March 21, 1996 (the
"Confidentiality Letter"), between Parent and the Company.
SECTION 5.04. Consents; Approvals. The Company and Parent
shall each use their best efforts to obtain all consents, waivers, approvals,
authorizations or orders
-40-
<PAGE> 47
(including, without limitation, all United States and foreign governmental and
regulatory rulings and approvals), and the Company and Parent shall make all
filings (including, without limitation, all filings with United States and
foreign governmental or regulatory agencies) required in connection with the
authorization, execution and delivery of this Agreement by the Company and
Parent and the consummation by them of the transactions contemplated hereby.
The Company and Parent shall furnish all information required to be included in
the Proxy Statement/Prospectus and the Registration Statement, or for any
application or other filing to be made pursuant to the rules and regulations of
any United States or foreign governmental body in connection with the
transactions contemplated by this Agreement.
SECTION 5.05. Agreements with Respect to Affiliates. The
Company shall deliver to Parent, prior to the date the Registration Statement
becomes effective under the Securities Act, a letter (the "Affiliate Letter")
identifying all persons who are, at the time of the Company Shareholders
Meeting, "affiliates" of the Company for purposes of Rule 145 under the
Securities Act ("Rule 145"), or the rules and regulations of the SEC relating
to pooling of interests accounting treatment for merger transactions (the
"Pooling Rules") . The Company shall use its best efforts to cause each person
who is identified as an "affiliate" in the Affiliate Letter to deliver to
Parent, no less than 35 days prior to the date of the Company Shareholders
Meeting a written agreement (an "Affiliate Agreement") in connection with
restrictions on affiliates under Rule 145 and, pooling of interests accounting
treatment, in form mutually agreeable to the Company and Parent.
SECTION 5.06. Indemnification and Insurance. (a) The
By-Laws and Articles of Incorporation of the Surviving Corporation shall
contain the provisions with respect to indemnification set forth in the By-Laws
and Articles of Incorporation of the Company, which provisions shall not be
amended, repealed or otherwise modified for a period of six years from the
Effective Time in any manner that would adversely affect the rights thereunder
as of the Effective Time of individuals who at the Effective Time were
directors, officers, employees or agents of the Company, unless such
modification is required by law.
(b) The Surviving Corporation shall, to the fullest
extent permitted under applicable law or under the Surviving Corporation's
Articles of Incorporation or By-Laws, indemnify and hold harmless, each present
and former director, officer or employee of the Company or any of its
subsidiaries (collectively, the "Indemnified Parties") against any costs or
expenses (including attorneys' fees), judgments, fines, losses, claims,
damages, liabilities and amounts paid in settlement in connection with any
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, (x) arising out of or pertaining to the
transactions contemplated by this Agreement or (y) otherwise with respect to
any acts or omissions occurring at or prior to the Effective Time, to the same
extent as provided in the Company's Articles of Incorporation or By-Laws or any
applicable contract or agreement as in effect on the date hereof, in each case
for a period of six years after the date hereof. In the event of any such
claim, action, suit, proceeding or investigation (whether arising before or
after the Effective Time), (i) any counsel retained by the Indemnified Parties
for any period after the Effective Time shall be reasonably satisfactory to the
Surviving Corporation, (ii) after the Effective Time, the Surviving Corporation
shall pay
-41-
<PAGE> 48
the reasonable fees and expenses of such counsel, promptly after statements
therefor are received, and (iii) the Surviving Corporation will cooperate in
the defense of any such matter; provided, however, that the Surviving
Corporation shall not be liable for any settlement effected without its written
consent (which consent shall not be unreasonably withheld); and provided,
further, that, in the event that any claim or claims for indemnification are
asserted or made within such six-year period, all rights to indemnification in
respect of any such claim or claims shall continue until the disposition of any
and all such claims. The Indemnified Parties as a group may retain only one
law firm to represent them with respect to any single action unless there is,
under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more Indemnified Parties,
in which case each Indemnified Person with respect to whom such a conflict
exists (or group of such Indemnified Persons who among them have no such
conflict) may retain one separate law firm.
(c) The Surviving Corporation shall honor and fulfill in
all respects the obligations of the Company pursuant to indemnification
agreements and employment agreements (the employee parties under such
agreements being referred to as the "Officer Employees") with the Company's
directors and officers existing at or before the Effective Time.
(d) For a period of three years after the Effective Time,
Parent shall cause the Surviving Corporation to maintain in effect, if
available, directors' and officers' liability insurance covering those persons
who are currently covered by the Company's directors' and officers' liability
insurance policy (a copy of which has been made available to Parent) on terms
comparable to those now applicable to directors and officers of the Company;
provided, however, that in no event shall Parent or the Surviving Corporation
be required to expend in excess of 200% of the annual premium currently paid by
the Company for such coverage; and provided further, that if the premium for
such coverage exceeds such amount, Parent or the Surviving Corporation shall
purchase a policy with the greatest coverage available for such 200% of the
annual premium.
(e) From and after the Effective Time, Parent shall
guarantee the obligations of the Surviving Corporation under this Section.
(f) This Section shall survive the consummation of the
Merger at the Effective Time, is intended to benefit the Company, the Surviving
Corporation and the Indemnified Parties, shall be binding on all successors and
assigns of the Surviving Corporation and shall be enforceable by the
Indemnified Parties.
SECTION 5.07. Notification of Certain Matters. The Company
shall give prompt notice to Parent, and Parent shall give prompt notice to the
Company, of (i) the occurrence or nonoccurrence of any event the occurrence or
nonoccurrence of which would be likely to cause any representation or warranty
contained in this Agreement to be materially untrue or inaccurate, or (ii) any
failure of the Company, Parent or Merger Sub, as the case may be, materially to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder; provided, however, that the delivery of any
notice pursuant to this Section shall not limit or otherwise affect the
remedies available
-42-
<PAGE> 49
hereunder to the party receiving such notice; and provided further that failure
to give such notice shall not be treated as a breach of covenant for the
purposes of Sections 6.02(a) or 6.03(a) unless the failure to give such notice
results in material prejudice to the other party.
SECTION 5.08. Further Action/Tax Treatment. Upon the terms
and subject to the conditions hereof, each of the parties hereto shall use all
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all other things necessary, proper or advisable to consummate
and make effective as promptly as practicable the transactions contemplated by
this Agreement, to obtain in a timely manner all necessary waivers, consents
and approvals and to effect all necessary registrations and filings, and
otherwise to satisfy or cause to be satisfied all conditions precedent to its
obligations under this Agreement. The foregoing covenant shall not include any
obligation by Parent to agree to divest, abandon, license or take similar
action with respect to any assets (tangible or intangible) of Parent or the
Company. Each of Parent, Merger Sub and the Company shall use its best efforts
to cause the Merger to qualify, and will not (both before and after
consummation of the Merger) take any actions which to its knowledge could
reasonably be expected to prevent the Merger from qualifying, as a
reorganization under the provisions of Section 368 of the Code.
SECTION 5.09. Public Announcements. Parent and the Company
shall consult with each other before issuing any press release with respect to
the Merger or this Agreement and shall not issue any such press release or make
any such public statement without the prior consent of the other party, which
shall not be unreasonably withheld; provided, however, that a party may,
without the prior consent of the other party, issue such press release or make
such public statement as may upon the advice of counsel be required by law or
the rules and regulations of the NYSE or The Nasdaq Stock Market, if it has
used all reasonable efforts to consult with the other party.
SECTION 5.10. Listing of Parent Shares. Parent shall use its
best efforts to cause the shares of New Tyco Common Stock to be issued in the
Merger to be listed, upon official notice of issuance, on the NYSE prior to the
Effective Time.
SECTION 5.11. Conveyance Taxes. Parent and the Company shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications, or other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock transfer and stamp
taxes, any transfer, recording, registration and other fees, and any similar
taxes which become payable in connection with the transactions contemplated
hereby that are required or permitted to be filed on or before the Effective
Time and the Surviving Corporation shall be responsible for the payment of all
such taxes and fees.
SECTION 5.12. Accountant's Letters. Upon reasonable notice
from the other, the Company shall use its best efforts to cause Joseph Decosimo
and Company LLC to deliver to Parent, and Parent shall use its best efforts to
cause Coopers & Lybrand to deliver to the Company, a letter covering such
matters as are requested by Parent or the Company, as the case may be, and as
are customarily addressed in accountant's "comfort" letters.
-43-
<PAGE> 50
SECTION 5.13. Pooling Accounting Treatment. Parent and the
Company each agrees not to take any action that would reasonably be expected to
adversely affect the ability of Parent or New Tyco to account for the business
combination to be effected by the Merger as a pooling of interests, and Parent
and the Company each agrees to use its best efforts to take such action as may
be reasonably required to negate the impact of any past actions by Parent, the
Company or their respective affiliates which would reasonably be expected to
adversely impact the ability of Parent or New Tyco to treat the Merger as a
pooling of interests. The taking by Parent or the Company of any action
prohibited by the previous sentence, or the failure of Parent or the Company to
take any action required by the previous sentence, if the Merger is not able to
be accounted for as a pooling of interests because of such action or failure to
take action, shall constitute a breach of this Agreement by such party for the
purposes of Section 7.01(i).
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.01. Conditions to Obligation of Each Party to
Effect the Merger. The respective obligations of each party to effect the
Merger shall be subject to the satisfaction at or prior to the Effective Time
of the following conditions:
(a) Effectiveness of the Registration Statement. The
Registration Statement shall have been declared effective by the SEC
under the Securities Act. No stop order suspending the effectiveness
of the Registration Statement shall have been issued by the SEC and no
proceedings for that purpose and no similar proceeding in respect of
the Proxy Statement/Prospectus shall have been initiated or
threatened by the SEC;
(b) Shareholder Approval. This Agreement and the Merger
shall have been approved and adopted by the requisite vote of the
shareholders of the Company;
(c) Listing. The shares of New Tyco Common Stock
issuable in the Merger shall have been authorized for listing on the
NYSE upon official notice of issuance;
(d) HSR Act. All waiting periods applicable to the
consummation of the Merger under the HSR Act shall have expired or
been terminated;
(e) Governmental Actions. There shall not have been
instituted, pending or threatened any action or proceeding (or any
investigation or other inquiry that might result in such an action or
proceeding) by any governmental authority or administrative agency
before any governmental authority, administrative agency or court of
competent jurisdiction, domestic or foreign, nor shall there be in
effect any judgment, decree or order of any governmental authority,
administrative agency or
-44-
<PAGE> 51
court of competent jurisdiction, or any other legal restraint (i)
preventing or seeking to prevent consummation of the Merger, (ii)
prohibiting or seeking to prohibit or limiting or seeking to limit,
Parent (which for the purposes of this Section 6.01(e) shall also be
deemed to refer to New Tyco) from exercising all material rights and
privileges pertaining to its ownership of the Surviving Corporation or
the ownership or operation by Parent or any of its subsidiaries of all
or a material portion of the business or assets of Parent or any of
its subsidiaries, or (iii) compelling or seeking to compel Parent or
any of its subsidiaries to dispose of or hold separate all or any
material portion of the business or assets of Parent or any of its
subsidiaries (including the Surviving Corporation and its
subsidiaries), as a result of the Merger or the transactions
contemplated by this Agreement;
(f) Illegality. No statute, rule, regulation or order
shall be enacted, entered, enforced or deemed applicable to the Merger
which makes the consummation of the Merger illegal;
(g) Tax Opinions. The Company shall have received a
written opinion of Miller and Martin, and Parent shall have received a
written opinion of Kramer, Levin, Naftalis & Frankel, in form and
substance reasonably satisfactory to each of them to the effect that
the Merger will constitute a reorganization within the meaning of
Section 368 of the Code. Each party agrees to make all reasonable
representations and covenants in connection with the rendering of such
opinions; and
(h) ADT Merger. The ADT Merger shall have been
consummated or the ADT Merger Agreement shall have been terminated in
accordance with its terms.
SECTION 6.02. Additional Conditions to Obligations of Parent
and Merger Sub. The obligations of Parent and Merger Sub to effect the Merger
are also subject to the following conditions:
(a) Representations and Warranties. The representations
and warranties of the Company contained in this Agreement shall be
true and correct in all respects on and as of the Effective Time,
except for (i) changes contemplated by this Agreement, (ii) those
representations and warranties which address matters only as of a
particular date (which shall have been true and correct as of such
date, subject to clause (iii)), and (iii) where the failure to be true
and correct could not reasonably be expected to have a Material
Adverse Effect, with the same force and effect as if made on and as of
the Effective Time, and Parent and Merger Sub shall have received a
certificate to such effect signed by the President and the Chief
Financial Officer of the Company;
(b) Agreements and Covenants. The Company shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with
by it on or prior to the Effective Time, and Parent and Merger Sub
shall have received a certificate to such effect signed by the
Chairman, the President and the Chief Financial Officer of the
Company;
-45-
<PAGE> 52
(c) Consents Obtained. All material consents, waivers,
approvals, authorizations or orders required to be obtained, and all
filings required to be made, by the Company for the authorization,
execution and delivery of this Agreement and the consummation by it of
the transactions contemplated hereby shall have been obtained and made
by the Company, except where the failure to receive such consents,
etc. could not reasonably be expected to have a Material Adverse
Effect on the Company or Parent;
(d) Opinion of Accountant. Parent shall have received an
opinion of Coopers & Lybrand, independent certified public
accountants, to the effect that the Merger, to the best of their
knowledge after due inquiry, qualifies for pooling of interests
accounting treatment if consummated in accordance with this Agreement
and Company shall have received an opinion of Joseph Decosimo and
Company, LLP, independent certified public accountants, to the effect
that the Merger, to the best of their knowledge after due inquiry,
qualifies for pooling of interests accounting treatment if consummated
in accordance with this Agreement. Such opinions shall be in form and
substance satisfactory to Parent; and
(e) Affiliate Agreements. Parent shall have received
from each person who is identified in the Affiliate Letter as an
"affiliate" of the Company, an Affiliate Agreement, and such Affiliate
Agreement shall be in full force and effect.
SECTION 6.03. Additional Conditions to Obligation of the
Company. The obligation of the Company to effect the Merger is also subject to
the following conditions:
(a) Representations and Warranties. The representations
and warranties of Parent and Merger Sub contained in this Agreement
shall be true and correct in all respects on and as of the Effective
Time, except for (i) changes contemplated by this Agreement, (ii)
those changes resulting from consummation of the ADT Merger in
accordance with the terms of the ADT Merger Agreement, (iii) those
representations and warranties which address matters only as of a
particular date (which shall have been true and correct as of such
date, subject to clause (iv)), and (iv) where the failure to be true
and correct could not reasonably be expected to have a Material
Adverse Effect, with the same force and effect as if made on and as of
the Effective Time, and the Company shall have received a certificate
to such effect signed by the President or any Vice-President of
Parent;
(b) Agreements and Covenants. Parent and Merger Sub
shall have performed or complied in all material respects with all
agreements and covenants required by this Agreement to be performed or
complied with by them on or prior to the Effective Time, and the
Company shall have received a certificate to such effect signed by the
President or any Vice-President of Parent;
(c) Consents Obtained. All material consents, waivers,
approvals, authorizations or orders required to be obtained, and all
filings required to be made, by Parent, Merger Sub or New Tyco for the
authorization, execution and delivery of this Agreement and the
consummation by them of the transactions contemplated
-46-
<PAGE> 53
hereby shall have been obtained and made by Parent, Merger Sub or New
Tyco, except where the failure to receive such consents, etc. could
not reasonably be expected to have a Material Adverse Effect on the
Company or Parent;
ARTICLE VII
TERMINATION
SECTION 7.01. Termination. This Agreement may be terminated
at any time prior to the Effective Time, notwithstanding approval thereof by
the shareholders of the Company or Parent:
(a) by mutual written consent duly authorized by the
Boards of Directors of Parent and the Company; or
(b) by either Parent or the Company if the Merger shall
not have been consummated by October 15, 1997 (provided that the right
to terminate this Agreement under this Section 7.01(b) shall not be
available to any party whose failure to fulfill any obligation under
this Agreement has been the cause of or resulted in the failure of the
Merger to occur on or before such date); or
(c) by either Parent or the Company if a court of
competent jurisdiction or governmental, regulatory or administrative
agency or commission shall have issued a nonappealable final order,
decree or ruling or taken any other action having the effect of
permanently restraining, enjoining or otherwise prohibiting the Merger
(provided that the right to terminate this Agreement under this
Section 7.01(c) shall not be available to any party who has not
complied with its obligations under Section 5.08 and such
noncompliance materially contributed to the issuance of any such
order, decree or ruling or the taking of such action); or
(d) by Parent, if the requisite vote of the shareholders
of the Company shall not have been obtained by October 15, 1997; or
(e) by Parent, if (i) the Board of Directors of the
Company shall withdraw, modify or change its approval or
recommendation of this Agreement or the Merger in a manner adverse to
Parent or shall have resolved to do so; (ii) the Board of Directors of
the Company shall have recommended to the shareholders of the Company
an Alternative Transaction (as hereinafter defined); or (iii) a tender
offer or exchange offer for 25% or more of the outstanding shares of
Company Common Stock is commenced (other than by Parent or an
affiliate of Parent) and the Board of Directors of the Company
recommends that the shareholders of the Company tender their shares in
such tender or exchange offer; or
(f) by the Company, if the Board of Directors of the
Company shall withdraw, modify or change its approval of this
Agreement or the Merger in a
-47-
<PAGE> 54
manner adverse to Parent or Merger Sub or shall have resolved to do
so, in each case in compliance with the provisions of Section 4.02; or
(g) by Parent or the Company, if any representation or
warranty of the Company or Parent, respectively, set forth in this
Agreement shall be untrue when made, such that the conditions set
forth in Sections 6.02(a) or 6.03(a), as the case may be, would not be
satisfied (a "Terminating Misrepresentation"); provided, that, if
such Terminating Misrepresentation is curable prior to October 15,
1997 by the Company or Parent, as the case may be, through the
exercise of its reasonable best efforts and for so long as the Company
or Parent, as the case may be, continues to exercise such reasonable
best efforts, neither Parent nor the Company, respectively, may
terminate this Agreement under this Section 7.01(g); or
(h) by Parent, if any representation or warranty of the
Company shall have become untrue such that the condition set
forth in Section 6.02(a) would not be satisfied, or by the Company, if
any representation or warranty of Parent shall have become untrue such
that the condition set forth in Section 6.03(a) would not be satisfied,
in either case other than by reason of a Terminating Breach (as
hereinafter defined); provided that if any such Terminating
Misrepresentation is curable prior to October 15, 1997 by the Company
or Parent, as the case may be, through the exercise of its reasonable
best efforts, and for so long as the Company or Parent, as the case may
be, continues to exercise such reasonable best efforts, neither Parent
nor the Company, respectively, may terminate this Agreement under this
Section 7.01(h); or
(i) by Parent or the Company, upon a breach of any
covenant or agreement on the part of the Company or Parent,
respectively, set forth in this Agreement, such that the conditions
set forth in Sections 6.02(b) or 6.03(b), as the case may be, would
not be satisfied (a "Terminating Breach"); provided, that, if such
Terminating Breach is curable prior to October 15, 1997 by the Company
or Parent, as the case may be, through the exercise of its reasonable
best efforts and for so long as the Company or Parent, as the case may
be, continues to exercise such reasonable best efforts, neither Parent
nor the Company, respectively, may terminate this Agreement under this
Section 7.01(i).
(j) Notwithstanding any other provision of this
Agreement, if the ADT Merger is not either consummated or terminated
in accordance with its terms, the Company shall have the one-time
right to terminate this Agreement effective September 16, 1997;
provided that, the Company has given Parent written notice of such
election prior to the close of business on September 15, 1997.
Notwithstanding any other provision in this Agreement the Company or
Parent shall have the right to terminate this Agreement on October 15,
1997 if the ADT Merger is not either consummated or terminated in
accordance with its terms.
As used herein, "Alternative Transaction" means any of (i) a
transaction pursuant to which any person (or group of persons) other than
Parent or its affiliates (a "Third Party") acquires or would acquire more than
25% of the outstanding shares of any
-48-
<PAGE> 55
class of equity securities of the Company, whether from the Company or pursuant
to a tender offer or exchange offer or otherwise, (ii) a merger or other
business combination involving the Company pursuant to which any Third Party
acquires more than 25% of the outstanding equity securities of the Company or
the entity surviving such merger or business combination, or (iii) any other
transaction pursuant to which any Third Party acquires or would acquire control
of assets (including for this purpose the outstanding equity securities of
subsidiaries of the Company, and the entity surviving any merger or business
combination including any of them) of the Company, or any of its subsidiaries
having a fair market value (as determined by the Board of Directors of the
Company in good faith) equal to more than 25% of the fair market value of all
the assets of the Company and its subsidiaries, taken as a whole, immediately
prior to such transaction; provided, however, that the term Alternative
Transaction shall not include any acquisition of securities by a broker dealer
in connection with a bona fide public offering of such securities.
SECTION 7.02. Effect of Termination. In the event of the
termination of this Agreement pursuant to Section 7.01, this Agreement shall
forthwith become void and there shall be no liability on the part of any party
hereto or any of its affiliates, directors, officers or shareholders except (i)
as set forth in Section 7.03 and Section 8.01 hereof, and (ii) nothing herein
shall relieve any party from liability for any breach hereof.
SECTION 7.03. Fees and Expenses. (a) Except as set forth in
this Section 7.03, all fees and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses, whether or not the Merger is consummated; provided,
however, that Parent and the Company shall share equally all SEC filing fees
and printing expenses incurred in connection with the printing and filing of
the Proxy Statement/Prospectus (including any preliminary materials related
thereto) and the Registration Statement (including financial statements and
exhibits) and any amendments or supplements thereto.
(b) The Company shall pay Parent a fee of $9,000,000
(the "Fee"), plus Parent's actual, documented and reasonable out-of-pocket
expenses relating to the transactions contemplated by this Agreement (including
but not limited to, fees and expenses of counsel and accountants and
out-of-pocket expenses (but not fees) of financial advisors) ("Expenses", as
applicable to Parent or Company), but in no event more than $600,000, upon the
first to occur of any of the following events:
(i) the termination of this Agreement by Parent
pursuant to Section 7.01(d) as a result of the failure to
receive the requisite vote for approval and adoption of this
Agreement by the shareholders of the Company by October 15,
1997; or
(ii) the termination of this Agreement by Parent
pursuant to Section 7.01(e); or
(iii) the termination of this Agreement by the
Company pursuant to Section 7.01(f); or
-49-
<PAGE> 56
(iv) the termination of this Agreement by Parent
pursuant to Section 7.01(i).
(c) Upon a termination of this Agreement by Parent
pursuant to Section 7.01(g), the Company shall pay to Parent the Expenses of
Parent relating to the transactions contemplated by this Agreement, but in no
event more than $600,000. Upon termination of this Agreement by Company
pursuant to Section 7.01(g), Parent shall pay to the Company the Expenses of
the Company relating to the transactions contemplated by this Agreement, but in
no event more than $600,000. Upon termination of this Agreement by either
Parent or the Company pursuant to Section 7.01(j) Parent shall pay to the
Company the Expenses of the Company.
(d) The Fee and/or Expenses payable pursuant to Section
7.03(b) or Section 7.03(c) shall be paid within one business day after the
first to occur of any of the events described in Section 7.03(b) or Section
7.03(c); provided that, in no event shall the Company or Parent, as the case
may be, be required to pay such Fee and/or Expenses to the other party, if,
immediately prior to the termination of this Agreement, the party entitled to
receive such Fee and/or Expenses was in material breach of its obligations
under this Agreement.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01. Effectiveness of Representations, Warranties
and Agreements; Knowledge, Etc. (a) Except as otherwise provided in this
Section 8.01, the representations, warranties and agreements of each party
hereto shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any other party hereto, any person
controlling any such party or any of their officers or directors, whether prior
to or after the execution of this Agreement. The representations, warranties
and agreements in this Agreement shall terminate at the Effective Time or upon
the termination of this Agreement pursuant to Section 7.01, as the case may be,
except that the agreements set forth in Article I and Section 5.06 shall
survive the Effective Time indefinitely and those set forth in Section 7.03
shall survive termination indefinitely. The Confidentiality Letter shall
survive termination of this Agreement as provided therein.
(b) Any disclosure made with reference to one or more
Sections of the Company Disclosure Schedule or the Parent Disclosure Schedule
shall be deemed disclosed with respect to each other section therein as to
which such disclosure is relevant provided that such relevance is reasonably
apparent.
SECTION 8.02. Notices. All notices and other communications
given or made pursuant hereto shall be in writing and shall be deemed to have
been duly given or made if and when delivered personally or by overnight
courier to the parties at the following addresses or sent by electronic
transmission, with confirmation received, to the telecopy
-50-
<PAGE> 57
numbers specified below (or at such other address or telecopy number for a
party as shall be specified by like notice):
(a) If to Parent or Merger Sub:
Tyco International Ltd.
One Tyco Park
Exeter, NH 03833
Telecopier No.: (603) 778-7330
Telephone No.: (603) 778-9700
Attention: Chairman
With a copy to:
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, NY 10022
Telecopier No.: (212) 715-8000
Telephone No.: (212) 715-9100
Attention: Joshua M. Berman, Esq.
(b) If to the Company:
Inbrand Corporation
1169 Canton Road
Marietta, GA 30066
Telecopier No.: (770) 419-1191
Telephone No.: (770) 422-3036
Attention: Chairman
-51-
<PAGE> 58
With a copy to:
Miller & Martin
1000 Volunteer Bldg.
832 Georgia Avenue
Chattanooga, TN 37402
Telecopier No.: (423) 785-8426
Telephone No.: (615 ) 756-6600
Attention: W. Scott McGinness, Jr.
SECTION 8.03. Certain Definitions. For purposes of this
Agreement, the term:
(a) "affiliates" means a person that directly or
indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, the first mentioned
person; including, without limitation, any partnership or joint
venture in which the Company (either alone, or through or together
with any other subsidiary) has, directly or indirectly, an interest of
5% or more;
(b) "beneficial owner" with respect to any shares of
Company Common Stock means a person who shall be deemed to be the
beneficial owner of such shares (i) which such person or any of its
affiliates or associates (as such term is defined in Rule 12b-2 of the
Exchange Act) beneficially owns, directly or indirectly, (ii) which
such person or any of its affiliates or associates has, directly or
indirectly, (A) the right to acquire (whether such right is
exercisable immediately or subject only to the passage of time),
pursuant to any agreement, arrangement or understanding or upon the
exercise of consideration rights, exchange rights, warrants or
options, or otherwise, or (B) the right to vote pursuant to any
agreement, arrangement or understanding, or (iii) which are
beneficially owned, directly or indirectly, by any other persons with
whom such person or any of its affiliates or associates has any
agreement, arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares;
(c) "business day" means any day other than a day on
which banks in New York are required or authorized to be closed;
(d) "control" (including the terms "controlled by" and
"under common control with") means the possession, directly or
indirectly or as trustee or executor, of the power to direct or cause
the direction of the management or policies of a person, whether
through the ownership of stock, as trustee or executor, by contract or
credit arrangement or otherwise;
(e) "person" means an individual, corporation,
partnership, association, trust, unincorporated organization, other
entity or group (as defined in Section 13(d)(3) of the Exchange Act);
and
-52-
<PAGE> 59
(f) "subsidiary" or "subsidiaries" of the Company, the
Surviving Corporation, Parent or any other person means any
corporation, partnership, joint venture or other legal entity of which
the Company, the Surviving Corporation, Parent or such other person,
as the case may be (either alone or through or together with any other
subsidiary), owns, directly or indirectly, more than 50% of the stock
or other equity interests the holders of which are generally entitled
to vote for the election of the board of directors or other governing
body of such corporation or other legal entity.
SECTION 8.04. Amendment. This Agreement may be amended by
the parties hereto by action taken by or on behalf of their respective Boards
of Directors at any time prior to the Effective Time; provided, however, that,
after approval of the Merger by the shareholders of the Company, no amendment
may be made which by law requires further approval by such shareholders without
such further approval. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
SECTION 8.05. Waiver. At any time prior to the Effective
Time, any party hereto may with respect to any other party hereto (a) extend
the time for the performance of any of the obligations or other acts, (b) waive
any inaccuracies in the representations and warranties contained herein or in
any document delivered pursuant hereto, or (c) waive compliance with any of the
agreements or conditions contained herein. Any such extension or waiver shall
be valid if set forth in an instrument in writing signed by the party or
parties to be bound thereby.
SECTION 8.06. Headings. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
SECTION 8.07. Severability. (a) If any term or other
provision of this Agreement is invalid, illegal or incapable of being enforced
by any rule of law, or public policy, all other conditions and provisions of
this Agreement shall nevertheless remain in full force and effect so long as
the economic or legal substance of the transactions contemplated hereby is not
affected in any manner adverse to any party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner to the end that transactions contemplated hereby are
fulfilled to the extent possible.
(b) The Company and Parent agree that the Fee provided in
Section 7.03(b) is fair and reasonable in the circumstances, considering not
only the Merger Consideration but also the outstanding funded indebtedness
(including capital leases) of the Company and its subsidiaries. If a court of
competent jurisdiction shall nonetheless, by a final, non-appealable judgment,
determine that the amount of the Fee exceeds the maximum amount permitted by
law, then the amount of the Fee shall be reduced to the maximum amount
permitted by law in the circumstances, as determined by such court of competent
jurisdiction.
-53-
<PAGE> 60
SECTION 8.08. Entire Agreement. This Agreement constitutes
the entire agreement and supersedes all prior agreements and undertakings
(other than the Confidentiality Letters), both written and oral, among the
parties, or any of them, with respect to the subject matter hereof and, except
as otherwise expressly provided herein.
SECTION 8.09. Assignment; Merger Sub. This Agreement shall
not be assigned by operation of law or otherwise, except that all or any of the
rights of Merger Sub hereunder may be assigned to any direct, wholly-owned
subsidiary of Parent or New Tyco provided that no such assignment shall relieve
the assigning party of its obligations hereunder. Merger Sub's rights under
this Agreement shall be assigned to a direct, wholly-owned subsidiary of New
Tyco, if such assignment is required in order that the Merger will constitute a
tax-free reorganization within the meaning of Section 368 of the Code. Parent
guarantees the full and punctual performance by Merger Sub of all the
obligations hereunder of Merger Sub or any such assignees.
SECTION 8.10. Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and nothing
in this Agreement, express or implied, is intended to or shall confer upon any
other person any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement, including, without limitation, by way of subrogation,
other than Section 5.06 (which is intended to be for the benefit of the
Indemnified Parties and Officer Employees and may be enforced by such
Indemnified Parties and Officer Employees).
SECTION 8.11. Failure or Indulgence Not Waiver; Remedies
Cumulative. No failure or delay on the part of any party hereto in the
exercise of any right hereunder shall impair such right or be construed to be a
waiver of, or acquiescence in, any breach of any representation, warranty or
agreement herein, nor shall any single or partial exercise of any such right
preclude other or further exercise thereof or of any other right. All rights
and remedies existing under this Agreement are cumulative to, and not exclusive
of, any rights or remedies otherwise available.
SECTION 8.12. Governing Law; Jurisdiction. (a) This
Agreement shall be governed by, and construed in accordance with, the internal
laws of the State of New York applicable to contracts executed and fully
performed within the State of New York.
(b) Each of the parties hereto submits to the non-exclusive
jurisdiction of the federal courts of the United States and the courts of the
State of New York located in the City of New York, Borough of Manhattan with
respect to any claim or cause of action arising out of this Agreement or the
transactions contemplated hereby.
SECTION 8.13. Counterparts. This Agreement may be executed
in one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original
but all of which taken together shall constitute one and the same agreement.
SECTION 8.14. WAIVER OF JURY TRIAL. EACH OF PARENT, MERGER
SUB AND THE COMPANY HEREBY IRREVOCABLY WAIVES, TO THE
-54-
<PAGE> 61
FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY.
[This space intentionally left blank.]
-55-
<PAGE> 62
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have
caused this Agreement to be executed as of the date first written above by
their respective officers thereunto duly authorized.
TYCO INTERNATIONAL LTD.
By /s/ Mark H. Swartz
--------------------------------------
Name: Mark H. Swartz
Title: Vice President - CFO
By /s/ L. Dennis Kozlowski
--------------------------------------
Name: L. Dennis Kozlowski
Title: Chairman and CEO
T5 ACQUISITION CORP.
By /s/ Mark H. Swartz
--------------------------------------
Name: Mark H. Swartz
Title: Vice President
By /s/ L. Dennis Kozlowski
--------------------------------------
Name: L. Dennis Kozlowski
Title: President
INBRAND CORPORATION
By /s/ Scott Sigler
--------------------------------------
Name: Scott Sigler
Title: President/Chief Operating
Officer
By /s/ Garnett A. Smith
--------------------------------------
Name: GARNETT A. SMITH
Title: CHAIRMAN
<PAGE> 1
Exhibit No. 99
Press Release of INBRAND Corporation
dated as of May 13, 1997
<PAGE> 2
EXHIBIT 99
[TYCO INTERNATIONAL LETTERHEAD]
FOR IMMEDIATE RELEASE
CONTACT: CONTACT:
David P. Brownell Garnett A. Smith
Tyco International Ltd. INBRAND Corporation
Senior Vice President Chairman and CEO
(603) 778-9700 (770) 422-3036
TYCO INTERNATIONAL TO ACQUIRE INBRAND CORPORATION
ACQUISITION WILL EXPAND TYCO'S DISPOSABLE
MEDICAL PRODUCTS UNIT
Exeter, New Hampshire and Marietta, Georgia, May 13, 1997 - Tyco
International Ltd. (NYSE-TYC), a diversified manufacturer of industrial and
commercial products, and INBRAND Corporation (NBR-NASDAQ), a leading supplier
of disposable personal absorbent products, announced today that they have
entered into a definitive merger agreement pursuant to which Tyco will acquire
INBRAND in a stock for stock transaction valued at $320 million.
INBRAND, based in Marietta, Georgia, with annual revenues of $240
million, manufactures and distributes principally adult incontinence products,
as well as feminine hygiene products and disposable baby diapers to hospitals,
retail and alternate care sites throughout North America and Europe.
The acquisition, which will be accounted for as a pooling of interests,
will be structured as a stock for stock transaction with INBRAND shareholders
receiving 0.43 shares of Tyco stock for each share of INBRAND stock. Based on
Tyco's May 12, 1997 closing price of $63.25, the terms of the agreement would
result in a value of $27.20 per share to the INBRAND shareholders.
"The acquisition of INBRAND, a leading company in the disposable
absorbent products market, will greatly expand the presence of our Kendall
Health Care Products unit in this fast growing area. INBRAND brings significant
market positions in each of the markets they serve," said L. Dennis Kozlowski,
Tyco's Chairman and Chief Executive Officer.
"INBRAND's strong presence in Europe significantly enhances Kendall's
product offerings in that part of the world. The many synergies between
Kendall and INBRAND will result in an immediate positive impact on our
earnings," he said.
<PAGE> 3
"INBRAND's business is an excellent fit with Kendall. This merger
will enhance INBRAND's ability to continue its growth throughout the world
utilizing the combined strengths of INBRAND and Kendall. The merger also
assures access to additional capital to support the Company's rapidly growing
adult incontinence business. This transaction represents a fine opportunity
for current INBRAND shareholders to have a stake in an outstanding company,"
said Garnett A. Smith, INBRAND's Chairman and CEO.
The transaction is contingent upon customary regulatory review and
approval by the INBRAND shareholders. The transaction is expected to close
following the completion of the previously announced transaction with ADT. It
is also expected to be tax-free for INBRAND shareholders.
INBRAND will be part of Tyco's Disposable and Speciality Products
Segment. Tyco's recently announced acquisition of the Submarine Systems
business from AT&T will be organized within the Electrical and Electronic
Component segment while the proposed ADT merger will be in the Fire and Safety
Services group. Each of these acquisitions enhances Tyco's strategy of building
each of its four segments through internal growth, complemented by acquisitions.
Tyco International is a worldwide manufacturer with strong leadership
positions in disposable medical products, packaging materials, flow control
products, electrical and electronic components and is the world's largest
manufacturer and provide of the fire and safety systems and services. The
Company operates in more than 50 countries around the world and has revenues in
excess of $6 billion.
xx
