0000912057-01-536257.txt : 20011029
0000912057-01-536257.hdr.sgml : 20011029
ACCESSION NUMBER: 0000912057-01-536257
CONFORMED SUBMISSION TYPE: S-4
PUBLIC DOCUMENT COUNT: 6
FILED AS OF DATE: 20011023
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: TYCO INTERNATIONAL LTD /BER/
CENTRAL INDEX KEY: 0000833444
STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC CONNECTORS [3678]
STATE OF INCORPORATION: D0
FISCAL YEAR END: 0930
FILING VALUES:
FORM TYPE: S-4
SEC ACT: 1933 Act
SEC FILE NUMBER: 333-72038
FILM NUMBER: 1763895
BUSINESS ADDRESS:
STREET 1: 90 PITTS BAY ROAD
STREET 2: THE ZURICH CENTRE SECOND FLOOR
CITY: PEMROKE HM 08 BERMU
STATE: D0
BUSINESS PHONE: 4412928674
MAIL ADDRESS:
STREET 1: C/O TYCO INTERNATIONAL (US) INC
STREET 2: ONE TYCO PARK
CITY: EXETER
STATE: NH
ZIP: 03833
FORMER COMPANY:
FORMER CONFORMED NAME: ADT LIMITED
DATE OF NAME CHANGE: 19930601
S-4
1
a2061223zs-4.txt
S-4
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 23, 2001
REGISTRATION NO. 333-
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--------------------------------------------------------------------------------
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
------------------------------
TYCO INTERNATIONAL LTD.
(Exact name of registrant as specified in its charter)
BERMUDA 7382 NOT APPLICABLE
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
------------------------------
THE ZURICH CENTRE, SECOND FLOOR
90 PITTS BAY ROAD
PEMBROKE HM 08, BERMUDA
(441) 292-8674*
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------------
MARK H. SWARTZ
C/O TYCO INTERNATIONAL (US) INC.
ONE TYCO PARK
EXETER, NEW HAMPSHIRE 03833
(603) 778-9700
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------------
* Tyco International Ltd. maintains its registered and principal executive
offices at The Zurich Centre, Second Floor, 90 Pitts Bay Road, Pembroke HM 08,
Bermuda. The executive offices of Tyco's principal United States subsidiaries
are located at One Tyco Park, Exeter, New Hampshire 03833. The telephone number
there is (603) 778-9700.
------------------------------
COPIES TO:
MEREDITH B. CROSS FATI SADEGHI PHILLIP R. MILLS
WILMER, CUTLER & PICKERING SENIOR CORPORATE COUNSEL DAVIS POLK & WARDWELL
2445 M STREET, N.W. C/O TYCO INTERNATIONAL (US) 450 LEXINGTON AVENUE
WASHINGTON, D.C. 20037 INC. NEW YORK, NEW YORK 10017
(202) 663-6000 ONE TYCO PARK (212) 450-4000
EXETER, NEW HAMPSHIRE 03833
(603) 778-9700
------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
------------------------------
CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PER UNIT PRICE(2) REGISTRATION FEE(3)
Common Shares, nominal value U.S. $ 0.20 per
share...................................... 20,196,226 Not Applicable $943,736,812 $235,935
(1) Represents the estimated maximum number of Tyco common shares ("Tyco Common
Shares") issuable upon consummation of the amalgamation of TyCom Ltd. with
TGN Holdings, Ltd., a subsidiary of the Registrant (the "Amalgamation"),
calculated as the product of (a) 64,462,897, which is the sum of (i) the
500,999,100 TyCom common shares, par value U.S. $ 0.25 per share ("TyCom
Common Shares"), outstanding on October 18, 2001, less 444,419,353 TyCom
Common Shares held by TGN Holdings and its affiliates; (ii) 7,883,150 of
TyCom Common Shares issuable pursuant to outstanding stock options through
the date the Amalgamation is expected to be consummated, and (iii) the
number of TyCom Common Shares otherwise expected to be issued prior to the
date the Amalgamation is expected to be consummated, multiplied by (b) the
exchange ratio for the Amalgamation of 0.3133 Tyco Common Share for each
outstanding TyCom Common Share.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 promulgated under the Securities Act of 1933, as
amended, based on the product of (i) $14.64, the average of the high and low
sale prices of TyCom Common Shares on the New York Stock Exchange on
October 18, 2001 and (ii) 64,462,897, the expected maximum number of TyCom
Common Shares to be acquired in the Amalgamation as calculated in
footnote 1.
(3) The amount of registration fee, calculated in accordance with Section 6(b)
of the Securities Act of 1933, as amended, and Rule 457 promulgated
thereunder, is .000250 of the proposed maximum aggregate offering price.
------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SUBJECT TO COMPLETION, DATED OCTOBER 23, 2001
[TYCOM LTD. LOGO]
TYCOM LTD.
CROWN HOUSE
4 PAR-LA-VILLE ROAD
HAMILTON HM 08, BERMUDA
Dear TyCom Shareholder,
I am pleased to invite you to attend a special general meeting of
shareholders of TyCom Ltd., which will be held at [ ] a.m., Atlantic Time,
on [ ], 2001, at [ ].
At the meeting, you will be asked to approve an amalgamation agreement that
TyCom has entered into with TGN Holdings, Ltd., an indirect, wholly-owned
subsidiary of Tyco International Ltd. The amalgamation agreement provides for
the amalgamation of TyCom and TGN Holdings, resulting in TyCom becoming an
indirect, wholly-owned subsidiary of Tyco. Tyco has guaranteed the obligations
of TGN Holdings and the amalgamated company under the amalgamation agreement.
Tyco, through TGN Holdings, currently owns approximately 89% of TyCom's
outstanding shares and has agreed to vote its TyCom common shares in favor of
approval of the amalgamation agreement.
When the amalgamation is completed, Tyco will issue 0.3133 of a Tyco common
share for each outstanding TyCom common share (other than TyCom common shares
held by Tyco, TGN Holdings and their respective subsidiaries). Tyco's common
shares are listed on the New York Stock Exchange and the Bermuda Stock Exchange
under the symbol "TYC" and on the London Stock Exchange under the symbol "TYI."
TyCom's common shares are listed on the New York Stock Exchange and the Bermuda
Stock Exchange under the symbol "TCM." You are encouraged to check current
quotes for the respective prices of Tyco and TyCom prior to the special general
meeting.
The exchange ratio and the amalgamation agreement are the result of an offer
made by Tyco on October 3, 2001 to acquire the approximately 11% minority
interest in TyCom, thereby bringing TyCom back into Tyco's corporate structure
as an indirect, wholly-owned subsidiary. TyCom's board of directors formed a
special committee consisting of two independent directors, who were advised by
independent financial advisors and lawyers. The special committee has determined
that the amalgamation and the amalgamation agreement are fair to, and in the
best interests of, TyCom's shareholders (excluding Tyco, TGN Holdings and their
respective subsidiaries) and has recommended that the TyCom board approve the
amalgamation agreement and the amalgamation.
THE TYCOM BOARD OF DIRECTORS, TAKING INTO ACCOUNT THE FINDINGS AND
RECOMMENDATION OF THE SPECIAL COMMITTEE AND THE TERMS AND CONDITIONS OF THE
AMALGAMATION AGREEMENT, THE VOTING AGREEMENT AND THE TYCO GUARANTEE, HAS
DETERMINED THAT THE AMALGAMATION AND THE AMALGAMATION AGREEMENT ARE FAIR TO, AND
IN THE BEST INTERESTS OF, TYCOM'S SHAREHOLDERS (EXCLUDING TYCO, TGN HOLDINGS AND
THEIR RESPECTIVE SUBSIDIARIES), AND HAS APPROVED AND AUTHORIZED THE
AMALGAMATION. THE TYCOM BOARD RECOMMENDS THAT YOU VOTE "FOR" APPROVAL OF THE
AMALGAMATION AGREEMENT.
The accompanying proxy statement/prospectus provides a detailed description
of the proposed amalgamation. I urge you to read the enclosed materials
carefully.
Yours sincerely,
L. Dennis Kozlowski
Executive Chairman and Director
FOR A DISCUSSION OF RISK FACTORS ASSOCIATED WITH THE AMALGAMATION, SEE "RISK
FACTORS" BEGINNING ON PAGE .
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES TO BE ISSUED IN THE
AMALGAMATION OR DETERMINED WHETHER THIS PROXY STATEMENT/PROSPECTUS IS TRUTHFUL
OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This proxy statement/prospectus is dated [ ], 2001, and is first
being mailed to shareholders on or about [ ], 2001.
REFERENCES TO ADDITIONAL INFORMATION
This document incorporates by reference important business and financial
information about Tyco and TyCom from documents that are not included in, or
delivered with, this document. This information is available to you without
charge upon your written or oral request. You can obtain documents related to
Tyco and TyCom that are incorporated in this document by reference by requesting
them in writing, or by telephone, from the appropriate company:
TYCO INTERNATIONAL LTD. TYCOM LTD.
THE ZURICH CENTRE, SECOND FLOOR CROWN HOUSE
90 PITTS BAY ROAD 4 PAR-LA-VILLE ROAD
PEMBROKE HM 08, BERMUDA HAMILTON HM 08, BERMUDA
(441) 292-8674 (441) 294-8500
IF YOU WOULD LIKE TO REQUEST DOCUMENTS, PLEASE DO SO BY [ ], 2001
IN ORDER TO RECEIVE THEM BEFORE THE SPECIAL GENERAL MEETING.
See also "Where You Can Find More Information" on page i.
TYCOM LTD.
CROWN HOUSE
4 PAR-LA-VILLE ROAD
HAMILTON HM 08, BERMUDA
------------------------
NOTICE OF SPECIAL GENERAL MEETING OF SHAREHOLDERS
------------------------
Notice is hereby given that the Special General Meeting of Shareholders of
TyCom Ltd. will be held on [ ], 2001 at [ ] a.m., Atlantic Time,
at [ ], for the following purposes:
1. To consider and, if thought fit, vote to approve the Agreement and
Plan of Amalgamation, dated as of October 18, 2001, by and between TGN
Holdings, Ltd., a Bermuda company and an indirect, wholly-owned subsidiary
of Tyco International Ltd., a Bermuda company, and TyCom Ltd., a Bermuda
company. Approval of the amalgamation agreement will constitute approval of
the amalgamation contemplated thereby, pursuant to which TyCom and TGN
Holdings will amalgamate; and
2. To transact such other incidental business as may properly come
before the Special General Meeting or any adjournment or postponement
thereof.
Notice of the Special General Meeting has been sent to all holders of record
of TyCom common shares at the close of business on [ ], 2001. Notice
will also be mailed to shareholders who become holders of record of TyCom common
shares through [ ], 2001. All holders of record of TyCom common shares on
the date of the Special General Meeting will be entitled to attend and vote at
the Special General Meeting. Any shareholder who does not receive a copy of the
proxy statement/prospectus and accompanying proxy card may obtain a copy at the
meeting or by contacting TyCom at (441) 294-8500.
Shareholders are cordially invited to attend the Special General Meeting in
person. Whether or not you plan to attend the Special General Meeting, please
sign, date and return the enclosed proxy card to ensure that your shares are
represented at the Special General Meeting. Registered shareholders who attend
the Special General Meeting may vote their shares personally, even though they
have sent in proxies.
If your TyCom shares are held in a brokerage account or by a bank or other
nominee, you are considered the beneficial owner of shares "held in street
name," and these proxy materials are being forwarded to you by your broker or
nominee. Your name does not appear on the register of shareholders and, in order
to be admitted to the meeting, you must bring a letter or account statement
showing that you are the beneficial owner of the shares. You will not be able to
vote at the Special General Meeting and should instruct your broker or nominee
how to vote on your behalf.
The TyCom board of directors, taking into account the findings and
recommendation of the special committee and the terms and conditions of the
amalgamation agreement, the voting agreement and the Tyco guarantee, has
determined that the amalgamation and the amalgamation agreement are fair to, and
in the best interests of, TyCom's shareholders (excluding Tyco, TGN Holdings and
their respective subsidiaries), and has approved and authorized the
amalgamation. The TyCom board recommends that you vote "FOR" approval of the
amalgamation agreement. Further information regarding the Special General
Meeting and the amalgamation is set forth in the accompanying proxy
statement/prospectus and the annexes thereto.
Holders of TyCom common shares who do not vote in favor of the amalgamation
have the right to apply to the Supreme Court of Bermuda within one month of the
giving of this notice for an appraisal of the fair value of their shares. See
"The Amalgamation--Rights of Dissenting Shareholders" in the accompanying proxy
statement/prospectus. For the purposes of Section 106 of the Companies Act 1981
(Bermuda), as amended, the parties have determined that the consideration to be
paid in the amalgamation represents the fair value of the TyCom common shares.
IT IS IMPORTANT THAT YOU SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AS
SOON AS POSSIBLE. THE PROXY IS REVOCABLE AND IT WILL NOT BE USED IF YOU:
(1) GIVE WRITTEN NOTICE OF REVOCATION TO THE SECRETARY AT TYCOM LTD., CROWN
HOUSE, 4 PAR-LA-VILLE ROAD, HAMILTON HM 08, BERMUDA PRIOR TO THE VOTE TO BE
TAKEN AT THE MEETING; (2) LODGE A LATER-DATED PROXY CARD; OR (3) ATTEND AND VOTE
AT THE SPECIAL GENERAL MEETING.
By Order of the Board of Directors,
Judith Collis
Secretary
[ ], 2001
WHERE YOU CAN FIND MORE INFORMATION
Tyco and TyCom file annual, quarterly and special reports, proxy statements
and other information with the SEC under the Securities Exchange Act of 1934, as
amended. You may read and copy this information at the SEC's Public Reference
Room at 450 Fifth Street, N.W., Washington D.C. 20549 or at the SEC's other
public reference facilities. Please call the SEC at 1-800-SEC-0330 for further
information on the operation and location of the SEC's public reference
facilities. You may also obtain copies of this information by mail from the
Public Reference Section of the SEC at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, at prescribed rates.
The filings of Tyco and TyCom with the SEC are also available to the public
from commercial document retrieval services and at the web site maintained by
the SEC at "http://www.sec.gov."
You can also inspect reports, proxy statements and other information about
Tyco and TyCom at the offices of the New York Stock Exchange, 20 Broad Street,
New York, New York 10005.
Tyco filed a registration statement on Form S-4 to register with the SEC the
Tyco common shares to be delivered in connection with the amalgamation. This
document is a part of that registration statement and constitutes a prospectus
of Tyco, in addition to being a proxy statement of TyCom for the special general
meeting of TyCom shareholders. As allowed by SEC rules, this document does not
contain all the information you can find in the registration statement or the
exhibits to the registration statement. You may obtain copies of the Form S-4
(and any amendments to that document) in the manner described above.
This document incorporates by reference the following documents that Tyco
and TyCom have previously filed with the SEC:
TYCO SEC FILINGS (FILE NO. 001-13836) PERIOD
------------------------------------- ------
Annual Report on Form 10-K Fiscal year ended September 30, 2000
Quarterly Reports on Form 10-Q Quarterly periods ended December 31, 2000,
March 31, 2001 and June 30, 2001
Current Reports on Form 8-K Filed on November 1, 2000, November 15, 2000,
February 9, 2001, March 15, 2001, March 29,
2001, April 3, 2001, May 24, 2001, June 15,
2001, July 25, 2001, August 3, 2001 and
August 16, 2001
The description of Tyco common shares as set Filed on March 1, 1999
forth in its Registration Statement on
Form 8-A/A
TYCOM SEC FILINGS (FILE NO. 001-15765) PERIOD
-------------------------------------- ------
Annual Report on Form 10-K Fiscal year ended September 30, 2000
Quarterly Reports on Form 10-Q Quarterly periods ended December 31, 2000,
March 31, 2001 and June 30, 2001
The description of TyCom common shares as set Filed on March 27, 2000
forth in its Registration Statement on
Form 8-A
i
Tyco and TyCom also are incorporating by reference additional documents that
they file with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 between the date of this document and the date
that the offering of Tyco common shares through this document is completed. In
addition, Tyco and TyCom are incorporating by reference all documents that they
file pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the
date of the initial registration statement and prior to the date of
effectiveness of the registration statement. The information incorporated by
reference is considered to be part of this document, except for any information
that is superseded by information that is included in this document.
Tyco has supplied all information contained or incorporated by reference in
this document relating to Tyco, and TyCom has supplied all such information
relating to TyCom.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS DOCUMENT WHEN DECIDING HOW TO VOTE ON THE AMALGAMATION.
NEITHER TYCO NOR TYCOM HAS AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION
THAT IS DIFFERENT FROM WHAT IS CONTAINED IN THIS DOCUMENT. THIS DOCUMENT IS
DATED [ ], 2001. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED
IN THIS DOCUMENT IS ACCURATE AS OF ANY DATE OTHER THAN THIS DATE, AND NEITHER
THE MAILING OF THIS DOCUMENT NOR THE DELIVERY OF TYCO COMMON SHARES IN
CONNECTION WITH THE AMALGAMATION WILL CREATE ANY IMPLICATION TO THE CONTRARY. IF
YOU ARE IN A JURISDICTION WHERE OFFERS TO EXCHANGE OR SELL, OR SOLICITATIONS OF
OFFERS TO EXCHANGE OR PURCHASE, THE SECURITIES OFFERED BY THIS DOCUMENT OR THE
SOLICITATION OF PROXIES IS UNLAWFUL, OR IF YOU ARE A PERSON TO WHOM IT IS
UNLAWFUL TO DIRECT THESE TYPES OF ACTIVITIES, THEN THE OFFER PRESENTED IN THIS
DOCUMENT DOES NOT EXTEND TO YOU.
ii
TABLE OF CONTENTS
PAGE
--------
WHERE YOU CAN FIND MORE INFORMATION......................... i
QUESTIONS AND ANSWERS ABOUT THE AMALGAMATION................ 1
SUMMARY..................................................... 3
The Companies............................................. 3
The Special General Meeting............................... 4
The Amalgamation.......................................... 5
Comparison of Rights of Shareholders of TyCom and
Shareholders of Tyco.................................... 7
RISK FACTORS................................................ 8
FORWARD LOOKING INFORMATION................................. 10
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF TYCO AND
TYCOM..................................................... 11
Selected Consolidated Historical Financial Data of Tyco... 12
Selected Consolidated Historical Financial Data of
TyCom................................................... 14
Comparative Per Share Information......................... 15
Comparative Market Value Information...................... 16
Recent Developments of Tyco and TyCom..................... 17
TYCOM SPECIAL GENERAL MEETING............................... 19
Solicitation of Proxies................................... 19
Purpose of the TyCom Special General Meeting.............. 19
Recommendation of the Board of Directors of TyCom......... 19
Outstanding Voting Shares................................. 19
Voting Your Proxy......................................... 20
Costs of Solicitation..................................... 20
THE AMALGAMATION............................................ 21
Background of the Amalgamation............................ 21
Recommendation of the Special Committee and the TyCom
Board; Reasons of the TyCom Board and the Special
Committee for the Amalgamation.......................... 24
Opinion of Financial Advisor to the Special Committee..... 27
Reasons of Tyco for the Amalgamation...................... 32
Interests of Certain Persons in the Amalgamation.......... 32
Material U.S. Federal Income Tax and Bermuda Tax
Consequences............................................ 33
Accounting Treatment...................................... 36
Regulatory Approvals Required for the Amalgamation........ 37
U.S. Federal Securities Law Consequences.................. 37
Delisting and Deregistration of TyCom Common Shares;
Cessation of TyCom Periodic Reporting................... 37
Stock Exchange Listing.................................... 37
Rights of Dissenting Shareholders......................... 38
Litigation................................................ 38
THE AMALGAMATION AGREEMENT.................................. 40
General................................................... 40
The Amalgamation.......................................... 40
Effective Time............................................ 40
Amalgamation Consideration................................ 40
Exchange of TyCom Common Shares........................... 41
Representations and Warranties............................ 42
Conduct of Business by TyCom.............................. 42
iii
PAGE
--------
Certain Other Covenants................................... 42
Conditions to the Amalgamation............................ 44
Termination............................................... 45
Amendment and Waiver; Parties in Interest................. 46
Voting Agreement.......................................... 46
Guarantee................................................. 46
COMPARATIVE PER SHARE PRICES AND DIVIDENDS.................. 47
Tyco...................................................... 47
TyCom..................................................... 48
COMPARISON OF RIGHTS OF SHAREHOLDERS OF TYCOM AND TYCO...... 49
LEGAL MATTERS............................................... 63
EXPERTS..................................................... 63
FUTURE SHAREHOLDER PROPOSALS................................ 63
ANNEXES
Annex A--Agreement and Plan of Amalgamation and Related
Guarantee
Annex B--Voting Agreement
Annex C--Opinion of J.P. Morgan Securities Inc.
iv
QUESTIONS AND ANSWERS ABOUT THE AMALGAMATION
Q. WHY ARE TYCOM AND TYCO PROPOSING THE AMALGAMATION?
A. As a result of the transaction, Tyco will have the ability to more fully
integrate the business and assets of TyCom into Tyco's other businesses.
Furthermore, Tyco will be able to eliminate the costs and management time
associated with maintaining TyCom as a separate public company, and will be
able to more easily allocate capital between TyCom and Tyco's businesses.
TyCom agreed to the amalgamation as the result of negotiations between Tyco
and the special committee. The TyCom board established the special committee
in response to a proposal by Tyco to acquire the outstanding minority
interest in TyCom.
The reasons TyCom and Tyco are proposing the amalgamation are discussed in
more detail later in this document. See "The Amalgamation--Background of the
Amalgamation" beginning on page i "The Amalgamation--Recommendation of the
Special Committee and TyCom's Board of Directors; Reasons of TyCom and the
Special Committee for the Amalgamation" beginning on page ; and "The
Amalgamation--Reasons of Tyco for the Amalgamation" on page .
Q. WHAT WILL I RECEIVE IN THE AMALGAMATION?
A. If the amalgamation is completed, holders (other than Tyco, TGN Holdings and
their respective subsidiaries) of TyCom common shares at the time the
amalgamation is completed will receive 0.3133 of a Tyco common share in
exchange for each of their TyCom common shares. Cash will be paid instead of
fractional Tyco shares.
Q. WHAT ARE THE U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE AMALGAMATION?
A. The receipt by TyCom shareholders of Tyco common shares pursuant to the
amalgamation will constitute a taxable exchange for U.S. federal income tax
purposes. To review the tax consequences of the amalgamation in greater
detail, see "The Amalgamation--Material U.S. Federal Income Tax and Bermuda
Tax Consequences" beginning on page .
Q. WHEN WILL THE AMALGAMATION TAKE EFFECT?
A. The amalgamation is expected to take effect after the closing conditions set
forth in the amalgamation agreement have been satisfied or waived. We
currently expect to be able to complete the amalgamation in the first
calendar quarter of 2002.
Q. WHAT SHAREHOLDER APPROVAL IS NEEDED?
A. The affirmative vote of a majority of the outstanding TyCom common shares is
required for the approval of the amalgamation agreement. TGN Holdings is
entitled to cast approximately 89% of the total votes to be cast at the
TyCom special general meeting and has agreed to vote in favor of the
amalgamation. Accordingly, approval of the amalgamation agreement is
assured. The approval of Tyco shareholders (other than Tyco, TGN Holdings
and their respective subsidiaries) is not required.
Q. WHAT IF I DON'T VOTE?
A. If you fail to vote by proxy or in person, it will have no effect on the
approval of the amalgamation agreement.
If you return a properly signed proxy card but do not indicate how you want
to vote, your proxy will be counted as a vote in favor of approval of the
amalgamation agreement. If you respond and abstain from voting, your proxy
will have no effect on the approval of the amalgamation agreement.
1
Q. DO I HAVE THE RIGHT TO DISSENT FROM THE AMALGAMATION?
A. Yes. If you so choose, you will be entitled to exercise appraisal rights so
long as you take all of the steps required under Bermuda law. These steps
are described under "The Amalgamation--Rights of Dissenting Shareholders" on
page .
Q. WHAT SHOULD I DO NOW?
A. After carefully reading and considering the information contained in this
document, you should cast your vote on the amalgamation agreement by
completing, signing and dating your proxy card. The completed proxy card
should be returned in the enclosed postage-prepaid envelope. You also can
attend the special general meeting and vote in person. The TyCom Board of
Directors, taking into account the findings and recommendation of the
special committee and the terms and conditions of the amalgamation
agreement, the voting agreement and the Tyco guarantee, recommends that you
vote "FOR" approval of the amalgamation agreement.
Q. WHEN SHOULD I SEND IN MY PROXY CARD? CAN I CHANGE MY VOTE?
A. You should send in your proxy card as soon as possible so that your shares
will be voted at the special general meeting. You can change your vote at
any time prior to the special general meeting by submitting a later-dated
signed proxy card. You also can change your vote by giving written notice of
revocation to the Secretary of TyCom or attending the meeting and voting in
person.
Q. IF MY TYCOM COMMON SHARES ARE HELD BY A BANK OR BROKER, HOW CAN I VOTE?
A. If your shares are held by a bank, broker or other nominee, you must contact
the nominee to vote on your behalf. The nominee cannot vote your shares
without receiving instructions from you. If you instruct a nominee on how to
vote your shares, you must follow directions received from that nominee if
you wish to change your vote.
Q. WILL I RECEIVE A PHYSICAL CERTIFICATE FOR THE TYCO SHARES THAT ARE DELIVERED
TO ME IN THE AMALGAMATION?
A. No. If you are a record holder of TyCom common shares, your Tyco common
shares will be issued under Tyco's Direct Registration System. This means
that your shares will be held in an account maintained by Mellon Investor
Services LLC, Tyco's transfer agent. If you want a physical certificate, you
can request one at any time. If you hold your TyCom common shares through a
bank, broker or other nominee, you will initially hold your Tyco common
shares through that nominee.
Q. SHOULD I SEND IN MY TYCOM SHARE CERTIFICATES NOW?
A. No. After the amalgamation is completed, you will receive written
instructions on how to exchange your TyCom common share certificates for
Tyco common shares. Please do not send in your TyCom common share
certificates with your proxy.
2
SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION FROM THIS DOCUMENT AND DOES NOT
CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU. TO BETTER UNDERSTAND
THE AMALGAMATION AND FOR A MORE COMPLETE DESCRIPTION OF THE LEGAL TERMS OF THE
AMALGAMATION, YOU SHOULD READ CAREFULLY THIS ENTIRE DOCUMENT AND THE DOCUMENTS
TO WHICH YOU HAVE BEEN REFERRED. SEE "WHERE YOU CAN FIND MORE INFORMATION" ON
PAGE I. IN PARTICULAR, YOU SHOULD READ THE AMALGAMATION AGREEMENT AND RELATED
GUARANTEE, THE VOTING AGREEMENT AND THE OPINION OF JPMORGAN, WHICH ARE ATTACHED
TO THIS DOCUMENT AS ANNEXES A, B AND C, RESPECTIVELY.
THE COMPANIES
TYCO INTERNATIONAL LTD.
The Zurich Centre, Second Floor
90 Pitts Bay Road
Pembroke HM 08, Bermuda
(441) 292-8674
Tyco is a diversified manufacturing and service company that, through its
subsidiaries:
- designs, manufactures and distributes electrical and electronic components
and multi-layer printed circuit boards;
- designs, manufactures and distributes disposable medical supplies and
other specialty products;
- designs, manufactures, installs and services fire detection and
suppression systems, installs, monitors and maintains electronic security
systems and designs, manufactures, distributes and services specialty
valves;
- designs, engineers, manufactures, installs, operates and maintains
undersea cable communications systems; and
- offers vendor, equipment, commercial, factoring, consumer and structured
financing and leasing capabilities through its indirect wholly-owned
subsidiary, Tyco Capital Corporation.
Tyco operates in more than 100 countries around the world and had revenues
for its fiscal year ended September 30, 2001 in excess of $36 billion.
Tyco's strategy is to be the low-cost, high quality producer and provider in
each of its markets. It promotes its leadership position by investing in its
existing businesses, developing new markets and acquiring complementary
businesses and products. Combining the strengths of its existing operations and
its business acquisitions, Tyco seeks to enhance shareholder value through
increased earnings per share and strong cash flows.
Tyco reviews acquisition opportunities in the ordinary course of business,
some of which may be material and some of which are currently under
investigation, discussion or negotiation. There can be no assurance that any of
these acquisitions will be consummated.
Tyco's common shares are listed on the New York Stock Exchange and the
Bermuda Stock Exchange under the symbol "TYC" and on the London Stock Exchange
under the symbol "TYI."
Tyco's and TGN Holdings's registered and principal executive offices are
located at the above address in Bermuda. The executive offices of Tyco's
principal United States subsidiaries are located at One Tyco Park, Exeter, New
Hampshire 03833, and the telephone number there is (603) 778-9700.
For additional information regarding the business of Tyco, please see Tyco's
Form 10-K and other filings of Tyco with the SEC, which are incorporated by
reference into this document. See "Where You Can Find More Information" on page
i.
3
TGN HOLDINGS, LTD.
c/o Tyco International Ltd.
The Zurich Centre, Second Floor
90 Pitts Bay Road
Pembroke HM 08, Bermuda
(441) 292-8674
TGN Holdings is TyCom's immediate parent and is an indirect, wholly-owned
subsidiary of Tyco. TGN Holdings currently owns approximately 89% of the
outstanding TyCom common shares. Following the proposed transaction, TyCom and
TGN Holdings will amalgamate and the amalgamated company will be an indirect,
wholly-owned subsidiary of Tyco.
TYCOM LTD.
Crown House
4 Par-la-Ville Road
Hamilton HM 08, Bermuda
(441) 294-8500
TyCom is a leading independent provider of transoceanic fiber optic networks
and services. TyCom's products and services include:
- design, engineering, manufacture and installation of undersea cable
communications systems;
- service and maintenance of major undersea cable networks; and
- design, manufacture and installation of a global undersea fiber optic
network, known as the TyCom Global Network.-TM- TyCom operates, maintains
and sells bandwidth capacity on the TyCom Global Network.
TyCom was incorporated on March 8, 2000 as an indirect, wholly-owned
subsidiary of Tyco to serve as the holding company for Tyco's undersea fiber
optic cable communications business. In July 2000, TyCom sold approximately 14%
of its common shares in an initial public offering.
TyCom is deploying the TyCom Global Network in a number of phases. Phase 1
of the TyCom Global Network is designed to offer multi-terabit capacity
upgradeable to a maximum of 7.68 terabits per second, span approximately 90,000
kilometers and reach more than 30 major cities around the globe. TyCom is
designing and manufacturing the undersea cable, optical amplifiers and terminal
equipment, and designing, building and equipping the global and regional network
management centers and cable stations along the route. TyCom's own fleet of
cable ships, one of the world's largest, is installing and will maintain the
network.
TyCom's common shares are listed on the New York Stock Exchange and the
Bermuda Stock Exchange under the symbol "TCM."
TyCom's registered and principal executive offices are located at the above
address in Bermuda.
For additional information regarding the business of TyCom, please see
TyCom's Form 10-K and other filings of TyCom with the SEC, which are
incorporated by reference into this document. See "Where You Can Find More
Information" on page i.
THE SPECIAL GENERAL MEETING (PAGE )
The special general meeting of TyCom shareholders will be held on
[ ], 2001 at [ ] a.m., Atlantic Time, at [ ].
Notice of the meeting has been sent to all holders of record of TyCom's
common shares at the close of business on [ ], 2001. On that date, there
were outstanding and entitled to vote
4
500,999,100 TyCom common shares. Notice will also be mailed to shareholders who
become holders of record of TyCom common shares through [ ], 2001. Each
holder of record of TyCom common shares is entitled to one vote per share on the
amalgamation.
SHAREHOLDER VOTE REQUIRED
The affirmative vote of a majority of the outstanding TyCom common shares is
required for the approval of the amalgamation. TGN Holdings is entitled to cast
approximately 89% of the total votes to be cast at the Tyco special general
meeting and has agreed to vote in favor of the amalgamation.
THE AMALGAMATION (PAGE )
TyCom and TGN Holdings, an indirect, wholly-owned Tyco subsidiary, have
entered into an amalgamation agreement and a voting agreement. In the
amalgamation contemplated by the amalgamation agreement, TyCom and TGN Holdings
will amalgamate and the separate corporate existence of TyCom and TGN Holdings
will cease. TGN Holdings and TyCom will continue as the amalgamated company and
operate under the name TyCom Ltd. In the voting agreement, TGN Holdings has
agreed to vote its TyCom common shares (representing approximately 89% of
TyCom's outstanding shares) in favor of approval of the amalgamation agreement.
Tyco has guaranteed the obligations of TGN Holdings and the amalgamated company
under the amalgamation agreement and the voting agreement.
THE EXCHANGE RATIO; AMALGAMATION CONSIDERATION
Upon the consummation of the amalgamation, TyCom shareholders (other than
Tyco, TGN Holdings and their respective subsidiaries) will receive 0.3133 of a
Tyco common share for each TyCom common share held and will receive cash in lieu
of any fractional shares.
APPRAISAL RIGHTS
Under Bermuda law, which governs the amalgamation agreement, any holder of
TyCom common shares who does not vote in favor of the amalgamation agreement and
who is not satisfied that he or she has been offered the fair value of his or
her shares may, within one month of the giving of notice of the special general
meeting, apply to the Supreme Court of Bermuda to appraise the fair value of the
shares. There is no right of appeal from an appraisal by the Supreme Court. Such
holder will receive the value appraised by the Supreme Court only if the
amalgamation is completed. Pursuant to the amalgamation agreement, it is a
condition to the obligation of TGN Holdings and TyCom to effect the amalgamation
that the number of TyCom common shares with respect to which shareholders have
exercised appraisal rights does not exceed 5.6 million TyCom common shares. A
summary of the relevant provisions of the Companies Act 1981 (Bermuda), as
amended, is contained herein under the heading "The Amalgamation--Rights of
Dissenting Shareholders" beginning on page .
RESTRICTIONS ON THE ABILITY TO SELL TYCO COMMON SHARES
All Tyco common shares received by shareholders of TyCom in connection with
the amalgamation will be freely transferable except for Tyco common shares
received by TyCom shareholders who are considered to be "affiliates" of TyCom
under the Securities Act of 1933. See "The Amalgamation--U.S. Federal Securities
Law Consequences" on page .
TAX TREATMENT
The receipt by TyCom shareholders of Tyco common shares pursuant to the
amalgamation will constitute a taxable exchange for U.S. federal income tax
purposes. To review the tax consequences of
5
the amalgamation in greater detail, see "The Amalgamation--Material U.S. Federal
Income Tax and Bermuda Tax Consequences" beginning on page .
INTERESTS OF CERTAIN PERSONS IN THE AMALGAMATION
The executive officers and directors of TyCom, in their capacity as such,
may be deemed to have interests in the amalgamation that are in addition to or
different from their interests as shareholders of TyCom generally. The special
committee and the TyCom board of directors were aware of these interests and
considered them, among other matters, in approving the amalgamation. For a
discussion of these interests of the executive officers and directors of TyCom,
see "The Amalgamation--Interests of Certain Persons in the Amalgamation"
beginning on page .
CONDITIONS TO THE AMALGAMATION
The consummation of the amalgamation depends upon satisfaction of certain
conditions, including:
- continuing effectiveness of the registration statement of which this
document is a part;
- approval of the amalgamation by TyCom shareholders (TGN Holdings is
entitled to cast approximately 89% of the total votes to be cast at the
TyCom special general meeting and has agreed to vote in favor of the
amalgamation agreement);
- the absence of legal restraints to the consummation of the amalgamation,
including the receipt of any necessary material regulatory clearances; and
- the number of TyCom common shares with respect to which shareholders have
exercised appraisal rights does not exceed 5.6 million TyCom common
shares.
For further details, see "The Amalgamation Agreement--Conditions to the
Amalgamation" beginning on page .
TERMINATION OF THE AMALGAMATION
Either TyCom (only upon recommendation of the special committee) or TGN
Holdings may terminate the amalgamation agreement if:
- both parties consent in writing;
- the amalgamation is not consummated by June 30, 2002 through no fault of
the party seeking to terminate the amalgamation; or
- there are legal restraints preventing the amalgamation.
TGN Holdings also may terminate the amalgamation agreement if the special
committee withdraws, modifies or changes its recommendation of the amalgamation
agreement or the amalgamation in a manner adverse to Tyco or TGN Holdings or has
resolved to do so.
All costs and expenses incurred in connection with the amalgamation
agreement (other than those in connection with the preparation, printing,
mailing and filing of this proxy statement/prospectus, which will be paid by
Tyco) shall be paid by the party incurring such expenses, whether or not the
amalgamation is consummated.
For further details, see "The Amalgamation Agreement--Termination" beginning
on page .
ACCOUNTING TREATMENT
The amalgamation will be accounted for at historical costs, with the
exception of the acquisition of the minority interest which will be accounted
for under the purchase method of accounting in
6
accordance with generally accepted accounting principles in the United States.
See "The Amalgamation--Accounting Treatment" on page .
OPINION OF THE FINANCIAL ADVISOR TO TYCOM'S SPECIAL COMMITTEE
On October 18, 2001, JPMorgan delivered its opinion to the special committee
and the TyCom board of directors to the effect that, as of that date and subject
to the matters and assumptions set forth in the opinion, the consideration to be
received by the holders of TyCom common shares (other than Tyco, TGN Holdings
and their respective subsidiaries) in the amalgamation was fair from a financial
point of view to such holders. TyCom shareholders are urged to read the opinion
in its entirety. See "The Amalgamation--Opinion of Financial Advisor to the
Special Committee" and Annex C.
COMPARISON OF RIGHTS OF SHAREHOLDERS OF TYCOM AND SHAREHOLDERS OF TYCO (PAGE )
After the amalgamation, TyCom shareholders will become shareholders of Tyco,
and their rights as shareholders will be governed by Tyco's Memorandum of
Association and Bye-Laws. There are some differences between the memoranda of
association and bye-laws of Tyco and TyCom. However, since Tyco and TyCom are
both Bermuda companies, the rights of TyCom shareholders will continue to be
governed by Bermuda law after the amalgamation. For a summary of material
differences between the rights of Tyco shareholders and TyCom shareholders, see
"Comparison of Rights of Shareholders of TyCom and Tyco" beginning on page .
7
RISK FACTORS
IN EVALUATING THE AMALGAMATION AND THE AMALGAMATION AGREEMENT, TYCOM
SHAREHOLDERS SHOULD TAKE INTO ACCOUNT THE FOLLOWING RISK FACTORS:
THE VALUE OF THE AMALGAMATION CONSIDERATION THAT TYCOM SHAREHOLDERS WILL RECEIVE
WILL DEPEND ON THE VALUE OF TYCO COMMON SHARES AT THE TIME OF THE AMALGAMATION.
In the amalgamation, TyCom shareholders (other than Tyco, TGN Holdings and
their respective subsidiaries) will receive 0.3133 of a Tyco common share for
each of their TyCom common shares. Based on the closing Tyco common share price
on the New York Stock Exchange of $49.23 on October 18, 2001, the day the
amalgamation agreement was signed, the value of 0.3133 of a Tyco common share
was $15.42. The market price for Tyco shares at the time of the amalgamation is
likely to be different than the October 18, 2001 price because of market
fluctuations. The market value of Tyco common shares fluctuates for many
reasons, including changes in the business, operations or prospects of Tyco,
regulatory considerations or general market or economic conditions. Because the
0.3133 exchange ratio is fixed, the number of Tyco common shares TyCom
shareholders will receive in the amalgamation will not be affected by or
adjusted for the price of Tyco common shares at the time of the amalgamation. In
particular, TyCom shareholders will not receive a greater number of Tyco common
shares if the price per Tyco common share at the time of the amalgamation is
less than the October 18, 2001 price of $49.23.
Consummation of the amalgamation could be delayed past the time of the
special general meeting of TyCom shareholders because of regulatory action or
for other reasons not currently foreseeable. Consequently, the market value of
the Tyco common shares that TyCom shareholders receive in the amalgamation may
be higher or lower than the value based on the market price at the time TyCom
shareholders vote on the amalgamation. Even if there were a decline in the price
of Tyco shares during the period between the special general meeting and the
consummation of the amalgamation, TyCom shareholders would not have the
opportunity to vote again on the amalgamation, and the amalgamation
consideration would not be repriced.
THE OPINION OBTAINED BY THE TYCOM SPECIAL COMMITTEE FROM ITS FINANCIAL ADVISOR
SPEAKS AS OF ITS DATE AND DOES NOT REFLECT SUBSEQUENT CHANGES IN CIRCUMSTANCES.
TyCom shareholders should be aware that the opinion of JPMorgan, financial
advisor to the special committee of the TyCom board of directors, which
addresses the fairness from a financial point of view of the consideration to be
received by TyCom's shareholders (other than Tyco, TGN Holdings and their
respective subsidiaries), is based on financial, economic, market and other
conditions as they existed as of its date and not at any later time. Changes in
such conditions, which are beyond the control of Tyco, TyCom and JPMorgan, and
on which the opinion of JPMorgan is based, may alter the value of Tyco or TyCom
or their respective share prices following the date of the JPMorgan opinion.
THE AMALGAMATION WILL CONSTITUTE A TAXABLE EXCHANGE FOR TYCOM MINORITY
SHAREHOLDERS FOR U.S. FEDERAL INCOME TAX PURPOSES.
The receipt by TyCom minority shareholders of Tyco common shares pursuant to
the amalgamation will constitute a taxable exchange for U.S. federal income tax
purposes. A TyCom minority shareholder subject to U.S. federal income tax that
exchanges TyCom common shares for Tyco common shares will generally recognize
capital gain or loss equal to the difference between such shareholder's adjusted
tax basis in his or her TyCom common shares and the fair market value of the
Tyco common shares (and any cash in lieu of fractional shares) received in
exchange therefor. Such gain or loss will generally be long term capital gain or
loss if such shareholder's holding period for his or her TyCom common shares was
more than one year at the time of the exchange. The deductibility
8
of capital losses is subject to certain limitations. Any gain or loss so
recognized generally will be from a U.S. source. See "The Amalgamation--Material
U.S. Federal Income Tax and Bermuda Tax Consequences." TyCom shareholders are
urged to consult their tax advisors concerning the United States federal, state,
local and non-United States tax consequences of the amalgamation to them.
FAILURE TO COMPLETE THE AMALGAMATION COULD NEGATIVELY IMPACT TYCOM'S SHARE PRICE
AND FUTURE BUSINESS AND OPERATIONS.
Several conditions must be satisfied or waived in order to complete the
amalgamation. These conditions are described under "The Amalgamation Agreement"
and in detail in the amalgamation agreement, which is attached to this proxy
statement/prospectus as Annex A. The conditions may not be satisfied, and if not
satisfied or waived, the amalgamation will not occur or will be delayed.
If the amalgamation is not completed or is delayed, TyCom may be subject to
the following material risks:
- the price of TyCom common shares may decline to the extent that the
current market price of TyCom common shares reflects a market assumption
that the amalgamation will be completed; and
- costs related to the amalgamation, such as legal, accounting and certain
financial advisor fees, must be paid even if the amalgamation is not
completed.
Failure to complete the amalgamation could result in Tyco considering other
strategic alternatives with respect to TyCom. There is no assurance that any
such alternatives will be available or attractive to Tyco in the future. Even if
the amalgamation is not consummated, however, Tyco will continue to control
TyCom as a majority-owned subsidiary.
9
FORWARD LOOKING INFORMATION
Certain statements contained in or incorporated by reference into this
document are "forward looking statements" within the meaning of the United
States Private Securities Litigation Reform Act of 1995. All forward looking
statements involve risks, uncertainties and contingencies, many of which are
beyond the control of Tyco and TyCom, which may cause actual results,
performance or achievements to differ materially from anticipated results,
performance or achievements. All statements contained or incorporated by
reference that are not clearly historical in nature are forward looking. When
used in this proxy statement/prospectus, the words "anticipate," "believe,"
"expect," "estimate" and similar expressions are generally intended to identify
forward looking statements. Examples of forward looking statements include any
statements regarding the timing or benefits of the amalgamation and the value of
the Tyco common shares to be received by TyCom shareholders as consideration for
the amalgamation, as well as expectations with respect to future sales and other
results of operations, operating efficiencies and product expansion. Factors
that might affect such forward looking statements include, among other things:
- the impact of fluctuations in the share price of Tyco common shares;
- overall economic and business conditions;
- the demand for Tyco's and TyCom's goods and services;
- competitive factors in the industries in which Tyco and TyCom compete;
- the risk factors described above under the heading "Risk Factors";
- changes in U.S. and non-U.S. government regulations;
- changes in tax requirements (including tax rate changes, new tax laws and
revised tax law interpretations);
- results of litigation;
- interest rate fluctuations and other capital market conditions, including
foreign currency rate fluctuations;
- economic and political conditions in international markets, including
governmental changes and restrictions on the ability to transfer capital
across borders;
- the ability to achieve anticipated synergies in connection with the
acquisition of TyCom, Tyco's recent acquisition of Tyco Capital
Corporation and other acquisitions;
- the timing, impact and other uncertainties of future acquisitions by Tyco;
and
- the timing of construction and the successful operation of the TyCom
Global Network.
For additional factors that might affect such forward looking statements
with respect to TyCom, see the factors identified under the heading
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Forward Looking Information" in TyCom's Annual Report on Form 10-K
for the fiscal year ended September 30, 2000 and Quarterly Report on Form 10-Q
for the quarter ended June 30, 2001. See "Where You Can Find More Information"
on page i.
10
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF TYCO AND TYCOM
The following information is being provided to assist you in analyzing the
financial aspects of the amalgamation. The selected financial information for
Tyco for the nine months ended June 30, 2001 and 2000 was derived from the
unaudited Consolidated Financial Statements included in Tyco's Quarterly Report
on Form 10-Q for the quarterly period ended June 30, 2001. The data presented
for Tyco for the nine months ended June 30, 2001 and 2000 are unaudited and, in
the opinion of Tyco's management, include all adjustments, consisting of normal
recurring adjustments, necessary for the fair presentation of such data. Tyco's
results for the nine months ended June 30, 2001 are not necessarily indicative
of the results to be expected for the fiscal year ending September 30, 2001. The
selected financial information for Tyco for the fiscal years ended
September 30, 2000, 1999 and 1998 was derived from the audited Consolidated
Financial Statements included in Tyco's Annual Report on Form 10-K for the
fiscal year ended September 30, 2000. The selected financial information for
Tyco for the nine months ended September 30, 1997 was derived from the audited
Consolidated Financial Statements included in Tyco's Annual Report on
Form 10-K/A filed on June 26, 2000. The selected financial information for Tyco
for the year ended December 31, 1996 was derived from the audited Consolidated
Financial Statements included in Tyco's Current Report on Form 8-K filed on
June 3, 1999.
The selected financial information for TyCom for the nine months ended
June 30, 2001 and 2000 was derived from the unaudited Consolidated Financial
Statements included in TyCom's Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 2001. The data presented for TyCom for the nine months
ended June 30, 2001 and 2000 are unaudited and, in the opinion of TyCom's
management, include all adjustments, consisting of normal recurring adjustments,
necessary for the fair presentation of such data. TyCom's results for the nine
months ended June 30, 2001 are not necessarily indicative of the results to be
expected for the fiscal year ending September 30, 2001. The selected financial
information for TyCom for the years ended September 30, 2000, 1999 and 1998 was
derived from the audited Consolidated Financial Statements included in TyCom's
Annual Report on Form 10-K for the year ended September 30, 2000. The audited
information for the year ended September 30, 1997 and the unaudited information
for the year ended September 30, 1996 was derived from TyCom's historical books
and records and those of its subsidiaries. The aforementioned selected financial
information presents TyCom's consolidated financial position and results of
operations as a subsidiary of Tyco prior to TyCom's initial public offering
("IPO") on July 27, 2000, including adjustments necessary for a fair
presentation of the business, and as a stand-alone entity subsequent to the IPO.
The financial information presented may not be indicative of the results that
would have been achieved had TyCom operated as a stand-alone entity.
The information should be read in conjunction with the historical financial
statements and related notes contained in the annual, quarterly and other
reports filed by Tyco and TyCom with the SEC. See "Where You Can Find More
Information" on page i.
11
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF TYCO(1)
NINE MONTHS ENDED NINE MONTHS
JUNE 30, YEAR ENDED SEPTEMBER 30, ENDED YEAR ENDED
---------------------- --------------------------------- SEPTEMBER 30, DECEMBER 31,
2001(2) 2000(2) 2000(3) 1999(4) 1998(5) 1997(6)(7) 1996(8)(9)
---------- --------- --------- --------- --------- ------------- ------------
(UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE DATA)
CONSOLIDATED STATEMENTS OF
OPERATIONS DATA:
Total revenues.............. $ 26,549.7 $21,126.5 $30,691.9 $22,496.5 $19,061.7 $12,742.5 $14,671.0
Income (loss) from
continuing operations..... 3,376.7 2,610.0 4,520.1 1,067.7 1,168.6 (348.5) 49.4
Income (loss) from
continuing operations per
common share(10):
Basic....................... 1.91 1.55 2.68 0.65 0.74 (0.24) 0.02
Diluted..................... 1.89 1.52 2.64 0.64 0.72 (0.24) 0.02
Cash dividends per common
share (10)................ See (11) below.
CONSOLIDATED BALANCE SHEET
DATA
(END OF PERIOD):
Total assets................ $106,892.8 $40,404.3 $32,344.3 $23,440.7 $16,960.8 $14,686.2
Long-term debt.............. 38,036.1 9,461.8 9,109.4 5,424.7 2,785.9 2,202.4
Manditorily redeemable
preference shares......... 260.0 -- -- -- -- --
Total shareholders'
equity.................... 31,187.2 17,033.2 12,369.3 9,901.8 7,478.7 7,022.6
--------------------------
(1) On April 2, 1999, October 1, 1998, August 29, 1997 and August 27, 1997, Tyco
merged with AMP Incorporated, United States Surgical Corporation, Keystone
International, Inc. and Inbrand Corporation, respectively. On July 2, 1997,
Tyco, formerly called ADT Limited, merged with Tyco International Ltd., a
Massachusetts corporation at the time ("Former Tyco"). These five
combinations were accounted for under the pooling of interests method of
accounting. As such, the consolidated financial data presented above include
the effect of the mergers, except for the period prior to January 1, 1997,
which does not include Inbrand due to immateriality.
(2) Income from continuing operations in the nine months ended June 30, 2001
includes a charge of $184.3 million for the write-off of purchased
in-process research and development, net charges of $86.9 million, of which
$78.8 million is included in cost of sales, for restructuring and other
non-recurring items, a charge of $27.9 million for the impairment of
long-lived assets, a net gain of $276.6 million on the sale of businesses
and investments and a net gain of $64.1 million on the sale of shares of a
subsidiary. Income from continuing operations in the nine months ended
June 30, 2000 includes charges of $99.0 million for the impairment of
long-lived assets and a net credit of $81.3 million, of which net charges of
$1.0 million is included in cost of sales, for merger, restructuring and
other non-recurring items. See Notes 2, 7 and 8 to the Consolidated
Financial Statements contained in Tyco's quarterly report on Form 10-Q for
the quarterly period ended June 30, 2001, which is incorporated by reference
in this document.
(3) Income from continuing operations in the fiscal year ended September 30,
2000 includes a net charge of $176.3 million, of which $1.0 million is
included in cost of sales, for restructuring and other non-recurring
charges, and charges of $99.0 million for the impairment of long-lived
assets. See Notes 12 and 16 to the Consolidated Financial Statements
contained in Tyco's Annual Report on Form 10-K for the fiscal year ended
September 30, 2000, which is incorporated by reference in this document.
Income from continuing operations for the fiscal year ended September 30,
2000 includes a one-time pre-tax gain of $1,760.0 million related to the
issuance of common shares by a subsidiary. See Note 15 to the Consolidated
Financial Statements contained in Tyco's Annual Report on Form 10-K for the
fiscal year ended September 30, 2000.
12
(4) Income from continuing operations in the fiscal year ended September 30,
1999 includes charges of $1,035.2 million for merger, restructuring and
other non-recurring charges, of which $106.4 million is included in cost of
sales, and charges of $507.5 million for the impairment of long-lived assets
related to the mergers with U.S. Surgical Corporation and AMP and AMP's
profit improvement plan. See Notes 12 and 16 to the Consolidated Financial
Statements contained in Tyco's Annual Report on Form 10-K for the fiscal
year ended September 30, 2000.
(5) Income from continuing operations in the fiscal year ended September 30,
1998 includes charges of $80.5 million primarily related to costs to exit
certain businesses in U.S. Surgical Corporation's operations and
restructuring charges of $12.0 million related to the continuing operations
of U.S. Surgical Corporation. In addition, AMP recorded restructuring
charges of $185.8 million in connection with its profit improvement plan and
a credit of $21.4 million to restructuring charges representing a revision
of estimates related to its 1996 restructuring activities. See Note 16 to
the Consolidated Financial Statements contained in Tyco's Annual Report on
Form 10-K for the fiscal year ended September 30, 2000.
(6) In September 1997, Tyco changed its fiscal year end from December 31 to
September 30. Accordingly, the nine-month transition period ended
September 30, 1997 is presented.
(7) Loss from continuing operations in the nine months ended September 30, 1997
includes charges related to merger, restructuring and other non-recurring
costs of $917.8 million and impairment of long-lived assets of
$148.4 million primarily related to the mergers and integration of ADT,
Former Tyco, Keystone, and Inbrand, and charges of $24.3 million for
litigation and other related costs and $5.8 million for restructuring
charges in U.S. Surgical Corporation's operations. The results for the nine
months ended September 30, 1997 also include a charge of $361.0 million for
the write-off of purchased in-process research and development related to
the acquisition of the submarine systems business of AT&T Corp.
(8) Prior to their respective mergers, ADT, Keystone, U.S. Surgical Corporation
and AMP had December 31 fiscal year ends and Former Tyco had a June 30
fiscal year end. The selected consolidated financial data have been combined
using a December 31 fiscal year end for ADT, Keystone, Former Tyco, U.S.
Surgical Corporation and AMP for the year ended December 31, 1996.
(9) Income from continuing operations in 1996 includes non-recurring charges of
$744.7 million related to the adoption of Statement of Financial Accounting
Standards No. 121 "Accounting for the Impairment of Long-Lived Assets to be
Disposed Of," $237.3 million related principally to the restructuring of
ADT's electronic security services business in the United States and the
United Kingdom, $98.0 million to exit various product lines and
manufacturing operations associated with AMP's operations and $8.8 million
of fees and expenses related to ADT's acquisition of Automated Security
(Holdings) plc, a United Kingdom company.
(10) Per share amounts have been retroactively restated to give effect to the
mergers with Former Tyco, Keystone, Inbrand, U.S. Surgical Corporation and
AMP; a 0.48133 reverse stock split (1.92532 after giving effect to the
subsequent stock splits) effected on July 2, 1997; and two-for-one stock
splits distributed on October 22, 1997 and October 21, 1999, both of which
were effected in the form of a stock dividend.
(11) Tyco has paid a quarterly cash dividend of $0.0125 per common share since
July 2, 1997, the date of the Former Tyco/ADT merger. Prior to the merger
with ADT, Former Tyco had paid a quarterly cash dividend of $0.0125 per
share of common stock since January 1992. ADT had not paid any dividends on
its common shares since 1992. U.S. Surgical Corporation paid quarterly
dividends of $0.04 per share in the year ended September 30, 1998 and the
nine months ended September 30, 1997 and aggregate dividends of $0.08 per
share in 1996. AMP paid dividends of $0.27 per share in the first two
quarters of the year ended September 30, 1999, $0.26 per share in the first
quarter and $0.27 per share in the last three quarters of the year ended
September 30, 1998, $0.26 per share in each of the three quarters of the
nine months ended September 30, 1997 and aggregate dividends of $1.00 per
share in 1996. The payment of dividends by Tyco in the future will depend on
business conditions, Tyco's financial condition and earnings and other
factors.
13
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA OF TYCOM
NINE MONTHS ENDED
JUNE 30, YEAR ENDED SEPTEMBER 30,
------------------- -------------------------------------------------------
2001 2000 2000(1) 1999 1998 1997(2) 1996
-------- -------- -------- -------- -------- -------- -----------
(UNAUDITED) (UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE DATA)
CONSOLIDATED STATEMENTS OF
OPERATIONS DATA:
Net revenue................... $1,690.1 $1,952.2 $2,539.7 $1,637.6 $1,281.6 $ 375.5 $162.6
Operating income (loss)....... 308.8 372.1 498.6 323.6 262.3 (265.5) 57.0
Net income (loss)............. 259.4 223.9 303.3 163.0 152.0 (156.6) 37.0
Basic earnings (loss) per
common share(3)............. 0.50 0.50 0.66 0.36 0.34 (0.35) 0.08
Diluted earnings (loss) per
common share(3)............. 0.50 0.50 0.66 0.36 0.34 (0.35) 0.08
Cash dividends per common share See (4) below
CONSOLIDATED BALANCE SHEET DATA
(END OF PERIOD):
Total assets.................. $4,221.6 $4,088.3 $2,392.2 $1,366.8 $1,364.4(5) $ 53.3
Long-term debt................ 652.5 653.5 608.2 600.0 -- --
Shareholders' equity.......... 2,184.8 2,161.5 498.5 213.7 676.8(5) 38.0
------------------------
(1) Results for fiscal year 2000 include certain non-recurring costs of
$13.1 million ($10.5 million after tax) associated with TyCom's IPO.
(2) Results for fiscal year 1997 include a charge of $361.0 million
($220.2 million after tax) for the write-off of purchased in-process
research and development related to the acquisition of the submarine systems
business of AT&T Corp.
(3) Basic and diluted earnings per common share for fiscal 2000 have been
computed by dividing net income by the weighted-average number of common
shares outstanding. Basic and diluted earnings per common share prior to
fiscal 2000 have been computed by dividing net income for each period by
450,000,000 common shares, which is the number of common shares owned by
Tyco immediately prior to the IPO.
(4) Since TyCom's IPO, TyCom has not paid cash dividends.
(5) Unaudited.
14
COMPARATIVE PER SHARE INFORMATION
TYCO AND TYCOM TYCOM
TYCO TYCOM UNAUDITED EQUIVALENT
HISTORICAL HISTORICAL PRO FORMA UNAUDITED PRO
PER SHARE PER SHARE COMBINED PER FORMA PER
DATA DATA SHARE DATA(1) SHARE DATA(1)
---------- ---------- -------------- -------------
AT OR FOR THE NINE MONTHS ENDED JUNE 30, 2001
(UNAUDITED)
Income from continuing operations per common
share(2):
Basic....................................... $ 1.91 $0.50 $ 1.91 $ 0.60
Diluted..................................... 1.89 0.50 1.89 0.59
Cash dividends per common share............... See (3) below
Book value per common share................... 16.11 4.20 16.39 5.13
AT OR FOR THE YEAR ENDED SEPTEMBER 30, 2000
Income from continuing operations per
common share(2):
Basic....................................... $ 2.68 $0.66 $ 2.66 $ 0.83
Diluted..................................... 2.64 0.66 2.62 0.82
Cash dividends per common share............... See (3) below
Book value per common share................... 10.11 4.15 10.49 3.29
------------------------
(1) The Tyco and TyCom unaudited pro forma combined income and book value per
common share are based on TyCom shareholders receiving 0.3133 of a Tyco
common share for each TyCom common share held. The TyCom equivalent
unaudited pro forma per share data are calculated by multiplying the
unaudited pro forma combined per share data by 0.3133.
(2) See Notes (2) and (3) to "Selected Consolidated Historical Financial Data of
Tyco" on page and Notes (1) and (2) to "Selected Consolidated Historical
Financial Data of TyCom" on page for information on certain non-recurring
items.
(3) See Note (11) to "Selected Consolidated Historical Financial Data of Tyco"
on page and see Note (4) to "Selected Consolidated Historical Financial
Data of TyCom" on page for information on cash dividends per common share.
15
COMPARATIVE MARKET VALUE INFORMATION
The following table sets forth:
- the closing prices per share and aggregate market value of Tyco common
shares and of TyCom common shares on the New York Stock Exchange on
October 3, 2001, the last trading day prior to the public announcement of
the proposed amalgamation, and on [ ], 2001; and
- the equivalent price per share and equivalent market value of TyCom
shares, based on the exchange ratio of 0.3133.
TYCO TYCOM TYCOM
HISTORICAL HISTORICAL EQUIVALENT(1)
--------------- -------------- ---------------
On October 3, 2001
Closing price per common share............. $ 46.72 $ 9.46 $ 14.64
Market value of common shares(2)........... $90,437,992,431 $4,739,451,486 $ 7,334,626,824
On [ ], 2001
Closing price per common share............. $ $ $
Market value of common shares(2)........... $ $ $
------------------------
(1) Since the exchange ratio in the amalgamation is fixed, the value of the
amalgamation consideration that TyCom shareholders will receive will depend
on the value of Tyco common shares at the time of the amalgamation. You
should obtain current share price quotations for Tyco and TyCom before
making any decision about your vote on the amalgamation agreement.
(2) Market value based on 1,935,744,701 Tyco common shares and 500,999,100 TyCom
common shares outstanding as of October 3, 2001 and [ ] Tyco
common shares and [ ] TyCom common shares outstanding as of
[ ], 2001, excluding shares held in treasury or by subsidiaries.
The number of Tyco common shares outstanding as of October 3, 2001 and
[ ], 2001 includes 4,035,666 and [ ] shares,
respectively issuable upon exchange of exchangeable shares of CIT Exchangeco
Inc., a wholly-owned subsidiary of Tyco, at 0.6907 of a Tyco common share
per exchangeable share.
16
RECENT DEVELOPMENTS OF TYCO AND TYCOM
On October 18, 2001, Tyco announced that a subsidiary of Tyco has accepted
for exchange all shares properly tendered in the offer for the outstanding
common shares of Sensormatic Electronics Corporation ("Sensormatic"). Through
October 17, 2001, a total of approximately 84 million Sensormatic common shares
were tendered in the offer. The exchange ratio for the offer is 0.5189 of a Tyco
common share for each Sensormatic common share. Tyco also announced that the
offering period had been further extended to November 7, 2001. As soon as
practicable after the expiration of the offer and the conversion or redemption
of all Sensormatic preferred shares, Sensormatic will be merged into a
wholly-owned subsidiary of Tyco. In the merger, stockholders will receive the
same consideration of 0.5189 of a Tyco common share per Sensormatic common share
as received by stockholders in the offer.
On October 18, 2001, Tyco announced its results for the fourth quarter of
fiscal 2001, the three months ended September 30, 2001. Revenues before
non-recurring items and the adoption of Staff Accounting Bulletin No. 101
("SAB 101") for the quarter rose 29% to $10.08 billion compared with last year's
$7.80 billion. Diluted earnings per share before non-recurring items,
extraordinary items and the adoption of SAB 101 for the fourth quarter fiscal
2001 were $0.86, a 34% increase over earnings of $0.64 per diluted share in the
fourth quarter fiscal 2000. After giving effect to such items, revenues for the
fourth quarter fiscal 2001 were $10.01 billion compared to $9.57 billion in the
fourth quarter fiscal 2000 and diluted earnings per share for the fourth quarter
of fiscal 2001 were $0.70 per share, compared to $1.12 diluted earnings per
share in the fourth quarter of fiscal 2000. Included in the prior year's $1.12
is $0.59 resulting from a gain on the issuance of shares by a subsidiary.
The quarterly segment profits and margins for Tyco's Electronics, Healthcare
and Specialty Products, Fire and Security Services, and Telecommunications
businesses that are presented in the discussion below are operating profits
before non-recurring items, goodwill amortization and the adoption of SAB 101.
Results for Tyco's Tyco Capital business are pre-tax profits before goodwill
amortization.
Revenues at Tyco Electronics decreased 9% to $2.95 billion and operating
profits decreased 6% to $769.5 million; however, operating profits as a
percentage of revenues increased from 25% in the fiscal 2000 fourth quarter to
26% in the fiscal 2001 fourth quarter. Revenues at Tyco Healthcare and Specialty
Products increased 40% to $2.34 billion and operating profits increased 51% to
$609.3 million and increased as a percentage of revenues from 24% in the fiscal
2000 fourth quarter to 26% in the fiscal 2001 fourth quarter. Revenues at Tyco
Fire and Security Services increased 36% to $3.12 billion, operating profits
increased 51% to $662.3 million and increased as a percentage of revenues from
19% in the fiscal 2000 fourth quarter to 21% in the fiscal 2001 fourth quarter.
Revenues at Tyco Telecommunications (TyCom) decreased 71% to $173.2 million, and
segment operating profits decreased 35% to $94.0 million; however, segment
operating profit as a percentage of revenues increased from 25% in the fiscal
2000 fourth quarter to 54% in the fiscal 2001 fourth quarter. Revenues at Tyco
Capital were $1.50 billion and pre-tax earnings were $367.4 million in the
fiscal 2001 fourth quarter.
Tyco's October 18, 2001 press release provided the following additional
information with respect to TyCom's business. TyCom's overall revenues decreased
due to delays in the timing of third-party systems projects and capacity sales
on the TyCom Global Network. At the same time, margins increased due to project
completions and certain reduced accruals required due to lower profitability
levels for the fiscal year and certain contractual settlements. The shortfall in
revenue related to third-party system sales is primarily caused by a deferral of
revenue recognition for the C2C project. During the quarter, C2C was required to
seek outside financing to fill a funding gap caused by the bankruptcy filing of
a major customer of C2C. Full financing for the project is anticipated to be in
place during the first fiscal quarter of 2002. On the capacity side, the TyCom
Transatlantic system now has 400 gigabits of capacity
17
lit, with nearly 50% of this allocated to customers. TyCom is ahead of schedule
on a planned upgrade to 560 gigabits. Capacity sales for the quarter were lower
than forecast in part because of timing factors. A $63 million capacity
agreement scheduled to close in the quarter instead shifted to the first week of
October, and will be recognized in the first fiscal quarter of 2002.
Additionally, a $130 million capacity transaction with a major carrier was
accounted for as a swap and is not recognized as revenue; however, it will lower
the future cash cost of the TyCom Global Network build out. Given current market
conditions, TyCom has initiated a series of cost reduction actions intended to
bring its cost structures in line with current production expectations.
On October 18, 2001, Tyco announced that it intends to pay the purchase
price for any Liquid Yield Option-TM- Notes due 2020 (Zero Coupon--Senior) it is
required to repurchase as of November 17, 2001 entirely in cash.
18
TYCOM SPECIAL GENERAL MEETING
SOLICITATION OF PROXIES
This proxy statement/prospectus and accompanying proxy card are furnished in
connection with the solicitation of proxies by and on behalf of the TyCom board
in connection with the special general meeting of shareholders of TyCom to be
held on [ ], 2001 at [ ] at [ ] a.m., Atlantic Time, to
consider and, if thought fit, vote to approve the amalgamation agreement and the
transactions contemplated thereby. This proxy statement/prospectus and the
accompanying proxy card are being mailed to TyCom shareholders on or about
[ ], 2001.
PURPOSE OF THE TYCOM SPECIAL GENERAL MEETING
At the special general meeting, TyCom shareholders will consider and, if
thought fit, vote to approve the Agreement and Plan of Amalgamation, dated as of
October 18, 2001, by and between TyCom and one of Tyco's subsidiaries, TGN
Holdings. Approval of the amalgamation agreement will also constitute approval
of the amalgamation and the other transactions contemplated by the amalgamation
agreement. The amalgamation agreement provides, among other things, that TyCom
and TGN Holdings will be amalgamated, resulting in TyCom becoming an indirect,
wholly-owned subsidiary of Tyco, and that each outstanding TyCom common share
(other than TyCom common shares held by Tyco, TGN Holdings and their respective
subsidiaries) will be converted into the right to receive 0.3133 of a Tyco
common share (and cash in lieu of fractional shares). Tyco has guaranteed the
obligations of TGN Holdings and the amalgamated company under the amalgamation
agreement.
RECOMMENDATION OF THE BOARD OF DIRECTORS OF TYCOM
The TyCom board of directors, taking into account the findings and
recommendation of the special committee and the terms and conditions of the
amalgamation agreement, the voting agreement and the Tyco guarantee, has
determined that the amalgamation and the amalgamation agreement are fair to, and
in the best interests of, TyCom's shareholders (excluding Tyco, TGN Holdings and
their respective subsidiaries), and, has approved and authorized the
amalgamation. The TyCom board recommends that you vote "FOR" approval of the
amalgamation agreement. See "The Amalgamation--Recommendation of the Special
Committee and TyCom's Board of Directors; Reasons of TyCom and the Special
Committee for the Amalgamation" beginning on page .
OUTSTANDING VOTING SHARES
Notice of the special general meeting has been sent to all holders of record
of TyCom's common shares at the close of business on [ ], 2001. On that
date, there were outstanding and entitled to vote 500,999,100 TyCom common
shares. Notice will also be mailed to shareholders who become holders of record
of TyCom common shares through [ ], 2001. Any shareholder who does not
receive a copy of the proxy statement/prospectus and accompanying proxy card may
obtain a copy at the meeting or by contacting TyCom at (441) 294-8500. All
holders of record of TyCom's common shares on the date of the special general
meeting will be entitled to attend the special general meeting. A poll will be
taken on each proposal to be put to the special general meeting and every holder
of a common share will be entitled to one vote per share on each proposal. Two
holders of common shares present in person or by proxy and having the right to
attend and vote at the special general meeting are required to form a quorum for
the transaction of business.
For admission to the meeting, registered shareholders (those who own shares
in their own names) should come to the Registered Shareholders check-in area,
where their ownership will be verified. Those who have beneficial ownership of
shares held by a bank or broker (often referred to as "holding in street name")
should come to the Beneficial Owners check-in area. To be admitted, beneficial
owners must bring account statements or letters from their banks or brokers
showing that they own TyCom common shares, but they will not be able to vote at
the special general meeting. Only holders of record may vote at the special
general meeting. Beneficial shareholders should instruct their broker
19
or bank how to vote on their behalf. Registration will begin at [ ] a.m.,
and the special general meeting will begin at [ ] a.m.
The affirmative vote of a majority of the outstanding TyCom common shares is
required for the approval of the amalgamation agreement. TGN Holdings is
entitled to cast approximately 89% of the total votes to be cast at the TyCom
special general meeting and has agreed to vote in favor of the amalgamation
agreement. Accordingly approval of the amalgamation agreement is assured.
Pursuant to Bermuda law, (i) shares represented at the special general meeting
whose votes are withheld on any matter, (ii) shares which are represented by
"broker non-votes" (i.e., shares held by brokers or nominees which are
represented at the special general meeting but with respect to which the broker
or nominee is not empowered to vote on a particular proposal) and (iii) shares
which abstain from voting on any matter are not included in the determination of
the shares voting on such matter but are counted for quorum purposes. In
accordance with New York Stock Exchange rules, brokers and nominees may not
exercise their voting discretion with respect to the approval of the
amalgamation agreement. Therefore, if you do not instruct your broker how to
vote, your shares will not be voted with respect to approval of the amalgamation
agreement. TGN Holdings is entitled to cast approximately 89% of the total votes
to be cast at the TyCom special general meeting and has agreed to vote in favor
of the amalgamation agreement. Accordingly, approval of the amalgamation
agreement is assured, notwithstanding the vote of all other TyCom shareholders.
VOTING YOUR PROXY
Shares represented by a properly executed proxy will be voted as directed on
the proxy card. In the absence of contrary direction from a shareholder, proxies
held by the chairman of the special general meeting will be voted "FOR" the
approval of the amalgamation agreement.
A registered shareholder may revoke a proxy by giving written notice of
revocation to TyCom's Secretary at TyCom's registered office at any time before
it is voted, by submitting a later-dated proxy or by attending the special
general meeting and voting in person.
A proxy card has been enclosed with this document.
Shareholders should complete and return the proxy card as soon as possible.
To be valid, the proxy card must be completed in accordance with the
instructions on it.
COSTS OF SOLICITATION
Tyco will pay the expenses incurred in connection with the preparation,
printing, mailing and filing of this proxy statement/prospectus. In addition to
the use of the mails, certain directors, officers or employees of TyCom may
solicit proxies by telephone or personal contact. Upon request, TyCom will
reimburse brokers, dealers, banks and trustees, or their nominees, for
reasonable expenses incurred by them in forwarding proxy materials to beneficial
owners of common shares.
20
THE AMALGAMATION
BACKGROUND OF THE AMALGAMATION
On July 26, 2000, TyCom sold 70,300,000 of its common shares at $32.00 per
share in a public offering registered under the Securities Act. TyCom's net
proceeds from the offering were approximately $2.1 billion, of which
$200.0 million was paid as a dividend to Tyco. Immediately following the
offering, Tyco held 450.0 million of the outstanding shares of TyCom,
constituting 86% of the issued and outstanding shares at the time. Tyco
implemented the public offering of TyCom shares to unlock the value of TyCom's
business and to be a source of capital to fund expenditures that would result
from the development of the TyCom Global Network. Additionally, Tyco expected
the TyCom initial public offering would enable TyCom to use its shares for
acquisitions related to its business and to provide equity incentive employee
benefits for TyCom employees directly tied to the performance of TyCom's
business.
In early 2001, the market prices for shares of all of the participants in
the undersea broadband telecommunications industry, including TyCom, had
declined substantially from the levels at the time of TyCom's initial public
offering. In light of these declining prices, TyCom's board authorized the
repurchase of up to $500.0 million of TyCom's common shares. From time to time
during the spring and summer of 2001, TyCom repurchased shares under this
program, purchasing a total of 19.4 million shares for an aggregate of
$270.0 million.
By the late summer of 2001, TyCom's market price and the market prices of
others in the industry had fallen well below the levels of the spring of 2001.
Management of Tyco determined that the rationale for holding TyCom as an
independent listed company was substantially eroded by this decline in market
values. Tyco remained committed to TyCom's business, and management of Tyco
therefore began to consider a transaction in which Tyco would acquire all of
TyCom's remaining publicly held shares. Subsequently, Tyco engaged Goldman,
Sachs & Co. to assist in its consideration of such a transaction. At a meeting
of the Board of Directors of Tyco on Monday, October 1, 2001, Tyco's Board of
Directors discussed with management the proposed acquisition of the TyCom public
shares. The Tyco board discussed various factors relevant to the transaction,
and, following these discussions, the Tyco board approved the acquisition of the
TyCom public shares in a share for share exchange transaction based on a fixed
exchange ratio. The approval was subject to negotiation of transaction terms
satisfactory to Tyco management.
On Wednesday, October 3, 2001, Tyco submitted a written proposal to TyCom's
board to acquire the outstanding minority interest in TyCom for consideration
consisting of 0.2997 of a Tyco common share per common share of TyCom. Tyco's
proposal indicated that it was subject to negotiation of a definitive agreement
and necessary regulatory clearances. Tyco's proposal advised the TyCom board
that Tyco would not consider a sale of TyCom to a third party.
On Wednesday, October 3, 2001, at a special meeting by telephone of the
TyCom board, the TyCom board determined that is was advisable to form a special
committee, consisting of Brenda C. Barnes and Frank P. Doyle, neither of whom is
a director, officer or employee of Tyco (or any subsidiary of Tyco other than
TyCom) or an officer or employee of TyCom or its subsidiaries, to evaluate and
review the Tyco proposal and recommend to the TyCom board what action TyCom
should take in response to the proposal. The TyCom board authorized the special
committee to review and evaluate the terms and conditions and determine the
advisability of the proposal, to negotiate the terms of the proposal or an
improved proposal, to determine whether the proposal or any revised proposal was
fair to, and in the best interests of, TyCom's public shareholders, and to
recommend to the entire TyCom board whether to approve or disapprove the
proposal.
The special committee was also authorized to retain a financial advisor and
legal counsel to assist it in reviewing, evaluating and negotiating the terms
and conditions of the proposal or any revised
21
proposal and in determining whether the proposal or any revised proposal was
fair to, and in the best interests of, TyCom's public shareholders. The special
committee engaged Davis Polk & Wardwell as legal counsel and Conyers Dill &
Pearman as Bermuda legal counsel. The special committee also retained
J.P. Morgan Securities Inc. ("JPMorgan") to act as financial advisor to the
special committee.
Tyco and TyCom publicly announced Tyco's proposal before the market opened
on Thursday, October 4, 2001.
On Thursday, October 4, 2001, a lawsuit seeking class action status was
filed in New York state court, purportedly on behalf of public shareholders of
TyCom, against Tyco, TyCom and the TyCom board, in connection with Tyco's
proposal. Subsequently, six additional lawsuits were filed in New Jersey and New
Hampshire. See "Litigation".
On Thursday, October 4, 2001, the special committee met by telephone with
JPMorgan and Davis Polk & Wardwell to coordinate their activities with respect
to the Tyco proposal.
Over the next week, the special committee's legal and financial advisors
requested information from Tyco and TyCom and the special committee's financial
advisors conducted due diligence meetings with senior management of Tyco and
TyCom and discussed certain public and non-public information with respect to
each. The legal and financial advisors were in regular contact with the special
committee regarding the financial advisor's due diligence process and the terms
of Tyco's proposal.
On the afternoon of Monday, October 8, 2001, the special committee held a
meeting by telephone with Davis Polk & Wardwell and JPMorgan. At the meeting,
JPMorgan updated the special committee on the status of its review of both Tyco
and TyCom, including conversations with TyCom and Tyco's management. JPMorgan
discussed with the special committee the Tyco proposal and the historical
trading prices and performance of the TyCom and Tyco common shares. At the
meeting, Davis Polk & Wardwell advised the special committee regarding its
fiduciary duties and other legal matters with respect to the Tyco proposal.
On Tuesday and Wednesday, October 9 and 10, 2001, JPMorgan completed its
review and analysis of Tyco and TyCom and the Tyco proposal and Davis Polk &
Wardwell reviewed a draft of the amalgamation agreement provided by Tyco. Davis
Polk & Wardwell updated the special committee on the status of the plaintiffs'
lawsuits and the allegations made in the lawsuits.
On Thursday morning, October 11, 2001, the special committee met with its
financial and legal advisors. Davis Polk & Wardwell and Conyers Dill & Pearman
advised the special committee on the fiduciary duties of the special committee
members and relevant legal considerations resulting from their review and
analysis of the Tyco proposal. JPMorgan presented its report to the special
committee, which included its analysis and evaluation of Tyco, TyCom and the
Tyco proposal. Davis Polk & Wardwell reviewed the key terms of the amalgamation
agreement and tax treatment of the amalgamation. After questions and discussion,
the special committee discussed the options available to TyCom's public
shareholders and the range of possible responses to Tyco's proposal.
On Thursday afternoon, at the conclusion of the meeting, Mr. Doyle and
Ms. Barnes called Mark H. Swartz, Tyco's Executive Vice President and Chief
Financial Officer, to discuss Tyco's original offer and presented a number of
reasons why the initial exchange ratio proposed by Tyco should be improved.
After discussions, Mr. Swartz agreed to consider the special committee's
concerns and respond on Friday.
On Friday, October 12, 2001, Mr. Swartz, Mr. Doyle and Ms. Barnes had
several discussions on an increased exchange ratio. During the discussions,
Mr. Swartz indicated that Tyco would be willing to increase its offer to 0.3133
of a Tyco share, for each TyCom share, but that Tyco would not be willing to pay
a price higher than 0.3133 of a Tyco share. Mr. Doyle informed Mr. Swartz that
the special committee would call him Saturday afternoon.
22
On Saturday morning, October 13, 2001, the special committee met by
telephone with its financial and legal advisors to consider Tyco's increased
offer price. After discussion of the increased proposal, the special committee
directed Davis Polk & Wardwell to proceed with negotiations on the transaction
agreements including the amalgamation agreement, voting agreement and guarantee.
After the meeting, Mr. Doyle advised Mr. Swartz as to the discussions on the
increased exchange ratio offer. Mr. Doyle informed Mr. Swartz that the special
committee was prepared to proceed with negotiations on the transaction
agreements based upon the increased exchange ratio proposed by Tyco. Davis
Polk & Wardwell then sent a mark up of the amalgamation agreement and a proposed
voting agreement to Tyco and its counsel, Wilmer, Cutler & Pickering.
On Monday, October 14, 2001, Davis Polk & Wardwell and Wilmer, Cutler &
Pickering discussed the amalgamation agreement and voting agreement.
On Tuesday morning, October 16, 2001, the special committee met by telephone
with its advisors to discuss the status of negotiations of the transaction
agreements. Following that meeting, Davis Polk & Wardwell and Wilmer, Cutler &
Pickering engaged in further negotiations on the transaction agreements. On
Tuesday afternoon, Mr. Doyle and Mr. Swartz discussed issues raised by the
transaction agreements.
On Wednesday morning, October 17, 2001, the special committee again met by
telephone with its advisors. Davis Polk & Wardwell updated the special committee
on the status of negotiation on the transaction documents. Davis Polk & Wardwell
also advised the special committee regarding the status of its discussions with
plaintiffs' counsel in certain of the putative class action lawsuits.
Later that day, Davis Polk & Wardwell and JPMorgan spoke at length with
plaintiffs' counsel in certain of the TyCom lawsuits and their experts to hear
their views on Tyco's proposal. During this discussion, plaintiffs' counsel and
their experts discussed with representatives of JPMorgan the different analyses
performed by JPMorgan in its evaluation of TyCom. Plaintiffs' counsel and their
experts also presented their views as to the valuation of TyCom and offered a
number of reasons why the initial exchange ratio should be improved. Davis
Polk & Wardwell and Wilmer, Cutler & Pickering continued negotiations on the
transaction agreements.
On Thursday afternoon, October 18, 2001, the special committee held a
meeting by telephone with its financial advisors and legal counsel. JPMorgan
presented its financial analysis to the special committee on the fairness of the
consideration to TyCom's shareholders, other than Tyco and its subsidiaries,
from a financial point of view, to such holders. JPMorgan delivered its opinion
orally, which was later confirmed in writing to the special committee and the
TyCom board, to the effect that, subject to certain stated assumptions and
qualifications, as of that date, the consideration to be received by the
shareholders of TyCom, other than Tyco and its subsidiaries, in the proposed
amalgamation was fair, from a financial point of view, to such holders.
Davis Polk & Wardwell again advised the special committee on its legal
duties and responsibilities and then discussed the structure of the transaction,
the key terms and conditions of the transaction agreements and the tax treatment
of the transaction. Davis Polk & Wardwell reported on the views of plaintiffs'
legal and financial advisors in certain of the lawsuits and the memorandum of
understanding reached with plaintiffs in two claims.
After further discussion, the special committee unanimously (i) determined
that the amalgamation and the amalgamation agreement are fair to and in the best
interests of TyCom's public shareholders, other than Tyco and its subsidiaries,
and (ii) recommended that the TyCom board approve the amalgamation and the
amalgamation agreement.
After the special committee meeting, there was a meeting of the TyCom board.
All board members were present by telephone and JPMorgan, Davis Polk & Wardwell,
and Conyers Dill & Pearman also attended the meeting by telephone. The special
committee reported to the TyCom board its analysis
23
and considerations in making its determination that the amalgamation and
amalgamation agreement are fair to and in the best interests of TyCom's public
shareholders. The special committee then recommended that the TyCom board
approve the amalgamation and the amalgamation agreement.
Conyers Dill & Pearman then reviewed the duties of directors and Davis
Polk & Wardwell summarized the key terms and conditions of the transaction and
agreements. JPMorgan presented its financial analysis to the TyCom board on the
fairness of the consideration to TyCom's shareholders, other than Tyco and its
subsidiaries, from a financial point of view, and gave its opinion to the Board
that, subject to certain stated assumptions and qualifications, as of that date,
the consideration to be received by the shareholders of TyCom, other than Tyco
and its subsidiaries, in the proposed amalgamation was fair, from a financial
point of view. After further discussion and deliberation, taking into
consideration the recommendation of the special committee and the terms and
conditions of the transaction agreements, the TyCom board unanimously
(i) determined that the amalgamation and amalgamation agreement are fair to and
in the best interest of TyCom and the TyCom shareholders, other than Tyco, TGN
Holdings and their respective subsidiaries, (ii) determined that, taking into
account the guarantee, it is advisable to enter into the amalgamation agreement
and the voting agreement, (iii) approved the amalgamation and the forms of the
transaction agreements, (iv) recommended that the shareholders of TyCom approve
the amalgamation agreement and directed the amalgamation agreement be submitted
to TyCom's shareholders for their approval, and (v) approved the other matters
that were necessary to authorize and implement the amalgamation.
Following the TyCom board meeting, the parties executed and entered into the
amalgamation agreement, voting agreement and guarantee.
On Thursday, October 18, 2001 the defendants and plaintiffs in two of the
shareholder lawsuits reached an agreement in principle to settle the lawsuits,
which was set forth in a memorandum of understanding entered into on
October 19, 2001.
On Friday morning, October 19, 2001, prior to the opening of the market,
Tyco and TyCom jointly issued a press release announcing the transaction.
RECOMMENDATION OF THE SPECIAL COMMITTEE AND THE TYCOM BOARD; REASONS OF THE
TYCOM BOARD AND THE SPECIAL COMMITTEE FOR THE AMALGAMATION
At a meeting held on October 18, 2001, the special committee unanimously
determined that the amalgamation and the amalgamation agreement are fair to and
in the best interests of TyCom's public shareholders and recommended that the
TyCom board approve the amalgamation and amalgamation agreement. At a separate
meeting held on October 18, 2001, the TyCom board unanimously determined that,
taking into account the findings and recommendation of the special committee and
the terms and conditions of the transaction agreements, the amalgamation and the
amalgamation agreement are fair to and in the best interests of TyCom and its
shareholders other than Tyco, TGN Holdings and their respective subsidiaries.
The TyCom Board unanimously approved and adopted the amalgamation and the
amalgamation agreement and recommended that the TyCom's shareholders approve the
amalgamation and amalgamation agreement.
In the course of determining that the amalgamation and the amalgamation
agreement are fair to and in the best interest of TyCom's public shareholders,
the special committee consulted with its financial and legal advisors and
considered a number of factors in making its determination, including but not
limited to the following:
(1) Tyco currently owns approximately 89% of the outstanding common
shares of TyCom and TyCom could not pursue a transaction involving a sale of
the publicly-held shares of TyCom or any other strategic transaction
requiring shareholder approval without Tyco's consent; Tyco had stated in
its proposal that it would not consider selling its shares to a third party,
and accordingly, the
24
special committee did not propose or consider any alternative form of
strategic transaction and limited itself to negotiating a proposal by Tyco
to acquire the publicly-traded shares of TyCom, which the special committee
considered was fair to, and in the best interests of, TyCom's public
shareholders;
(2) if the special committee declined to approve Tyco's proposal at the
time, there was no assurance that there would be another opportunity for the
public shareholders of TyCom to receive a premium for their TyCom shares;
(3) the decline in trading prices for TyCom common shares in the period
since its initial public offering; market indices and the historical and
current market prices and recent trading activity for the TyCom common
shares, Tyco common shares and the equity of businesses comparable to those
of TyCom and Tyco, in each case which were provided to the special committee
by JPMorgan, and described under "Opinion of Financial Advisor to the
Special Committee";
(4) based on the closing price of Tyco common shares on October 17,
2001, the fact that the exchange ratio of 0.3133 of a share of Tyco to be
received per TyCom common share represented a premium over a range of
trading prices and averages of TyCom common shares, including a premium of
approximately 60.1% over the closing price of TyCom common shares on
October 3, 2001, the day immediately prior to the public announcement of the
Tyco proposal, a premium of approximately 104.3% over the closing price of
TyCom common shares on September 27, 2001, one week prior to the public
announcement of the Tyco proposal, and a premium of approximately 49.9% over
the closing price of TyCom's common shares one-month prior to the public
announcement of the Tyco proposal;
(5) the offer price is below certain historical trading prices of the
TyCom common shares, including the initial public offering price;
(6) the increase in the exchange ratio from Tyco's original offer and
its understanding, based on the negotiations between it and Tyco, that the
exchange ratio of 0.3133 represented the highest price Tyco would be willing
to pay in acquiring TyCom's publicly-owned shares;
(7) TyCom's business, financial condition, future prospects, current
business strategy and competitive position in its industry, as well as the
general industry, economic and stock market conditions;
(8) TyCom management's outlook, compared to Wall Street's outlook for
TyCom, and that TyCom's earnings in the quarter ending September 30, 2001
substantially underperformed Wall Street's earnings estimates for TyCom;
(9) the premiums achieved in comparable minority public shareholder
merger transactions, including transactions where the subsidiary recently
underwent an initial public offering;
(10) the presentation of JPMorgan that involved various valuation
analyses of TyCom, and the opinion of JPMorgan to the special committee and
the TyCom board to the effect that, as of October 18, 2001 and based upon
and subject to the matters stated in the opinion, the consideration to be
received by the holders of TyCom common shares (other than Tyco and its
subsidiaries) in the proposed amalgamation was fair, from a financial point
of view, to such holders, see "Opinion of Financial Advisor to the Special
Committee";
(11) the consideration received by TyCom's public shareholders is taxable
for U.S. federal income tax purposes;
25
(12) the amalgamation agreement was the product of arm's-length
negotiations between the special committee and Tyco, and no member of the
special committee was employed by or affiliated with TyCom or Tyco, except
as a director of TyCom;
(13) the lack of any required approval by TyCom's public shareholders to
complete the amalgamation given that Tyco currently has sufficient voting
power to approve the amalgamation without the affirmative vote of any other
shareholder of TyCom and Tyco has agreed to vote its shares to approve the
amalgamation agreement, and the belief that Tyco has the ability and desire
to complete the amalgamation in a timely manner;
(14) the terms of the amalgamation agreement and the obligation of Tyco
to consummate the amalgamation is subject to a limited number of conditions,
including the absence of a material adverse effect condition with respect to
Tyco or TyCom for events occurring after the signing of the amalgamation
agreement;
(15) the views of plaintiffs' legal and financial advisors in certain of
the TyCom shareholder lawsuits that were filed following Tyco's October 3,
2001 proposal as to the appropriate value to be received in any transaction
in which TyCom's public shareholders would receive Tyco common shares;
(16) the availability of appraisal rights under Bermuda law for TyCom
shareholders who may not support the amalgamation if they properly perfect
and exercise their appraisal rights, which rights are described under
"Rights of Dissenting Shareholders";
(17) the recognition that, following consummation of the amalgamation,
the shareholders of TyCom will no longer be able to participate directly in
any increases or decreases in value of TyCom's common shares; the
opportunity of TyCom's public shareholders to have an equity participation
in Tyco, which includes the performance of TyCom; and the depth of trading
liquidity of Tyco's common shares; and
(18) Tyco's common shares trading prices relative to comparable
businesses; Tyco management's outlook for its future performance; and the
impact of the transaction on Tyco's estimated future earnings per share.
In view of the wide variety of factors considered in connection with its
evaluation of the amalgamation and the complexity of these matters, the special
committee did not find it useful to and did not attempt to quantify, rank or
otherwise assign relative weights to the factors considered in connection with
its determination. The special committee relied on the experience and expertise
of JPMorgan, its financial advisor, for quantitative analysis of the financial
terms of the amalgamation, as described under "Opinion of Financial Advisor to
the Special Committee." In addition, the special committee did not undertake to
make any specific determination as to whether any particular factor was
essential to its ultimate determination, but rather the special committee
conducted an overall analysis of the factors described above, including thorough
discussions with its legal and financial advisors. In considering the factors
described above, individual members of the special committee may have given
different weight to different factors or reached different conclusions as to
whether a specific factor weighed in favor of or against approving the
amalgamation agreement.
In addition, the special committee believes that sufficient procedural
safeguards were and are present to ensure the fairness of the amalgamation to
TyCom's public shareholders and to permit the special committee to represent
effectively the interests of TyCom's public shareholders including:
- the special committee consisted entirely of non-employee independent
directors who acted to represent solely the interests of the TyCom's
public shareholders;
- the special committee retained and received advice from its independent
legal counsel, Davis Polk & Wardwell and Conyers Dill & Pearman; and
26
- the special committee was advised by and received the opinion of JPMorgan,
its financial advisor.
The TyCom Board consists of six members, two of whom served on the special
committee. At the October 18 meeting of the TyCom board, the special committee,
with the participation of representatives of its legal and financial advisors,
Davis Polk & Wardwell, Conyers Dill & Pearman and JPMorgan, respectively,
reported to the entire TyCom board on its review of the amalgamation agreement
and the amalgamation. The TyCom board considered the conclusions and
recommendations of the special committee. Furthermore, the TyCom board
considered the fact that it received an opinion regarding fairness from JPMorgan
together with the other factors enumerated above which were considered by the
special committee. The TyCom board believes that these factors support its
fairness determination.
OPINION OF FINANCIAL ADVISOR TO THE SPECIAL COMMITTEE
JPMorgan acted as the financial advisor to the special committee in
connection with the amalgamation. The special committee requested JPMorgan, in
its role as the financial advisor, to evaluate the fairness, from a financial
point of view, of the consideration to be received by the holders of TyCom
common shares (other than Tyco and its subsidiaries) in the amalgamation. On
October 18, 2001, JPMorgan delivered its opinion to the special committee and
the TyCom board, to the effect that, as of such date and based upon and subject
to certain matters stated therein, the consideration to be received by the
holders of TyCom common shares (other than Tyco and its subsidiaries) in the
amalgamation was fair, from a financial point of view, to such holders.
THE FULL TEXT OF THE JPMORGAN'S OPINION, WHICH SETS FORTH THE ASSUMPTIONS
MADE, FACTORS CONSIDERED AND LIMITATIONS UPON THE REVIEW UNDERTAKEN BY JPMORGAN
IN RENDERING ITS OPINION, IS INCLUDED AS ANNEX C. JPMORGAN'S WRITTEN OPINION WAS
ADDRESSED TO THE SPECIAL COMMITTEE AND THE TYCOM BOARD, WAS DIRECTED ONLY TO THE
CONSIDERATION TO BE RECEIVED BY THE HOLDERS OF TYCOM COMMON SHARES (OTHER THAN
TYCO AND ITS SUBSIDIARIES) IN THE AMALGAMATION AND DID NOT CONSTITUTE A
RECOMMENDATION TO ANY TYCOM SHAREHOLDER AS TO HOW SUCH SHAREHOLDER SHOULD VOTE
ON THE AMALGAMATION. THE FOLLOWING SUMMARY OF THE MATERIAL PROVISIONS OF
JPMORGAN'S OPINION IS QUALIFIED BY REFERENCE TO SUCH OPINION. TYCOM SHAREHOLDERS
ARE URGED TO READ THIS OPINION IN ITS ENTIRETY.
In arriving at its opinion, JPMorgan, among other things:
- reviewed the amalgamation agreement;
- reviewed certain publicly available business and financial information
concerning TyCom and Tyco and the industries in which they operate;
- compared the proposed financial terms of the amalgamation with the
publicly available financial terms of certain transactions involving
certain companies JPMorgan deemed relevant and the consideration received
for such companies;
- compared the financial and operating performance of TyCom and Tyco with
publicly available information concerning certain other companies JPMorgan
deemed relevant and the current and historical market prices of TyCom's
and Tyco's common shares and certain other publicly traded securities of
those other companies;
- reviewed certain internal financial analyses and forecasts prepared by the
management of TyCom relating to its business; and
- performed other financial studies and analyses and considered other
information deemed relevant by JPMorgan.
27
In addition, JPMorgan held discussions with certain members of the
management of TyCom and Tyco with respect to certain aspects of the
amalgamation, the past and current business operations of TyCom and Tyco, the
financial condition and future prospects and operations of TyCom and Tyco, the
effects of the amalgamation on the financial condition and future prospects of
TyCom and Tyco, and certain other matters believed necessary or appropriate to
JPMorgan's inquiry. JPMorgan did not receive any forecast from Tyco as to its
projected financial performance other than guidance that JPMorgan could rely on
Tyco's previously announced earnings estimates for the years 2001 and 2002.
In rendering its opinion, JPMorgan relied upon and assumed, without
independent verification, the accuracy and completeness of all information that
was publicly available or was furnished to it by TyCom and Tyco or otherwise
reviewed by it, and JPMorgan did not assume any responsibility or liability
therefor. JPMorgan did not conduct any valuation or appraisal of any assets or
liabilities, nor have any valuations or appraisals been provided to it. In
relying on financial analyses, forecasts and guidance provided to it, JPMorgan
assumed that they were reasonably prepared based on assumptions reflecting the
best currently available estimates and judgments by management as to the
expected future results of operations and financial condition of TyCom and Tyco
to which such analyses, forecasts or guidance relate. JPMorgan also assumed that
the amalgamation would have the tax consequences described in discussions with,
and materials furnished to it by, representatives of TyCom, and that the
amalgamation and the other transactions contemplated by the amalgamation
agreement would be consummated as described in the amalgamation agreement.
JPMorgan relied as to all legal matters relevant to rendering its opinion upon
the advice of counsel. JPMorgan further assumed that all material governmental,
regulatory or other consents and approvals necessary for the consummation of the
amalgamation will be obtained without any adverse effect on TyCom or Tyco or on
the contemplated benefits of the amalgamation.
The projections furnished to JPMorgan for TyCom were prepared by the
management of TyCom. TyCom does not publicly disclose internal management
projections of the type provided to JPMorgan in connection with JPMorgan's
analysis of the amalgamation consideration, and such projections were not
prepared with a view toward public disclosure. These projections were based on
numerous variables and assumptions that are inherently uncertain and may be
beyond the control of management, including, without limitation, factors related
to general economic and competitive conditions and prevailing interest rates.
Accordingly, actual results could vary significantly from those set forth in
such projections.
JPMorgan's opinion was necessarily based on economic, market and other
conditions as in effect on, and the information made available to JPMorgan as
of, the date of its opinion. Subsequent developments may affect the written
opinion dated October 18, 2001, and JPMorgan does not have any obligation to
update, revise, or reaffirm such opinion. JPMorgan's opinion was limited to the
fairness, from a financial point of view, of the consideration to be received by
the holders of TyCom common shares (other than Tyco and its subsidiaries) in the
proposed amalgamation. JPMorgan expressed no opinion as to the underlying
decision by TyCom to engage in the amalgamation. JPMorgan expressed no opinion
as to the price at which TyCom's or Tyco's common shares will trade at any
future time.
JPMorgan's opinion noted that it was not authorized to and did not solicit
any expressions of interest from any other parties with respect to the sale of
all or any part of TyCom or any other alternative transaction. Consequently,
JPMorgan assumed that such terms were the most beneficial terms from TyCom's
perspective that could under the circumstances be negotiated among the parties
to such transactions, and JPMorgan expressed no opinion whether any alternative
transaction might produce consideration for TyCom's shareholders in an amount in
excess of that contemplated in the amalgamation.
28
In accordance with customary investment banking practice, JPMorgan employed
generally accepted valuation methods in reaching its opinion. The following is a
summary of the material financial analyses utilized by JPMorgan in connection
with delivering its opinion.
ANALYSIS OF TYCOM
HISTORICAL STOCK PERFORMANCE. JPMorgan reviewed historical trading prices
for TyCom's common shares including a summary of trading prices in relation to
certain historical averages and prices as of particular dates. This stock price
performance review indicated that since TyCom's initial public offering on
July 27, 2000, the low and high closing prices for TyCom's common shares were
$7.14 and $45.44 per share, respectively, and the closing price on October 3,
2001 was $9.46 per share.
COMPARABLE PUBLIC COMPANIES ANALYSIS. Using publicly available information
JPMorgan compared certain financial and operating information and ratios for
TyCom with corresponding financial and operating information and ratios for the
following eight telecommunications companies:
- Asia Global Crossing Ltd.
- Broadwing Inc.
- Flag Telecom Holdings Limited
- Global Crossing Ltd.
- KPNQwest N.V.
- Level 3 Communications, Inc.
- Qwest Communications International Inc.
- Williams Communications Group, Inc.
Using the closing prices per share as of October 17, 2001, this analysis
indicated that:
- the ratio of the firm value to estimated 2001 revenues ranged from 0.5x to
5.1x, with a mean of 2.4x and a median of 2.3x; and
- the ratio of the firm value to estimated 2001 EBITDA ranged from 0.6x to
17.0x, with a mean of 7.5x and a median of 7.4x.
This analysis indicated a range of implied prices per share of TyCom's
common shares of approximately $6.25 to $11.00 value per share by applying a
range of 1.75x to 2.75x for the ratio of the firm value to estimated calendar
year 2001 revenues. JPMorgan also calculated a range of implied prices per share
of TyCom's common shares of approximately $4.50 to $7.75 by applying a range of
6.0x to 9.0x for the ratio of firm value to estimated calendar year 2001 EBITDA,
compared to the implied value of the consideration to be received in the
amalgamation of $15.14 per share of TyCom common shares, based upon the closing
price per share of Tyco common shares on October 17, 2001 of $48.33.
SELECTED TRANSACTION ANALYSIS. Using publicly available information,
JPMorgan examined selected transactions in the telecommunications industry since
January 1997. These transactions and the month and year in which each
transaction was announced were as follows:
- Tyco International Ltd./AT&T Submarine Systems, Inc. (April 1997)
- Global Crossing Ltd./Global Marine Systems Ltd. (April 1999)
This analysis indicated that:
- the ratio of transaction value to estimated forward twelve months revenue
ranged from 0.9x to 2.3x with a median of 1.6x; and
29
- the ratio of transaction value to estimated forward twelve months EBITDA
ranged from 6.4x to 9.4x, with a median of 7.9x.
This analysis indicated a range of implied prices per share of TyCom's
common shares of approximately $9.25 to $14.50 value per share by applying a
range of 6.5x to 9.5x for the ratio of the transaction value to management's
projected fiscal year 2002 EBITDA. JPMorgan compiled consensus analyst estimates
and adjusted them for TyCom's actual 2001 performance as provided by TyCom's
management, which is referred to herein as the "street sensitivity case." This
analysis indicated a range of implied prices per share of TyCom's common shares
of approximately $8.50 to $13.50 by applying a range of 6.5x to 9.5x for the
ratio of transaction value to estimated fiscal year 2002 EBITDA, compared to the
implied value of the consideration to be received in the amalgamation of $15.14
per share of TyCom common shares, based upon the closing price per share of Tyco
common shares on October 17, 2001 of $48.33.
DISCOUNTED CASH FLOW ANALYSIS. JPMorgan performed a discounted cash flow
analysis for TyCom using management's projections and also by using the street
sensitivity case. JPMorgan calculated a discounted cash flow analysis for TyCom
assuming discount rates ranging from 13% to 15%, and estimated terminal
multiples of EBITDA in the year 2005 ranging from 6.0x to 9.0x. By using
management's projections, this analysis indicated a range of implied prices of
TyCom's common shares on a fully-diluted basis of approximately $12.00 to $20.50
value per share. By using the street sensitivity case, this analysis indicated a
range of implied prices per share of TyCom's common shares of approximately
$3.50 to $8.00 value per share, compared to the implied value of the
consideration to be received in the amalgamation of $15.14 per share of TyCom
common shares, based upon the closing price per share of Tyco common shares on
October 17, 2001 of $48.33.
ANALYSIS OF TYCO
HISTORICAL STOCK PERFORMANCE. JPMorgan reviewed historical trading prices
for Tyco's common shares. This stock price performance review indicated that
since TyCom's initial public offering on July 27, 2000, the low and high closing
prices for Tyco's common shares were $40.80 and $62.80 per share, respectively,
and the closing prices on October 3, 2001 and on October 17, 2001 were $46.72
and $48.33 per share, respectively.
COMPARABLE PUBLIC COMPANIES ANALYSIS. Using publicly available information
JPMorgan compared certain financial and operating information and ratios for
Tyco with corresponding financial and operating information and ratios for the
following six diversified companies:
- Emerson Electric Co.
- General Electric Company
- Honeywell International Inc.
- Illinois Tool Works Inc.
- Minnesota Mining and Manufacturing Company
- United Technologies Corporation
Using the closing prices per share on October 17, 2001, this analysis
indicated that:
- the ratio of the firm value to estimated 2001 earnings ranged from 13.6x
to 26.2x, with a mean of 19.0x and a median of 18.7x, as compared to the
ratio for Tyco of 16.5x;
- the ratio of the firm value to estimated 2002 earnings ranged from 12.9x
to 22.9x, with a mean of 17.4x and a median of 16.9x, as compared to the
ratio for Tyco of 14.1x;
30
- the ratio of the firm value to estimated 2001 EBITDA ranged from 6.8x to
16.3x, with a mean of 10.2x and a median of 9.8x, as compared to the ratio
for Tyco of 11.7x;
- the ratio of the firm value to estimated 2002 EBITDA ranged from 7.0x to
14.5x, with a mean of 9.6x and a median of 9.2x, as compared to the ratio
for Tyco of 9.9x;
- the ratio of the firm value to estimated 2001 earnings to I/B/E/S
estimated five year growth rate ranged from 1.0x to 1.8x, with a mean of
1.4x and a median of 1.5x, as compared to the ratio for Tyco of 1.0x; and
- the ratio of the firm value to estimated 2002 earnings to I/B/E/S
estimated five year growth rate ranged from 0.9x to 1.6x, with a mean of
1.3x and a median of 1.4x, as compared to the ratio for Tyco of 0.8x.
PRO FORMA ANALYSIS. JPMorgan also analyzed the pro forma effects of the
amalgamation on the projected earnings per share of Tyco for fiscal year 2002
based on I/B/E/S median estimates for Tyco and I/B/E/S median estimates and
management estimates for TyCom. Incorporating assumptions with respect to
recognizing income, issuing shares as a result of the amalgamation and estimated
annual synergies to be realized in 2002, this analysis indicated that the
amalgamation would be approximately breakeven to earnings per share of Tyco
common shares in 2002 under both the I/B/E/S case and the management case.
The summary set forth above does not purport to be a complete description of
the analyses or data presented by JPMorgan. The preparation of an opinion
regarding fairness is a complex process and is not necessarily susceptible to
partial analysis or summary description. JPMorgan believes that the summary set
forth above and its analyses must be considered as a whole and that selecting
portions thereof, without considering all of its analyses, could create an
incomplete view of the processes underlying its analyses and opinion. JPMorgan
based its analyses on assumptions that it deemed reasonable, including
assumptions concerning general business and economic conditions and industry-
specific factors. The other principal assumptions upon which JPMorgan based its
analyses are set forth above under the description of each such analysis.
JPMorgan's analyses are not necessarily indicative of actual values or actual
future results that might be achieved, which values may be higher or lower than
those indicated. Moreover, JPMorgan's analyses are not and do not purport to be
appraisals or otherwise reflective of the prices at which businesses actually
could be bought or sold.
None of the comparable companies used in the comparable public companies
analysis described above is identical to TyCom or Tyco, and none of the
comparable transactions used in the comparable transactions analysis described
above is identical to the amalgamation. Accordingly, an analysis of publicly
traded comparable companies and transactions is not exclusively mathematical;
rather it involves complex considerations and judgments concerning differences
in financial and operating characteristics of the comparable companies and other
factors that could affect the public trading value of the comparable companies
or company to which they are being compared.
As a part of its investment banking business, JPMorgan and its affiliates
are continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, investments for passive and control
purposes, negotiated underwritings, secondary distributions of listed and
unlisted securities, private placements, and valuations for estate, corporate
and other purposes. JPMorgan was selected to advise the special committee with
respect to the amalgamation and deliver an opinion to the special committee and
the TyCom board with respect to the amalgamation on the basis of such experience
and JPMorgan's familiarity with TyCom.
For services rendered in connection with the amalgamation and the delivery
of its opinion, TyCom has agreed to pay JPMorgan a customary fee. In addition,
TyCom has agreed to reimburse JPMorgan for its expenses incurred in connection
with its services, including the fees and disbursements of
31
counsel, and will indemnify JPMorgan against certain liabilities, including
liabilities arising under the federal securities laws.
Certain affiliates of JPMorgan have, from time to time, performed certain
financial advisory and other commercial and investment banking services for
TyCom and Tyco, for which they received customary compensation, and in the
future may continue to perform certain financial advisory and other commercial
and investment banking services for TyCom or Tyco, for which they would receive
customary compensation including the following services: in July 2001, an
affiliate of JPMorgan acted as lead manager for a $1.8 billion offering of
senior notes of Tyco; in February 2001, an affiliate of JPMorgan acted as sole
lead arranger for a $5.855 billion senior unsecured credit facility of Tyco and
as co-manager for a $2.0 billion offering of senior notes of Tyco; in
April 2000, an affiliate of JPMorgan acted as bookrunner for a E600 million
Eurobond issuance of Tyco; and in January 1999, an affiliate of JPMorgan acted
as bookrunner for a $1.2 billion issuance of senior notes. In addition, in
July 2000, one of JPMorgan's affiliates acted as senior co-manager of TyCom's
initial public offering.
In addition, in the ordinary course of their businesses, JPMorgan and its
affiliates may actively trade the debt and equity securities and loans of TyCom
or Tyco for their own account or for the accounts of customers and, accordingly,
they may at any time hold long or short positions in such securities or loans.
REASONS OF TYCO FOR THE AMALGAMATION
At a meeting held on October 1, 2001, Tyco's Board of Directors determined
that the acquisition by Tyco of the publicly held TyCom shares was in keeping
with its commitment to the undersea broadband telecommunications business and
its strategy for developing that business.
In reaching its decision to approve the transaction, Tyco's Board of
Directors considered the following material factors:
- the substantial erosion of the rationale for maintaining TyCom as a
separate public company resulting from the sustained decline in market
prices for shares of companies in the undersea broadband
telecommunications industry in general and for shares of TyCom in
particular;
- the ability as a result of the transaction to more fully integrate the
business and assets of TyCom into Tyco's other businesses, in particular,
Tyco's electronics business;
- the elimination of the costs and management time associated with
maintaining TyCom as a separate public company;
- the relative ease of allocating capital between TyCom and Tyco's other
businesses that will be possible when TyCom is a wholly-owned business;
- the aggregate amount of Tyco shares to be issued to TyCom shareholders in
the transaction; and
- the Tyco Board's expectation that the TyCom Board would establish a
special committee of independent directors to act on behalf of the
minority shareholders of TyCom for the purpose of negotiating and
determining whether to recommend the transaction to the TyCom board.
INTERESTS OF CERTAIN PERSONS IN THE AMALGAMATION
GENERAL
The executive officers and directors of TyCom, in their capacity as such,
may be deemed to have interests in the amalgamation that are in addition to or
different from their interests as shareholders of TyCom generally. The special
committee and the TyCom board were aware of these interests and considered them,
among other matters, in approving the amalgamation.
32
INDEMNIFICATION ARRANGEMENTS
The amalgamation agreement requires the amalgamated company to provide
indemnification and insurance for TyCom's current directors and officers. These
provisions are described under "The Amalgamation--Certain Other
Covenants--Indemnification and Insurance" beginning on page .
TYCOM EQUITY PLANS
Under the amalgamation agreement, options to purchase TyCom common shares
will become exercisable for Tyco common shares at an adjusted exercise price
based on the exchange ratio in the amalgamation as described under "The
Amalgamation--Amalgamation Consideration--Stock Options" on page . The vesting
schedule will not be changed. In the aggregate, TyCom executive officers and
non-employee directors currently hold options to purchase 4,873,250 TyCom common
shares.
TyCom restricted shares will be converted into Tyco restricted shares based
on the exchange ratio as described under "The Amalgamation--Certain Other
Covenants--Certain Employee Benefits" on page , and the terms will not
otherwise be changed. In the aggregate, TyCom executive officers currently hold
72,500 TyCom restricted shares.
OTHER TYCOM EMPLOYEE BENEFIT PLANS
The TyCom Supplemental Executive Retirement Plan and the TyCom Deferred
Compensation Plan will be terminated upon consummation of the amalgamation with
the account balances of participants transferred to the corresponding Tyco
plans. See "The Amalgamation--Certain Other Covenants--Certain Employee
Benefits" on page . TyCom executive officers participate in these plans.
RELATIONSHIPS OF TYCOM DIRECTORS AND EXECUTIVE OFFICERS WITH TYCO; OWNERSHIP OF
TYCOM COMMON SHARES
Mr. L. Dennis Kozlowski is Executive Chairman and a director of TyCom and is
Chairman, Chief Executive Officer, President and a director of Tyco. Mr. Mark H.
Swartz is Vice President and a director of TyCom and is Executive Vice
President, Chief Financial Officer and a director of Tyco. Mr. Neil R. Garvey is
President, Chief Executive Officer and a director of TyCom and is an executive
officer of Tyco.
At the close of business on [ ], 2001, the record date for the
TyCom special general meeting, directors and executive officers of TyCom
beneficially owned approximately TyCom common shares, including shares subject
to TyCom options that were exercisable within 60 days of that date. This
represents approximately % of the TyCom common shares outstanding on that
date.
COMPENSATION OF TYCOM DIRECTORS
TyCom's non-employee directors currently receive $50,000 per year for
services as director and are granted options to purchase 10,000 TyCom common
shares at the closing price on the day before the grant. The options that have
been granted to these directors will be treated the same as other TyCom options
in the amalgamation as described under "The Amalgamation--Amalgamation
Consideration--Stock Options" on page .
MATERIAL U.S. FEDERAL INCOME TAX AND BERMUDA TAX CONSEQUENCES
U.S. FEDERAL INCOME TAX CONSEQUENCES
The following discussion sets forth the material U.S. federal income tax
consequences of the exchange of TyCom common shares for Tyco common shares in
the amalgamation and the ownership of Tyco common shares. The discussion which
follows is based on the U.S. Internal Revenue Code of 1986, as amended, Treasury
Regulations promulgated thereunder, administrative rulings and
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pronouncements and judicial decisions as of the date hereof, all of which are
subject to change, possibly with retroactive effect. Any such change could alter
the tax consequences discussed in this document.
The discussion below is for general information only and, except where
specifically noted, does not address the effects of any state, local or non-U.S.
tax laws. In addition, the discussion below relates to persons who hold TyCom
common shares, and will hold Tyco common shares, as capital assets. The tax
treatment of a TyCom shareholder may vary depending upon such shareholder's
particular situation, and certain shareholders may be subject to special rules
not discussed below, including for example, partners of entities classified as
partnerships for U.S. federal income tax purposes that hold TyCom common shares
or will hold Tyco common shares, insurance companies, tax-exempt organizations,
financial institutions, broker-dealers and individuals who received TyCom common
shares pursuant to the exercise of employee stock options or otherwise as
compensation.
As used in this section, a "U.S. Holder" means a beneficial owner of TyCom
common shares that exchanges TyCom common shares for Tyco common shares and that
is, for U.S. federal income tax purposes:
- a citizen or resident of the U.S.;
- a corporation, partnership or other entity, other than a trust, created or
organized in or under the laws of the U.S. or any political subdivision
thereof;
- an estate whose income is subject to U.S. federal income tax regardless of
its source; or
- a trust if, in general, a court within the U.S. is able to exercise
primary supervision over its administration and one or more U.S. persons
have authority to control all of its substantial decisions, or a trust
that has a valid election in effect under applicable U.S. treasury
regulations to be treated as a U.S. person.
As used in this section, a non-U.S. Holder is a beneficial owner of TyCom common
shares that exchanges TyCom common shares for Tyco common shares and that is not
a U.S. Holder.
CONSEQUENCES OF THE AMALGAMATION
The receipt by TyCom shareholders of Tyco common shares pursuant to the
amalgamation will constitute a taxable exchange for U.S. federal income tax
purposes.
U.S. HOLDERS. Each U.S. Holder that exchanges TyCom common shares for Tyco
common shares will recognize gain or loss equal to the difference between such
holder's adjusted tax basis in its TyCom common shares and the fair market value
of the Tyco common shares (and any cash in lieu of fractional shares) received
therefor. Such gain or loss will generally be capital gain or loss and will
generally be long term capital gain or loss if such U.S. Holder's holding period
for its TyCom common shares was more than one year at the time of the exchange.
The deductibility of capital losses is subject to certain limitations. Any gain
or loss so recognized generally will be U.S. source income or loss for purposes
of computing the U.S. Holders foreign tax credit limitation. Each U.S. Holder
that exchanges TyCom common shares for Tyco common shares will have a tax basis
in the Tyco common shares equal to their fair market value on the date of the
exchange, and such shareholder's holding period for the Tyco common shares will
begin on the day following the date of the exchange.
NON-U.S. HOLDERS. In general, and subject to the discussion below under
"--Information Reporting and Backup Withholding," a non-U.S. Holder will not be
subject to U.S. federal income or withholding tax on gain realized on the
exchange of TyCom common shares for Tyco common shares pursuant to the
amalgamation, unless either (1) the gain is effectively connected with the
conduct by the non-U.S. Holder of a trade or business in the U.S. or (2) in the
case of gain realized by an individual non-U.S. Holder, the non-U.S. Holder is
present in the U.S. for 183 days or more in the
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taxable year of the exchange and certain other conditions are met. In the event
that clause (1) in the preceding paragraph applies, such gain generally will be
subject to regular U.S. federal income tax in the same manner as if such gain
were realized by a U.S. Holder. In addition, if such non-U.S. Holder is a
corporation, such gain may be subject to a branch profits tax at a rate of 30%,
or a lower rate provided by an applicable income tax treaty. In the event that
clause (2), but not clause (1), in the preceding paragraph applies, the gain
generally will be subject to tax at a rate of 30%, or such lower rate as may be
provided by an applicable income tax treaty.
OWNERSHIP OF TYCO COMMON SHARES
U.S. HOLDERS OF TYCO COMMON SHARES
DISTRIBUTIONS. Distributions made to U.S. Holders of Tyco common shares
will be treated as dividends and taxable as ordinary income to the extent that
such distributions are made out of Tyco's current or accumulated earnings and
profits as determined for U.S. federal income tax purposes. To the extent that
the amount of any distribution exceeds Tyco's current and accumulated earnings
and profits for a taxable year, the excess will be treated as a tax-free return
of capital which reduces such U.S. Holder's tax basis in the Tyco common shares
to the extent thereof, and thereafter as capital gain. The U.S. federal income
tax treatment described in the immediately preceding sentence applies whether or
not such distributions are treated as a return of capital for non-tax purposes.
Amounts taxable as dividends generally will be treated as foreign source
"passive" income for foreign tax credit purposes. The amount of any distribution
of property other than cash will be the fair market value of such property on
the date of distribution by Tyco. U.S. Holders of Tyco common shares that are
corporations will not be entitled to claim a dividends-received deduction with
respect to distributions by Tyco, because Tyco is not a U.S. corporation.
DISPOSITION. Gain or loss recognized by a U.S. Holder of Tyco common shares
on the sale, exchange or other taxable disposition of Tyco common shares will be
subject to U.S. federal income taxation as capital gain or loss in an amount
equal to the difference between the amount realized on such sale, exchange or
other disposition and such U.S. Holder's adjusted tax basis in the Tyco common
shares surrendered. Such gain or loss will be long term capital gain or loss if
such U.S. Holder's holding period for its Tyco common shares is more than one
year. The deductibility of capital losses is subject to certain limitations. Any
gain or loss so recognized generally will be U.S. source income or loss for
purposes of computing the U.S. Holder foreign tax credit limitation.
NON-U.S. HOLDERS OF TYCO COMMON SHARES
DISTRIBUTIONS AND DISPOSITION. In general, and subject to the discussion
below under "--Information Reporting and Backup Withholding," a non-U.S. Holder
will not be subject to U.S. federal income or withholding tax on income from
distributions with respect to, or gain upon the disposition of, Tyco common
shares, unless either (1) the income or gain is effectively connected with the
conduct by the non-U.S. Holder of a trade or business in the U.S. or (2) in the
case of gain realized by an individual non-U.S. Holder upon a disposition of
Tyco common shares, the non-U.S. Holder is present in the U.S. for 183 days or
more in the taxable year of the sale and certain other conditions are met.
In the event that clause (1) in the preceding paragraph applies, such income
or gain generally will be subject to regular U.S. federal income tax in the same
manner as if such income or gain, as the case may be, were realized by a U.S.
Holder. In addition, if such non-U.S. Holder is a corporation, such income or
gain may be subject to a branch profits tax at a rate of 30%, although a lower
rate may be provided by an applicable income tax treaty. In the event that
clause (2), but not clause (1), in the preceding paragraph applies, the gain
generally will be subject to tax at a rate of 30%, or such lower rate as may be
provided by an applicable income tax treaty.
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INFORMATION REPORTING AND BACKUP WITHHOLDING
Non-exempt U.S. Holders may be subject to information reporting with respect
to the cash proceeds (if any) from the exchange of TyCom common shares for Tyco
common stock, and with respect to payments of dividends on, and the proceeds of
the disposition of, Tyco common shares. Non-exempt U.S. Holders who are subject
to information reporting and who do not provide appropriate information when
requested may be subject to backup withholding at the rates specified in the
Code (currently 30.5%).
If the TyCom common shares or Tyco common shares are held by a non-U.S.
Holder through a non-U.S., and non-U.S. related, broker or financial
institution, information reporting and backup withholding generally would not be
required. Information reporting and backup withholding may apply if the TyCom
common shares or Tyco common shares are held by a non-U.S. Holder through a
U.S., or U.S. related, broker or financial institution and the non-U.S. Holder
fails to provide appropriate information.
The amount of any backup withholding from a payment to a holder will be
allowed as a credit against such holder's U.S. federal income tax liability and
may entitle such holder to a refund provided that the required information is
provided to the IRS.
Holders should consult their tax advisors regarding the imposition of backup
withholding and information reporting with respect to the exchange of TyCom
common shares for Tyco common shares, and with respect to distributions on and
dispositions of Tyco common shares.
BERMUDA TAX CONSEQUENCES
In the opinion of Appleby Spurling & Kempe, attorneys in Bermuda for Tyco,
there will be no Bermuda income, corporation or profits tax, withholding tax,
capital gains tax, capital transfer tax, estate duty or inheritance tax payable
in respect of the delivery of Tyco common shares to TyCom shareholders in
exchange for TyCom common shares pursuant to the amalgamation. In addition, as
of the date hereof, there is no Bermuda income, corporation or profits tax,
withholding tax, capital gains tax, capital transfer tax, estate duty or
inheritance tax payable in respect of capital gains realized on a disposition of
Tyco common shares or in respect of distributions by Tyco with respect to Tyco
common shares. Furthermore, Tyco has received from the Minister of Finance of
Bermuda under the Exempted Undertakings Tax Protection Act of 1966 an
undertaking that, in the event of there being enacted in Bermuda any legislation
imposing any tax computed on profits or income, including any dividend or
capital gains withholding tax, or computed on any capital assets, gain or
appreciation or any tax in the nature of an estate or inheritance tax or duty,
the imposition of such tax shall not be applicable to Tyco or any of its
operations, nor to its common shares nor to obligations of Tyco until the year
2016. This undertaking applies to Tyco common shares. It does not, however,
prevent the application of Bermuda taxes to persons ordinarily resident in
Bermuda.
THE FOREGOING DISCUSSION IS INTENDED ONLY AS A SUMMARY AND DOES NOT PURPORT
TO BE A COMPLETE ANALYSIS OR LISTING OF ALL POTENTIAL TAX EFFECTS RELEVANT TO A
DECISION WHETHER TO VOTE IN FAVOR OF ADOPTION OF THE AMALGAMATION AGREEMENT.
TYCOM SHAREHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS CONCERNING THE UNITED
STATES FEDERAL, STATE, LOCAL AND NON-UNITED STATES TAX CONSEQUENCES OF THE
AMALGAMATION TO THEM.
ACCOUNTING TREATMENT
The amalgamation will be accounted for at historical costs, with the
exception of the acquisition of the minority interest which will be accounted
for under the purchase method of accounting in accordance with generally
accepted accounting principles in the United States. Accordingly, the cost to
acquire the TyCom minority interest in excess of its carrying value will be
allocated on a pro rata basis
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to the assets acquired and liabilities assumed based on their fair values, with
any excess being allocated to goodwill.
REGULATORY APPROVALS REQUIRED FOR THE AMALGAMATION
Completion of the amalgamation requires receipt of the consent of the
Minister of Finance in Bermuda and the Bermuda Monetary Authority, which is
expected to have been obtained upon filing of the required documents following
shareholder approval. The parties do not believe there are any other regulatory
approvals required to complete the amalgamation.
U.S. FEDERAL SECURITIES LAW CONSEQUENCES
TyCom shareholders who receive Tyco common shares in the amalgamation can
freely transfer such shares, except that persons who are deemed to be
"affiliates," as such term is defined under the Securities Act, of TyCom prior
to the amalgamation may only sell shares they receive in the amalgamation in
transactions permitted by the resale provisions of Rule 145 under the Securities
Act, or as otherwise permitted under the Securities Act. Individuals or entities
that control, are controlled by, or are under common control with, TyCom,
including directors and executive officers of TyCom, are considered to be
affiliates.
In general, under Rule 145, for one year following the consummation of the
amalgamation, TyCom affiliates will be subject to the following restrictions on
the public sale of Tyco common shares acquired in the amalgamation:
- a TyCom affiliate, together with certain related persons, may sell only
through unsolicited "broker transactions" or in transactions directly with
a "market maker," as such terms are defined in Rule 144 under the
Securities Act;
- the number of Tyco common shares a TyCom affiliate may sell, together with
certain related persons and certain persons acting in concert, within any
three-month period may not exceed the greater of 1% of the outstanding
Tyco common shares or the average weekly trading volume of such shares
during the four calendar weeks preceding such sale; and
- a TyCom affiliate may sell only if Tyco remains current with its
informational filings with the SEC under the Exchange Act.
After the end of one year from the consummation of the amalgamation, a TyCom
affiliate may sell Tyco common shares received in the amalgamation without such
limitations on the manner of sale or volume, provided that Tyco is current with
its Exchange Act informational filings and such TyCom affiliate is not then an
affiliate of Tyco. Two years after the consummation of the amalgamation, an
affiliate of TyCom may sell such Tyco common shares without any restrictions, so
long as such affiliate was not an affiliate of Tyco for at least three months
prior to such sale.
DELISTING AND DEREGISTRATION OF TYCOM SHARES; CESSATION OF TYCOM PERIODIC
REPORTING
If the amalgamation is completed, the TyCom common shares will be delisted
from the New York Stock Exchange and the Bermuda Stock Exchange and will be
deregistered under the Exchange Act. Upon deregistration, TyCom will no longer
be required to make periodic filings of annual and quarterly reports, current
reports or proxy statements with the SEC.
STOCK EXCHANGE LISTING
It is a condition to the amalgamation that the New York Stock Exchange
authorize for listing the Tyco common shares to be delivered in connection with
the amalgamation. TGN Holdings has agreed
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to cause Tyco to use its reasonable best efforts to obtain approval for listing
of the Tyco common shares on the New York Stock Exchange prior to the completion
of the amalgamation.
RIGHTS OF DISSENTING SHAREHOLDERS
At the effective time of the amalgamation, each holder of a TyCom common
share certificate (other than Tyco, TGN Holdings and their respective
subsidiaries) will no longer have any rights with respect to TyCom common
shares, except the right to receive the amalgamation consideration upon
surrender of the certificates or, in the case of a dissenting shareholder, the
right to be paid the fair value of his or her shares. Under Bermuda law, a
dissenting shareholder is entitled to be paid the fair value of his or her
shares. In order to exercise appraisal rights, a shareholder must not vote in
favor of the amalgamation and must within one month of the giving of notice of
the special general meeting apply to the Supreme Court of Bermuda to appraise
the fair value of his or her shares. There are no statutory rules prescribing
the process of appraisal by the court and it is generally considered that the
court will apply the general common law with a view to determining the fair
market value of the shares. In the event that a dissenting TyCom shareholder
fails to perfect, effectively withdraws or otherwise loses any right to
appraisal and payment under Section 106 of the Companies Act of 1981 (Bermuda),
as amended, such shareholder will no longer have any right to appraisal
thereunder and will be entitled to elect to receive the consideration in the
amalgamation. Pursuant to the amalgamation agreement, it is a condition to the
obligation of the parties to effect the amalgamation that the number of TyCom
common shares with respect to which shareholders have exercised appraisal rights
pursuant to Section 106(6) of the Companies Act 1981 (Bermuda), as amended does
not exceed 5.6 million TyCom common shares.
The relevant portion of Section 106 of the Companies Act 1981 (Bermuda), as
amended is as follows:
(6) Any shareholder who did not vote in favour of the amalgamation and who
is not satisfied that he has been offered fair value for his shares may within
one month of the giving of the notice referred to in subsection (2) apply to the
Court to appraise the fair value of his shares.
(6A) Subject to subsection (6B), within one month of the Court appraising
the fair value of any shares under subsection (6) the company shall be entitled
either--
(a) to pay to the dissenting shareholder an amount equal to the value
of his shares as appraised by the Court; or
(b) to terminate the amalgamation in accordance with subsection (7).
(6B) Where the Court has appraised any shares under subsection (6) and the
amalgamation has proceeded prior to the appraisal then, within one month of the
Court appraising the value of the shares, if the amount paid to the dissenting
shareholder for his shares is less than that appraised by the Court the
amalgamated company shall pay to such shareholder the difference between the
amount paid to him and the value appraised by the Court.
(6C) No appeal shall lie from an appraisal by the Court under this section.
(6D) The costs of any application to the Court under this section shall be
in the discretion of the Court.
LITIGATION
Tyco, TyCom and certain of their directors have been named as defendants in
seven substantially similar lawsuits related to Tyco's proposed acquisition of
the TyCom shares, each filed on behalf of a purported class consisting of the
public shareholders of TyCom. The complaints have been filed in the Supreme
Court of the State of New York, the Superior Court of the State of New Jersey,
and the Superior Court of the State of New Hampshire. Each alleges that
defendants have violated their fiduciary duties and duties of good faith, fair
dealing, loyalty and disclosure to the public shareholders
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in connection with the transaction. The complaints seek as relief, among other
things, an order enjoining the consummation of the proposed transaction and
damages in an unspecified amount. Tyco and TyCom believe that the allegations of
the complaints are without merit.
On October 18, 2001, the defendants and plaintiffs in two of these actions
reached an agreement in principle to settle these actions, which was
subsequently set forth in a memorandum of understanding entered into on
October 19, 2001. In the memorandum of understanding, the special committee
acknowledged that the existence of these actions, the desire to address
plaintiffs' allegations and the views of plaintiffs' legal and financial
advisors were taken into consideration by the special committee in reaching its
determination that the amalgamation and the amalgamation agreement are fair to,
and in the best interests of, TyCom's shareholders (excluding Tyco, TGN Holdings
and their respective subsidiaries) and its determination to recommend that the
TyCom board approve the amalgamation agreement and the amalgamation. Tyco, while
believing the amalgamation proposal was fair and reasonable, acknowledged that
the desirability of addressing plaintiffs' allegations was a factor taken into
account along with other factors in increasing the exchange ratio from 0.2997
shares to 0.3133 shares and defendants agreed to provide plaintiff's counsel an
opportunity to comment on drafts of this document. The settlement is subject to
a number of conditions, including the dismissal, or stay in contemplation of
dismissal, of the other actions, the completion of confirmatory discovery by
plaintiffs' counsel and the negotiation and execution of definitive settlement
documents. If the settlement is approved by the court, plaintiff's counsel
intends to apply for an award of attorney's fees and expenses. Defendants have
agreed not to oppose such an application up to an aggregate amount of $750,000
in fees and $25,000 in expenses, to be paid by Tyco in the amount awarded by the
court.
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THE AMALGAMATION AGREEMENT
GENERAL
This section describes the material provisions of the amalgamation
agreement, the voting agreement and Tyco's guarantee of obligations of TGN
Holdings and the amalgamated company under the amalgamation agreement and the
voting agreement. This description is not complete, and shareholders are
encouraged to read the full text of the amalgamation agreement, the related Tyco
guarantee and the voting agreement which are attached as Annex A and Annex B to
this document. In addition, important information about the amalgamation
agreement and the amalgamation is provided in the previous section entitled "The
Amalgamation" beginning on page .
THE AMALGAMATION
At the effective time of the amalgamation, upon the terms and subject to the
conditions of the amalgamation agreement and the applicable provisions of the
Companies Act 1981 (Bermuda), as amended, the amalgamation of TGN Holdings and
TyCom and their continuance as one company shall become effective.
EFFECTIVE TIME
Unless the amalgamation agreement is terminated as described below, after
the satisfaction or waiver of the closing conditions set forth in the
amalgamation agreement (or at such time as TGN Holdings and TyCom may agree),
TGN Holdings and TyCom will file amalgamation documentation with the Registrar
of Companies of Bermuda, as prescribed by the Companies Act 1981 (Bermuda), as
amended. The effect of this filing is that TGN Holdings and TyCom will continue
as the amalgamated company under the name of TyCom Ltd. as an indirect
wholly-owned subsidiary of Tyco.
AMALGAMATION CONSIDERATION
GENERAL
As a result of the amalgamation, all TyCom common shares outstanding
immediately prior to the amalgamation, except as described below under
"--Cancellation," will be converted into the right to receive 0.3133 of a Tyco
common share and cash in lieu of any fractional share as described below under
"--Fractional Tyco Shares."
THE EXCHANGE RATIO; ADJUSTMENTS TO EXCHANGE RATIO
The exchange ratio is fixed at 0.3133 of a Tyco common share for each TyCom
common share outstanding immediately prior to the amalgamation (other than
shares held by Tyco, TGN Holdings or their respective subsidiaries). If, prior
to the effective time of the amalgamation, there is a stock split, reverse stock
split or distribution of any assets, securities, cash or other property (other
than cash dividends on the Tyco common shares on customary record and payment
dates in an amount not greater than $0.0125 per share per quarter) or any
reorganization, recapitalization, reclassification, readjustment, split up,
combination or exchange of shares or other like event with respect to Tyco
common shares and TyCom common shares, the exchange ratio and any other amounts
payable pursuant to the amalgamation agreement will be adjusted appropriately.
In the event Tyco engages in any merger or other corporate transaction after the
date of the amalgamation agreement and prior to the effective time of the
amalgamation that results in the conversion of Tyco common shares into cash or
any other asset, security or other property prior to the effective time of the
amalgamation, Tyco will make appropriate provisions to ensure that each holder
of a TyCom common share will receive consideration in the amalgamation that is
equivalent to the consideration such holder would have
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received in the merger or other corporate transaction, assuming for this purpose
that the amalgamation occurred immediately prior to the consummation of such
merger or other corporate transaction.
FRACTIONAL TYCO SHARES
A TyCom shareholder will not receive a fraction of a Tyco common share in
the amalgamation. A TyCom shareholder who would otherwise have been entitled to
a fraction of a Tyco common share will instead receive a cash payment (without
interest) determined by multiplying the fractional share interest to which such
holder would otherwise be entitled by the "average share price" of Tyco common
shares. For this purpose, "average share price" means the average of the "daily
per share prices" for the five trading days ending on the fourth trading day
prior to the effective time of the amalgamation. "Daily per share price" for any
trading day means the volume-weighted average of the per share selling prices on
the NYSE of Tyco common shares for that day, as reported by Bloomberg Financial
Markets (or if such service is unavailable a service providing similar
information selected by TGN Holdings and TyCom).
STOCK OPTIONS AND RESTRICTED SHARES
The amalgamation agreement provides that, upon the consummation of the
amalgamation, each outstanding option to purchase TyCom common shares:
- will be exercisable for that number of whole Tyco common shares equal to
the product of the number of TyCom common shares issuable upon exercise of
such option immediately prior to the consummation of the amalgamation
multiplied by the exchange ratio, rounded to the nearest whole number of
Tyco common shares, and the per share exercise price for the Tyco common
shares issuable upon exercise of TyCom options will be equal to the
quotient determined by dividing the exercise price per TyCom common share
at which such options were exercisable immediately prior to the
consummation of the amalgamation by the exchange ratio, rounded to the
nearest whole cent; and
- will otherwise be subject to the same terms and conditions as were
applicable to such option immediately prior to the consummation of the
amalgamation.
The amalgamation agreement provides that outstanding TyCom restricted shares
will be converted into restricted Tyco common shares under Tyco's long-term
incentive plan based on the exchange ratio. The restricted TyCom common shares
will otherwise be subject to the same terms and conditions as were applicable to
such restricted TyCom common shares immediately prior to the consummation of the
amalgamation.
The amalgamation agreement includes an acknowledgement by TyCom and TGN
Holdings that the amalgamation will not be a "change of control" with respect to
any TyCom options or TyCom restricted shares.
CANCELLATION
Each TyCom common share held by any of TyCom's subsidiaries and each share
owned by Tyco, TGN Holdings or any of their respective subsidiaries immediately
prior to the effective time of the amalgamation will be cancelled and retired
without payment of any consideration.
EXCHANGE OF TYCOM COMMON SHARES
Promptly after the consummation of the amalgamation, the amalgamated company
will instruct the designated exchange agent to mail to each holder of record of
TyCom common shares a letter of transmittal and instructions as to how to
surrender certificates for TyCom common shares in exchange for Tyco common
shares and payment for any fractional Tyco common shares. If you hold TyCom
41
common shares through a bank, broker or other nominee, such nominee will be
responsible for effecting the exchange. TYCOM SHAREHOLDERS SHOULD NOT RETURN
STOCK CERTIFICATES WITH THE ENCLOSED PROXY.
Holders of certificates previously representing TyCom common shares will not
be paid dividends or distributions on the Tyco common shares and will not be
paid cash in lieu of a fractional Tyco common share until such certificates are
surrendered to the exchange agent for exchange. When such certificates are
surrendered, any unpaid dividends declared by Tyco after the consummation of the
amalgamation and any cash in lieu of a fractional Tyco common share will be paid
without interest. For all other corporate purposes, certificates that
represented TyCom common shares prior to the consummation of the amalgamation
will represent, from and after the consummation of the amalgamation, the number
of Tyco common shares and cash in respect of fractional Tyco shares into which
such TyCom common shares are actually converted in the amalgamation.
The exchange agent will deliver Tyco common shares in exchange for lost,
stolen or destroyed certificates if the owner of such certificates signs an
affidavit of loss, theft or destruction, as appropriate. The amalgamated company
also may, in its discretion, require the holder of such lost, stolen or
destroyed certificates to deliver a bond in a reasonable sum as indemnity
against any claim that might be made against Tyco, TGN Holdings, the amalgamated
company or the exchange agent with respect to alleged lost, stolen or destroyed
certificates.
REPRESENTATIONS AND WARRANTIES
TyCom and TGN Holdings have made certain customary mutual representations
and warranties in the amalgamation agreement about themselves and their
respective subsidiaries, as well as, in the case of TGN Holdings, Tyco. The
representations and warranties of TGN Holdings have been unconditionally
guaranteed by Tyco.
CONDUCT OF BUSINESS BY TYCOM
TyCom has agreed that, prior to the consummation of the amalgamation, TyCom
will conduct its business, and will cause the businesses of its subsidiaries to
be conducted, only in the ordinary course of business and in a manner consistent
with past practice.
CERTAIN OTHER COVENANTS
CERTAIN EMPLOYEE BENEFITS
TyCom will terminate all contributions to its employee stock purchase plan
as of November 30, 2001 or, if earlier, the day prior to the effective time of
the amalgamation, and all TyCom common shares purchased through the TyCom
employee stock purchase plan shall be treated as all other TyCom common shares.
For more information on the treatment of all TyCom common shares as a result of
the amalgamation see the descriptions above under "--Exchange Ratio" and
"--Exchange of TyCom Common Shares."
As of the consummation of the amalgamation (or as soon thereafter as
administratively feasible), TyCom's supplemental executive retirement plan will
be terminated, and all account balances for participants will be transferred to
Tyco's supplemental executive retirement plan. Otherwise, the account balances
for participants will be subject to the same terms and conditions as were
applicable under such plan immediately prior to the consummation of the
amalgamation.
As of the consummation of the amalgamation, TyCom's deferred compensation
plan will be terminated, and all account balances and outstanding deferral and
distribution elections of participants will be transferred to, and become
balances in or elections under, Tyco's deferred compensation plan,
42
subject to the same terms and conditions as were applicable under such
retirement plans immediately prior to the consummation of the amalgamation.
NOTIFICATION OF CERTAIN MATTERS
TyCom and TGN Holdings will each give each other prompt notice of the
occurrence or nonoccurrence of any event which would reasonably be expected to
cause any representation or warranty contained in the amalgamation agreement to
be materially untrue or inaccurate, or any failure of TyCom or TGN Holdings, as
the case may be, to comply with or satisfy any covenant, condition or agreement
contained in the amalgamation agreement.
PUBLIC ANNOUNCEMENTS
TGN Holdings and TyCom will consult with each other before issuing (and in
the case of TGN Holdings, before Tyco issues) any press release or making any
written public statement with respect to the amalgamation or the amalgamation
agreement and will not issue any press release or make any public statement with
respect to the amalgamation or the amalgamation agreement without the prior
consent of the other party, which consent will not be unreasonably withheld,
except as required by law or the regulations of the SEC or the New York Stock
Exchange.
INDEMNIFICATION AND INSURANCE
The memorandum of association and bye-laws of the amalgamated company will
contain the same indemnification provisions as are currently set forth in
TyCom's Memorandum of Association and Bye-laws, and such provisions will not be
amended, modified or otherwise repealed in any manner that would adversely
affect the rights thereunder of individuals who were directors, officers,
employees or agents of TyCom at the consummation of the amalgamation unless
otherwise required by law.
After the consummation of the amalgamation, the amalgamated company will,
and the amalgamated company will cause Tyco to, to the fullest extent permitted
under applicable law, indemnify and hold harmless each present and former
director or officer of TyCom or any of its subsidiaries against any costs or
expenses, judgments, fines, losses, claims, damages, liabilities and amounts
paid in settlement in connection with any actual or threatened claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to the transactions contemplated by
the amalgamation agreement or otherwise with respect to any acts or omissions
occurring at or prior to the consummation of the amalgamation.
Following the amalgamation, the amalgamated company will, and the
amalgamated company will cause Tyco to, honor and fulfill in all respects
TyCom's obligations under the indemnification agreements and employment
agreements with TyCom's directors and officers existing at or before the
consummation of the amalgamation.
In addition, the amalgamated company will, and the amalgamated company will
cause Tyco to, provide, for a period of not less than six years after the
consummation of the amalgamation (or the applicable statute of limitations, if
longer), TyCom's current directors and officers that are currently covered with
an insurance and indemnification policy that provides coverage for events
occurring at or prior to the consummation of the amalgamation that is no less
favorable than TyCom's existing policy and with third party insurers of a
similar or better A.M. Best rating or, if substantially equivalent insurance
coverage is unavailable, the best available coverage; provided, however, that
the amalgamated company will not be required to pay an annual insurance premium
in excess of 200% of the annual premium currently paid by TyCom for such
insurance, but in such case will purchase as much coverage as possible for such
amount.
43
TYCO COMMON SHARES
Tyco has guaranteed that it will take all actions necessary to enable TGN
Holdings to deliver Tyco common shares to the TyCom shareholders in the
amalgamation. Tyco also has guaranteed that it will prepare and submit a listing
application for listing of the shares issuable in the amalgamation on the New
York Stock Exchange and use its reasonable best efforts to obtain approval for
such listing prior to the effective time of the amalgamation.
FURTHER ACTION
The parties to the amalgamation agreement will use all reasonable best
efforts to, and TGN Holdings will cause Tyco to use its reasonable best efforts
to: take, or cause to be taken, all appropriate actions and to do, or cause to
be done, all other things necessary, proper or advisable to consummate and make
effective the amalgamation; to obtain all consents, approvals, authorizations
and orders necessary for consummation of the amalgamation; and to defend any
litigation, proceeding or investigation and to have lifted any order that
restricts consummation of the amalgamation.
AGREEMENTS WITH RESPECT TO AFFILIATES
Prior to the effectiveness of the registration statement, TyCom will
identify to TGN Holdings all persons who are anticipated to be "affiliates" of
TyCom for purposes of Rule 145 under the Securities Act at the time of the
special general meeting of the TyCom shareholders. TyCom will use its reasonable
best efforts to cause each person identified as an "affiliate" to deliver to TGN
Holdings prior to the date of the TyCom special general meeting a written
agreement in connection with restrictions on "affiliates" under Rule 145, in a
form mutually agreeable to TyCom and TGN Holdings.
CONDITIONS TO THE AMALGAMATION
CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE AMALGAMATION
The obligations of TyCom and TGN Holdings to effect the amalgamation are
subject to the satisfaction at or prior to the effective time of the following
conditions:
1. EFFECTIVENESS OF REGISTRATION STATEMENT. The registration statement of
which this document is a part has become effective under the Securities
Act, and the SEC has not issued any stop order suspending the
effectiveness of such registration statement, nor shall any proceedings
for that purpose be pending before or threatened by the SEC;
2. SHAREHOLDER APPROVAL. The TyCom shareholders have approved and adopted
the amalgamation agreement (TGN Holdings is entitled to vote
approximately 89% of the total votes to be cast at the special general
meeting and has agreed to vote in favor of the amalgamation agreement);
3. LEGAL ACTIONS. No governmental, regulatory or administrative authority,
or any court or tribunal has enacted, issued, or entered any law,
regulation, rule, code, executive order, injunction, judgment, decree, or
other order that makes the consummation of the amalgamation illegal or
otherwise prohibits the consummation of the amalgamation;
4. LISTING. The New York Stock Exchange has authorized for listing the Tyco
common shares to be delivered by TGN Holdings in connection with the
amalgamation; and
5. APPRAISAL RIGHTS. The number of TyCom shares with respect to which
shareholders have exercised appraisal rights does not exceed 5.6 million
TyCom common shares.
44
ADDITIONAL CONDITIONS TO OBLIGATION OF TGN HOLDINGS
The obligations of TGN Holdings to effect the amalgamation are also subject
to the following conditions:
1. REPRESENTATIONS AND WARRANTIES. Except as set forth in the amalgamation
agreement, the representations and warranties of TyCom in the
amalgamation agreement that are qualified by reference to a material
adverse effect must be true and correct in all respects, and the
representations and warranties that are not so qualified must be true and
correct in all material respects, on and as of the date of the
consummation of the amalgamation (except for representations and
warranties made as of a particular date, which shall be true and correct
as of such date), with the same force and effect as if made on and as of
the date of the consummation of the amalgamation, and TGN Holdings has
received a certificate to such effect signed by an officer of TyCom; and
2. AGREEMENTS AND COVENANTS. TyCom has performed or complied in all
material respects with all agreements and covenants required by the
amalgamation agreement to be performed or complied with by it on or prior
to the date of the consummation of the amalgamation, and TGN Holdings has
received a certificate to such effect signed by an officer of TyCom.
ADDITIONAL CONDITIONS TO OBLIGATION OF TYCOM
The obligation of TyCom to effect the amalgamation is also subject to the
following conditions:
1. REPRESENTATIONS AND WARRANTIES. Except as set forth in the amalgamation
agreement, the representations and warranties of TGN Holdings contained
in the amalgamation agreement that are qualified by reference to material
adverse effect must be true and correct in all respects, and the
representations and warranties that are not so qualified must be true and
correct in all material respects, on and as of the date of the
consummation of the amalgamation (except for representations and
warranties made as of a particular date, which shall be true and correct
as of such date), with the same force and effect as if made on and as of
the date of the consummation of the amalgamation, and TyCom has received
a certificate to such effect signed by an officer of TGN Holdings; and
2. AGREEMENTS AND COVENANTS. TGN Holdings has performed or complied in all
material respects with all agreements and covenants required by the
amalgamation agreement to be performed or complied with by them on or
prior to the consummation of the amalgamation, and TyCom has received a
certificate to such effect signed by an officer of TGN Holdings.
TERMINATION
GROUNDS FOR TERMINATION
The amalgamation agreement may be terminated at any time prior to the
consummation of the amalgamation, notwithstanding the approval of the
amalgamation agreement by the TyCom shareholders:
1. by mutual written consent duly authorized by the Boards of Directors of
TGN Holdings and (only upon recommendation by the special committee)
TyCom;
2. by either TGN Holdings or (only upon recommendation by the special
committee) TyCom, if a governmental authority shall have enacted, issued,
promulgated, enforced or entered any law, regulation, rule, code,
executive order, injunction, judgment decree or other order that
restrains, enjoins or otherwise prohibits the amalgamation and such
action has become final and non-appealable;
45
3. by either TGN Holdings or (only upon recommendation by the special
committee) TyCom, if the amalgamation has not been consummated by
June 30, 2002; provided, however, that this right to terminate the
amalgamation agreement is not available to any party whose failure to
fulfill any obligation under the amalgamation agreement has been the
cause of, or resulted in, the failure of the amalgamation to be
consummated; or
4. by TGN Holdings, if the special committee withdraws, modifies or changes
its recommendation of the amalgamation agreement or the amalgamation in a
manner adverse to Tyco or TGN Holdings or has resolved to do so.
FEES AND EXPENSES
All costs and expenses incurred in connection with the amalgamation
agreement and the amalgamation (other than those in connection with the
preparation, printing, mailing and filing of this proxy statement/prospectus,
which will be paid by TGN Holdings) shall be paid by the party incurring such
expenses, whether or not the amalgamation is consummated.
AMENDMENT AND WAIVER; PARTIES IN INTEREST
The parties to the amalgamation agreement may amend the amalgamation
agreement with the prior written approval of the special committee at any time
prior to the consummation of the amalgamation. However, after approval of the
amalgamation agreement by the TyCom shareholders, the amalgamation agreement
cannot be amended without further approval of shareholders if shareholder
approval of such amendment is required by law.
At any time prior to the consummation of the amalgamation, any party to the
amalgamation agreement may extend the time for the performance of any of the
obligations or other acts by the other, waive any inaccuracies in the
representations and warranties contained in the amalgamation agreement or in any
document delivered pursuant to the amalgamation agreement, or waive compliance
with any of the agreements or conditions contained in the amalgamation
agreement. However, no extension or waiver by TyCom shall be effective without
the prior written approval of the special committee. Any such extension or
waiver will be valid only if set forth in writing by the party or parties
granting such extension or waiver.
The amalgamation agreement is binding upon and inures solely to the benefit
of the parties thereto, and nothing in the amalgamation agreement, express or
implied, confers upon any other person any right, benefit or remedy of any
nature whatsoever under or by reason of the amalgamation agreement, including,
without limitation, by way of subrogation, other than certain indemnification,
employment and insurance obligations of TGN Holdings, the amalgamated company
and Tyco following the consummation of the amalgamation, which are intended for
the benefit of certain specified officers and directors of TyCom and may be
enforced by such individuals, and rights of shareholders to conversion and
delivery of shares, which are intended to be for the benefit of holders of such
shares.
VOTING AGREEMENT
TGN Holdings has agreed in a voting agreement to vote all TyCom common
shares it controls in favor of the amalgamation and against any competing
transaction, and has granted the members of the special committee a proxy to so
vote the shares. TGN Holdings has also agreed not to transfer its shares, except
to an affiliate that agrees to be bound by the voting agreement.
GUARANTEE
Tyco has fully and unconditionally guaranteed the representations,
warranties, covenants, agreements and other obligations of TGN Holdings and the
amalgamated company under the amalgamation agreement and the voting agreement.
46
COMPARATIVE PER SHARE PRICES AND DIVIDENDS
TYCO
Tyco common shares are listed and traded on the New York Stock Exchange, the
London Stock Exchange and the Bermuda Stock Exchange. The following table sets
forth the high and low sales prices per Tyco common share on the New York Stock
Exchange, as reported by Bloomberg Financial Markets, and the dividends paid on
such shares for the quarterly periods presented below. The price and dividends
for Tyco common shares have been restated to reflect a two-for-one stock split
distributed on October 21, 1999, which was effected in the form of a stock
dividend.
TYCO COMMON SHARES DIVIDEND PER
------------------- COMMON
HIGH LOW SHARE
-------- -------- ----------------
FISCAL 2000:
First Quarter............................................... $53.8750 $23.0625 $ 0.0125
Second Quarter.............................................. 53.2500 32.0000 0.0125
Third Quarter............................................... 51.3750 41.0000 0.0125
Fourth Quarter.............................................. 59.1875 45.5625 0.0125
FISCAL 2001:
First Quarter............................................... $58.8750 $44.5000 $ 0.0125
Second Quarter.............................................. 63.2100 41.4000 0.0125
Third Quarter............................................... 59.3000 40.1500 0.0125
Fourth Quarter.............................................. 55.2900 39.2400 0.0125
FISCAL 2002:
First Quarter (through October 22, 2001).................... $49.4800 $44.7000 --
See "Selected Consolidated Historical Financial Data of Tyco and
TyCom--Comparative Market Value Information" on page for recent Tyco common
share price information. Shareholders are urged to obtain current market
quotations. See also "Risk Factors--The value of the amalgamation consideration
that TyCom shareholders will receive will depend on the value of Tyco common
shares at the time of the amalgamation" on page .
47
TYCOM
TyCom's common shares are listed and traded on the New York Stock Exchange
and the Bermuda Stock Exchange. The following table sets forth the high and low
sales prices per TyCom common share, on the New York Stock Exchange, as reported
by Bloomberg Financial Markets, for the quarterly periods presented below.
TYCOM COMMON SHARE
-------------------
HIGH LOW
-------- --------
FISCAL 2000:
Fourth Quarter (July 27, 2000(1) through September 30,
2000)..................................................... $ 46.25 $ 32.75
FISCAL 2001:
First Quarter............................................... $ 38.50 $ 19.00
Second Quarter.............................................. 31.55 9.45
Third Quarter............................................... 20.15 9.50
Fourth Quarter.............................................. 17.20 7.14
FISCAL 2002:
First Quarter (through October 22, 2001).................... $ 15.31 $ 7.35
See "Selected Consolidated Historical Financial Data of Tyco and
TyCom--Comparative Market Value Information" on page for recent TyCom common
share price information. Shareholders are urged to obtain current market
quotations.
------------------------
(1) Date of TyCom's IPO.
48
COMPARISON OF RIGHTS OF SHAREHOLDERS OF TYCOM AND TYCO
TyCom is a Bermuda company, and the rights of TyCom's shareholders are
governed by TyCom's Memorandum of Association, Bye-Laws, and the laws of
Bermuda. Upon consummation of the amalgamation, TyCom's shareholders will become
shareholders of Tyco. The rights of Tyco shareholders are governed by Tyco's
Memorandum of Association, Bye-Laws, and Bermuda law.
The following is a summary of material differences between the rights of a
TyCom shareholder and the rights of a Tyco shareholder arising from differences
between the governing instruments of the two companies. This summary is not
intended to be complete and is qualified in its entirety by reference to the
applicable corporate laws of Bermuda and to the TyCom Memorandum of Association
and TyCom Bye-Laws and to the Tyco Memorandum of Association and Tyco Bye-Laws.
Copies of TyCom's Memorandum of Association and Bye-Laws and of Tyco's
Memorandum of Association and Bye-Laws have been filed with the SEC and will be
sent to shareholders of TyCom upon request. See "Where You Can Find More
Information" on page i.
BERMUDA LAW AND CURRENT GOVERNING BERMUDA LAW AND CURRENT GOVERNING
DOCUMENTS OF TYCOM DOCUMENTS OF TYCO
--------------------------------------------- ---------------------------------------------
AUTHORIZED CAPITAL SHARES
- 3,000,000,000 common shares - 2,500,000,000 common shares
- 600,000,000 preference shares - 125,000,000 preference shares
PREFERENCE SHARES
- The TyCom Bye-Laws authorize TyCom to - The Tyco Bye-Laws authorize Tyco to issue
issue up to 600,000,000 preference shares up to 125,000,000 preference shares of the
of par value of U.S.$1.00 per share. No nominal value of U.S. $1.00 each. One such
preference shares have been issued. share has been designated a special voting
preference share, which share provides
voting rights in Tyco with respect to
approximately 4,300,000 currently
outstanding exchangeable shares of CIT
Exchangeco Inc., a subsidiary of Tyco,
equivalent on a per share basis to the
voting rights of 0.6907 of a Tyco common
share. Each such exchangeable share is
exchangeable for 0.6907 of a Tyco common
share.
- The preference shares may be issued in - Same.
more than one series which may be
designated and to which may be attached
such rights and restrictions as the TyCom
Board of Directors may determine.
49
BERMUDA LAW AND CURRENT GOVERNING BERMUDA LAW AND CURRENT GOVERNING
DOCUMENTS OF TYCOM DOCUMENTS OF TYCO
--------------------------------------------- ---------------------------------------------
SPECIAL GENERAL MEETING OF SHAREHOLDERS
- TyCom shareholders holding at least 10% of - Same.
the paid-up capital of TyCom entitled to
vote may require TyCom to call a special
general meeting. The Court has a residual
power to order a meeting to be held if it
is impracticable to call or conduct a
meeting of TyCom in accordance with the
TyCom Bye-laws or Bermuda law.
- Under Bermuda law, if an annual general - Same.
meeting is not held within three months of
the due date or any required number of
directors is not elected at such meeting,
the Registrar of Companies, any creditor
or shareholder may apply to the Bermuda
Supreme Court for the winding up of the
company. On such application, the Court
may order the company to be wound up or
sanction the holding of a general meeting
to put the affairs of the company in
order.
- The TyCom Bye-laws provide that the TyCom - The Tyco Bye-laws provide that the Tyco
Board of Directors may, whenever it thinks Board of Directors may call a special
fit, and shall, on the requisition in general meeting of Tyco shareholders
writing of shareholders holding such a whenever it judges it necessary.
number of shares as is prescribed by, and
made in accordance with, the Companies
Acts, call a special general meeting of
TyCom shareholders.
50
BERMUDA LAW AND CURRENT GOVERNING BERMUDA LAW AND CURRENT GOVERNING
DOCUMENTS OF TYCOM DOCUMENTS OF TYCO
--------------------------------------------- ---------------------------------------------
QUORUM
- The presence, in person or by proxy, of - Same.
any two TyCom shareholders at a
shareholders meeting generally constitutes
a quorum.
VOTING RIGHTS
- Any proposal at a general meeting may be - Same.
decided by a show of hands of the
shareholders present in person unless a
poll is demanded. Where a poll is
demanded, a shareholder is entitled to one
vote for each TyCom common share held by
the shareholder.
- The TyCom Bye-laws contain no such - The Tyco Bye-laws provide that a Tyco
provisions. shareholder will lose voting rights:
(1) for the period the shareholder fails to
comply with a notice from Tyco
requesting specified information
regarding such person's interest in Tyco
shares, plus an additional 90 days;
(2) if such shareholder fails after notice
by Tyco to make a takeover offer in
accordance with the City Code on
Takeovers and Mergers issued by the
Panel on Takeovers and Mergers in the
United Kingdom as applied by or in
accordance with the Tyco Bye-laws;
(3) upon notice by the Tyco Board of
Directors, for a period of 180 days if
such shareholder acquires 3% or more of
Tyco's issued share capital of any class
and fails to notify Tyco of such
acquisition within two days; or
(4) upon notice by the Tyco Board of
Directors, for a period of 180 days if
such shareholder holds 3% or more of
Tyco's issued share capital of any class
and fails to notify Tyco of a change in
the shareholder's interests amounting to
1% or more of the share capital of any
class.
NOTICE OF SHAREHOLDER MEETINGS
- Under the TyCom Bye-laws, at least 20 - Under Bermuda law and the Tyco Bye-laws,
clear days' notice must be given of any at least 5 days' notice must be given of any
shareholders meeting. shareholders meeting.
51
BERMUDA LAW AND CURRENT GOVERNING BERMUDA LAW AND CURRENT GOVERNING
DOCUMENTS OF TYCOM DOCUMENTS OF TYCO
--------------------------------------------- ---------------------------------------------
SHAREHOLDER NOMINATIONS AND PROPOSALS
- Any TyCom shareholder may nominate a - Any Tyco shareholder may nominate a
director for election by notice to TyCom. director for election by notice to Tyco. To
To be timely, such a notice must be given be timely, such a notice must be given to
to the Secretary of TyCom not less than 60 the Secretary of Tyco not less than six
and not more than 180 days before the date and not more than 28 clear days before the
of the relevant general meeting. Under date of the relevant general meeting.
Bermuda law, only TyCom shareholders Under Bermuda law, only Tyco shareholders
holding not less than 5% of the total holding not less than 5% of the total
voting rights or 100 or more shareholders voting rights or 100 or more shareholders
in number may require a proposal be in number may require a proposal be
submitted to an annual general meeting. submitted to an annual general meeting.
Generally, to be timely, notice of such a Generally, to be timely, notice of such a
proposal must be received by TyCom not proposal must be received by Tyco not less
less than six weeks before the annual than six weeks before the annual general
general meeting. The TyCom Board can waive meeting. The Tyco Board can waive these
these requirements regarding shareholder requirements regarding shareholder
proposals. proposals, and the staff of the SEC has
taken the position that the SEC's proxy
rules may require Tyco to include in its
proxy materials proposals of shareholders
who do not satisfy these requirements.
SHAREHOLDERS' PREEMPTIVE RIGHTS
- Bermuda law does not confer preemptive - Same.
rights on shareholders, in respect of the
issue of additional securities of a
Bermuda company, but would permit such
rights to be conferred by a company's
bye-laws. The TyCom Bye-laws do not
provide for any such preemptive rights.
DERIVATIVE ACTIONS
- TyCom shareholders may not generally - Same.
initiate an action for a wrongdoing to the
company. In certain limited circumstances,
however, TyCom shareholders may proceed in
a derivative action.
- The Bermuda courts would ordinarily follow - Same.
English precedent, which permits a
shareholder to commence a derivative
action only if:
(1) the act complained of is alleged to be
beyond the corporate power of the
company or to be illegal;
52
BERMUDA LAW AND CURRENT GOVERNING BERMUDA LAW AND CURRENT GOVERNING
DOCUMENTS OF TYCOM DOCUMENTS OF TYCO
--------------------------------------------- ---------------------------------------------
(2) the act complained of is alleged to
constitute a fraud against the
minority shareholders by the majority
shareholders who have used their
controlling position to prevent the
company from taking action against
the wrongdoers;
(3) an act requires approval by a greater
percentage of the company's
shareholders than actually approved
it; or
(4) there is an absolute necessity to
waive the general rule that a
shareholder may not bring a
derivative action so that the
company's memorandum of association
or bye-laws are not violated.
- Under Bermuda law, a shareholder who - Same.
complains that the affairs of a company
are being or have been conducted in a
manner oppressive or prejudicial to some
of the shareholders, including himself,
may petition the court for relief, and the
court has wide discretion to grant relief
if it is satisfied that the complaint is
so justified and that: (1) to wind up the
company would unfairly prejudice those
shareholders, but (2) the facts otherwise
would justify a winding-up order on just
and equitable grounds.
- Traditionally, such relief has been - Same.
granted in relatively limited
circumstances.
BOARD OF DIRECTORS
- The TyCom Bye-laws provide that the number - The Tyco Bye-laws provide that the number
of directors may be determined by the of directors may be determined by the
shareholders in a general meeting, shareholders in a general meeting,
provided that there shall be no more than provided that there are at least two
fifteen and not less than three directors. directors.
- Bermuda law would permit a classified - Same.
Board of Directors, but the TyCom Bye-laws
do not provide for one.
- The TyCom Bye-laws do not require that a - The Tyco Bye-laws require that a director
director be a shareholder. be a shareholder.
53
BERMUDA LAW AND CURRENT GOVERNING BERMUDA LAW AND CURRENT GOVERNING
DOCUMENTS OF TYCOM DOCUMENTS OF TYCO
--------------------------------------------- ---------------------------------------------
REMOVAL OF DIRECTORS
- A director of TyCom may be removed from - A director of Tyco may be removed from
office, with or without cause, by the office, with or without cause, by the
shareholders at a special general meeting shareholders at a special general meeting
or by written resolution signed by not or by written resolution signed by all the
less than 80% of the other directors. The other directors. The Tyco Bye-laws
TyCom Bye-laws authorize the TyCom Board authorize the Tyco Board of Directors to
of Directors to fill any vacancy in the fill any vacancy in the Tyco Board of
TyCom Board of Directors and authorize the Directors and authorize the remaining
remaining Directors to act notwithstanding Directors to act notwithstanding any
any vacancy. A director so appointed holds vacancy. A director so appointed holds
office until the next annual general office until the next annual general
meeting. meeting.
AMENDMENTS TO MEMORANDUM OF ASSOCIATION AND BYE-LAWS
- Under Bermuda law, a company may alter its - Same.
memorandum of association by resolution
passed at a general meeting of
shareholders of which due notice has been
given and, where required, with the
consent of the Minister of Finance. Such a
resolution requires an affirmative vote of
a majority of the votes cast and need not
be recommended by the Board of Directors.
- Holders of at least 20% of any class of - Same.
the company's share capital may apply to
the Bermuda Supreme Court to annul any
alteration. Upon such application, the
alteration will not have effect until it
is confirmed by the Court.
- The TyCom Bye-laws may only be amended by - Same.
the TyCom Board and such amendment becomes
effective only after confirmation by the
TyCom shareholders.
- The TyCom Bye-laws provide that, if TyCom - Same.
has two or more classes of shares, the
rights attached to any class of shares,
unless otherwise provided by the terms of
such class, may be varied either by the
consent in writing of the holders of
three-fourths of the shares of the class,
or by a resolution passed at a separate
meeting of the holders of such class of
shares by holders of three-fourths of the
shares of such class voting at such
separate meeting. Certain procedural rules
of such a separate meeting differ from the
rules of a TyCom general meeting.
54
BERMUDA LAW AND CURRENT GOVERNING BERMUDA LAW AND CURRENT GOVERNING
DOCUMENTS OF TYCOM DOCUMENTS OF TYCO
--------------------------------------------- ---------------------------------------------
- Pursuant to Bermuda law, holders of at - Same.
least 10% of a class of shares in a
company in which the share capital is
divided into different classes may apply
to the Bermuda Supreme Court to annul any
variation in the rights attached to the
class of shares. Upon such application,
the variation will not have effect until
it is confirmed by the Court.
SHARE PURCHASES
- Generally, TyCom may purchase its shares - Same.
for cancellation, unless, on the date on
which the purchase is to be effected,
there are reasonable grounds for believing
that TyCom is, or after the purchase would
be, unable to pay its liabilities as they
become due and subject to certain
statutory requirements as to the funds
from which payment in respect of such
purchase may be made.
- A subsidiary of TyCom also may purchase - Same.
TyCom shares. TyCom shares owned by a
subsidiary of TyCom may be voted on all
matters on which shareholders are entitled
to vote and are counted for quorum
purposes.
- Bermuda law permits TyCom to constitute - Same.
and issue preference shares which are
redeemable at the option of either the
company or the holder.
55
BERMUDA LAW AND CURRENT GOVERNING BERMUDA LAW AND CURRENT GOVERNING
DOCUMENTS OF TYCOM DOCUMENTS OF TYCO
--------------------------------------------- ---------------------------------------------
SALE, LEASE OR EXCHANGE OF ASSETS, AMALGAMATIONS, SHARE ACQUISITIONS,
BUSINESS COMBINATIONS AND RELATED PROVISIONS
- Under Bermuda law, a company's - Same.
shareholders are not generally required to
approve a sale, lease or exchange of all
or substantially all of a company's
property and assets. Bermuda law does
require, however, that shareholders
approve certain forms of mergers and
reconstructions. A compromise or
arrangement in connection with a scheme
for the reconstruction of the company on
terms which include the transfer of all or
part of the undertaking or the property of
the company to another company requires
the approval of a majority in number
representing three-fourths in value of the
shareholders or class of shareholders, as
the case may be, present and voting either
in person or by proxy at the meeting, and
the sanction of the Bermuda Supreme Court.
- Pursuant to Bermuda law, an amalgamation - Pursuant to Bermuda law, an amalgamation
of two or more companies requires Board of two or more companies requires Board
approval and the approval of the approval and the approval of the
shareholders of each company by a shareholders of each company by a
three-fourths majority vote, unless the three-fourths majority vote, unless the
bye-laws otherwise provide. TyCom's bye-laws otherwise provide. Tyco's
Bye-laws changed the shareholder approval Bye-laws contain no such provision. For
requirement to a simple majority vote. For purposes of approval of an amalgamation,
purposes of approval of an amalgamation, all shares, whether or not otherwise
all shares, whether or not otherwise entitled to vote, carry the right to vote.
entitled to vote, carry the right to vote. A separate vote of a class of shares is
A separate vote of a class of shares is required if the rights of such class would
required if the rights of such class would be altered by virtue of the amalgamation.
be altered by virtue of the amalgamation.
- The TyCom Bye-laws contain no such - The Tyco Bye-laws permit the Tyco Board to
provisions. make applicable to Tyco certain rules of
the City Code on Takeovers and Mergers
issued by the Panel on Takeovers and
Mergers in the United Kingdom.
56
BERMUDA LAW AND CURRENT GOVERNING BERMUDA LAW AND CURRENT GOVERNING
DOCUMENTS OF TYCOM DOCUMENTS OF TYCO
--------------------------------------------- ---------------------------------------------
- Not applicable - The City Code on Takeovers and Mergers
requires any person or group acting in
concert which acquires shares that,
together with shares previously owned by
it, have 30% or more of the voting power
of a company, to make an offer to purchase
all equity shares of the company and any
of the company's voting non-equity capital
shares of the type held by such person or
group. The offer price must not be less
than the highest price paid in the
preceding 12 months for shares of the same
class by such person or anyone in such
group and must be made in cash or include
a cash alternative.
- Not applicable. - If a person or group owns 30% or more of
the Tyco shares, and the Tyco Board
determines that an offer under the City
Code is not expedient or the person or
group is required to make such an offer
but fails to do so, the Tyco Board may by
notice require such a person or group to
make an offer which:
(1) includes all shares of every class of
share capital of Tyco and, if the Tyco Board
so requires, all securities of Tyco
convertible into Tyco shares;
(2) is in cash or includes a cash
alternative;
(3) is made within 30 days of the Tyco
Board's notice;
(4) remains open for at least 14 days after
the offer becomes unconditional;
(5) requires payment to be made within 21
days after the offer becomes
unconditional; and
(6) is at a price not less than the highest
price paid in the preceding 12 months
for shares of the same class by the
person or any member of the group, or if
the price is unavailable or
inappropriate, then at a price fixed by
the Tyco Board. The purchase price for
convertible securities must be on terms
the Tyco Board considers fair and
reasonable.
57
BERMUDA LAW AND CURRENT GOVERNING BERMUDA LAW AND CURRENT GOVERNING
DOCUMENTS OF TYCOM DOCUMENTS OF TYCO
--------------------------------------------- ---------------------------------------------
- Not applicable. - The Rules Governing Substantial
Acquisitions of Shares issued by the Takeover
Panel provide, subject to certain
exceptions, that a person or group acting
in concert may not acquire in a period of
seven days shares representing 10% of more
of the voting shares of a company if those
shares, when aggregated with shares of the
company already held by the person or
group, would carry more than 15%, but less
than 30%, of the total voting rights of
the company. The Tyco Board may require
compliance with these rules and may
require any person or group to dispose of
any Tyco shares acquired in violation of
these rules. Under the Tyco Bye-laws, any
person who acquires an interest in 3% or
more of the issued share capital of any
class of Tyco is required to notify Tyco
of that interest and of any change in that
person's interest amounting to 1% or more
of the issued capital of any class. Any
such notification must be made within two
business days after the relevant event. In
determining the percentage interest of any
person for these and similar purposes,
interests of persons acting in concert may
be aggregated.
REQUIRED PURCHASE AND SALE OF SHARES; SHORT FORM AMALGAMATION
- Pursuant to Bermuda law, if a scheme or - Same.
contract involving the transfer of shares
or any class of shares in a Bermuda
company to another company has, within
four months after the making of the offer
in this regard by the transferee company,
been approved by the holders of not less
than 90% in value of the shares or class
of shares for which the offer of such
approval being obtained, the transferee
company may give notice to any dissenting
shareholder that it desires to acquire his
or her shares. Such transferee company
will then be entitled and bound to acquire
such shares on the terms on which
shareholders that approved such scheme or
contract transferred their shares, unless
the Bermuda Supreme Court orders otherwise
upon application by the dissenting
shareholder.
58
BERMUDA LAW AND CURRENT GOVERNING BERMUDA LAW AND CURRENT GOVERNING
DOCUMENTS OF TYCOM DOCUMENTS OF TYCO
--------------------------------------------- ---------------------------------------------
- Under Bermuda law, within one month of the - Same.
transfer of 90% in value of a Bermuda
company's shares or any class of shares to
another company under a scheme or
contract, the transferee company is
required to notify the holders of the
remaining shares of such transfer. Within
three months of the giving of such notice,
any remaining holder of shares may require
the transferee company to acquire his or
her shares on the same terms as provided
for in the scheme or contract, or upon
such terms as may be agreed, or upon such
terms as the Bermuda Supreme Court may
determine upon application of the
transferee company or the shareholder.
- Under Bermuda law, a holder or holders of - Same.
not less than 95% of the shares of any
class of shares in a Bermuda company may
give notice to the remaining shareholders
or class of shareholders of the intention
to acquire their shares, on the terms set
out in the notice. Bermuda law provides
that when such notice is given the
acquiring holder or holders shall be
entitled and bound to acquire the shares
of the remaining shareholders on the terms
set out in the notice, unless the
remaining shareholders exercise statutory
appraisal rights.
- Under Bermuda law, an amalgamation is only - Same.
permitted without a shareholder vote when
it is between a parent company and its
wholly-owned subsidiary or between two or
more wholly-owned subsidiaries.
DISSENTERS' RIGHTS
- Under Bermuda law, a properly dissenting - Same.
shareholder who did not vote in favour of
an amalgamation and who is not satisfied
that he or she has been offered fair value
for his or her shares may apply to the
court to appraise the fair value of his or
her shares. If the court appraised value
is greater than the value received or to
be received in the amalgamation, the
company must pay the court appraised value
to the dissenting shareholder within one
month of the appraisal, unless it decides
to terminate the amalgamation.
59
BERMUDA LAW AND CURRENT GOVERNING BERMUDA LAW AND CURRENT GOVERNING
DOCUMENTS OF TYCOM DOCUMENTS OF TYCO
--------------------------------------------- ---------------------------------------------
- Bermuda law additionally provides a right - Same.
of appraisal in respect of the situations
discussed under "Required Purchase and
Sale of Shares; Short-Form Amalgamation"
above.
SHAREHOLDER CONSENT IN LIEU OF MEETINGS
- Pursuant to Bermuda law, action by written - Same.
consent of shareholders is permitted where
the written resolution is signed by all of
the shareholders, or all the shareholders
of the relevant class of shares, who would
be entitled to attend and vote at a
meeting, with the exception of a
resolution to remove an auditor or a
director before the expiration of his or
her term of office.
FIDUCIARY DUTIES OF DIRECTORS
- Directors of a Bermuda company have - Same, except that the Tyco Bye-laws
fiduciary duties to the company. Pursuant preclude a director from voting on any
to Bermuda law, every director and officer material contract with the company in
of a company must, in exercising his or which the director has an interest,
her powers and discharging his or her subject to certain limited exceptions.
duties, act honestly and in good faith
with a view to the best interests of the
company and exercise the care, diligence
and skill that a reasonably prudent person
would exercise in comparable
circumstances. Bermuda law and the TyCom
Bye-laws also generally require a director
who is interested in any material contract
with the company to disclose the nature of
that interest. The TyCom Bye-laws allow a
director who has disclosed his interest to
vote on any such contract.
- Bermuda courts have not interpreted the - Same.
fiduciary obligation of a director in a
transaction that would be a "change of
control" as necessarily requiring that the
director seek to obtain the highest value
reasonably available for the shareholders
of the company.
60
BERMUDA LAW AND CURRENT GOVERNING BERMUDA LAW AND CURRENT GOVERNING
DOCUMENTS OF TYCOM DOCUMENTS OF TYCO
--------------------------------------------- ---------------------------------------------
INDEMNIFICATION OF OFFICERS AND DIRECTORS
- Bermuda law permits a company to indemnify - Same.
its officers and employees with respect to
any loss arising or liability attaching to
such person by virtue of any rule of law
concerning any negligence, default, breach
of duty, or breach of trust of which the
officer or employee may be guilty in
relation to the company or any of its
subsidiaries, provided that the company
may not indemnify an officer or employee
against any liability arising out of his
or her fraud or dishonesty.
- The TyCom Bye-laws provide that every - The Tyco Bye-laws provide that every
director, secretary and other officer of director, secretary and other officer of Tyco
TyCom shall be indemnified by TyCom for shall be indemnified by Tyco by reason of
all liabilities, losses, damages or any contract entered into, or any act or
expenses arising out of the actual or thing done, by such officer in the
purported execution or discharge of his or discharge of his or her duties, to the
her duties or otherwise in relation to or extent permitted by Bermuda law.
in connection with his or her duties,
powers or office, to the extent permitted
by Bermuda law.
- Bermuda law also permits a company to - Same.
indemnify an officer against liability
incurred in defending any civil or
criminal proceedings in which judgment is
given in his or her favour or in which he
or she is acquitted, or when the Bermuda
Supreme Court grants relief to such
officer. The Court may relieve an officer
from liability for negligence, default,
breach of duty or breach of trust if it
appears to the Court that such officer has
acted honestly and reasonably and, in all
the circumstances, ought fairly to be
excused.
DIRECTOR LIABILITY
- Bermuda law permits a company to exempt an - Bermuda law permits a company to exempt an
officer from loss or liability in officer from loss or liability in
circumstances where it is permissible for circumstances where it is permissible for
the company to indemnify such officer, as the company to indemnify such officer, as
indicated above. The TyCom Bye-laws indicated above. The Tyco Bye-laws exclude
exclude the liability of any officer of the liability of any officer of Tyco for
TyCom for any error of judgement, any error of judgement, omission, default
omission, default or oversight in relation or oversight in relation to the execution
to the execution of his or her duties, so of his or her duties, except in respect of
long as he has acted honestly and in good willful negligence, willful default, fraud
faith with a view to the best interest of or dishonesty.
TyCom.
61
BERMUDA LAW AND CURRENT GOVERNING BERMUDA LAW AND CURRENT GOVERNING
DOCUMENTS OF TYCOM DOCUMENTS OF TYCO
--------------------------------------------- ---------------------------------------------
DIVIDENDS
- Bermuda law provides that a company may - Same, except that the Tyco Bye-laws
not declare a dividend, or make a provide that dividends may only be paid out
distribution out of contributed surplus, of profits available for the purpose.
if there are reasonable grounds for
believing that the company is, or after
such payment would be, unable to pay its
liabilities as they become due, or if the
realizable value of the company's assets
would thereby be less than the aggregate
of its liabilities and its issued share
capital and share premium accounts. The
TyCom Bye-laws provide that the TyCom
Board of Directors may from time to time
declare dividends.
62
LEGAL MATTERS
The validity of the Tyco common shares to be issued to TyCom shareholders in
connection with the amalgamation will be passed upon by Appleby Spurling &
Kempe, Hamilton, Bermuda, Bermuda counsel to Tyco. Michael L. Jones, secretary
of Tyco, is a partner of Appleby Spurling & Kempe.
EXPERTS
The consolidated financial statements and financial statement schedule of
Tyco as of September 30, 2000 and 1999, and for each of the three years in the
period ended September 30, 2000, included in Tyco's Annual Report on Form 10-K
filed on December 21, 2000, and incorporated by reference in this document, have
been audited by PricewaterhouseCoopers, independent accountants, as set forth in
their report included therein. In its report, that firm states that with respect
to a certain subsidiary its opinion is based upon the report of other
independent accountants, namely Arthur Andersen LLP (as it relates to the
consolidated balance sheet of AMP Incorporated and its subsidiaries as of
September 30, 1998, and the related consolidated statements of income,
shareholders' equity and cash flows for the year ended September 30, 1998). The
consolidated financial statements and financial statement schedule referred to
above have been incorporated herein in reliance on said reports given on the
authority of such firms as experts in auditing and accounting.
The consolidated balance sheets as of December 31, 2000 and 1999 and the
related consolidated statements of income, changes in shareholders' equity and
cash flows of The CIT Group, Inc. and its subsidiaries for each of the years in
the three-year period ended December 31, 2000 have been incorporated by
reference herein and in the registration statement in reliance upon the report
of KPMG LLP, independent certified public accountants, also incorporated by
reference herein, and upon the authority of KPMG LLP as experts in accounting
and auditing.
The consolidated financial statements and financial statement schedule of
TyCom as of September 30, 2000 and 1999, and for each of the three years in the
period ended September 30, 2000, included in TyCom's Annual Report on Form 10-K
filed on December 21, 2000, and incorporated by reference in this document, have
been so included in reliance on the report of PricewaterhouseCoopers,
independent accountants, given on the authority of such firm as experts in
auditing and accounting.
FUTURE SHAREHOLDER PROPOSALS
TyCom does not currently expect to hold a 2002 Annual General Meeting of
Shareholders, unless the amalgamation agreement is terminated. Proposals of
TyCom shareholders to be included in the proxy statement to be mailed to all
TyCom shareholders entitled to vote at the 2002 Annual General Meeting of
Shareholders were to be received at TyCom's principal executive offices not
later than September 17, 2001. In addition, under TyCom's Bye-laws, nominations
for director or other business proposals to be addressed at the meeting by a
shareholder are to be received not later than November 30, 2001. However, if the
amalgamation agreement is terminated and the 2002 Annual General Meeting is held
more than 30 days after February 28, 2002, shareholder nominations or business
proposals will be timely if received no later than the 10th day after public
announcement of the meeting date.
63
ANNEX A
AGREEMENT AND PLAN OF AMALGAMATION
BY AND BETWEEN
TGN HOLDINGS, LTD.
AND
TYCOM LTD.
INCLUDING
GUARANTEE
OF
TYCO INTERNATIONAL LTD.
dated as of October 18, 2001
TABLE OF CONTENTS
PAGE
--------
Article 1 THE AMALGAMATION....................................................... A-4
Section 1.1 The Amalgamation............................................ A-4
Section 1.2 Effective Time.............................................. A-4
Section 1.3 Effects of the Amalgamation................................. A-4
Memorandum of Association; Bye-Laws; Directors and
Section 1.4 Officers.................................................... A-4
Article 2 CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES..................... A-5
Section 2.1 Conversion of Securities.................................... A-5
Section 2.2 Exchange of Certificates.................................... A-6
Section 2.3 No Further Ownership Rights in TyCom Common Shares.......... A-8
Section 2.4 Shares of Dissenting Shareholders........................... A-8
Section 2.5 Stock Options; Restricted Shares............................ A-8
Article 3 Representations and Warranties of TyCom................................ A-8
Section 3.1 Organization and Qualification; Subsidiaries................ A-9
Section 3.2 Capitalization.............................................. A-9
Section 3.3 Authority Relative to this Agreement........................ A-10
Section 3.4 No Conflict; Required Filings and Consents.................. A-10
Section 3.5 SEC Filings; Financial Statements........................... A-11
Section 3.6 Brokers..................................................... A-11
Section 3.7 Opinion of Financial Advisor................................ A-12
Article 4 Representations and Warranties of TGN.................................. A-12
Section 4.1 Organization and Qualification.............................. A-12
Section 4.2 Capitalization of Guarantor................................. A-12
Section 4.3 Authority Relative to this Agreement........................ A-13
Section 4.4 No Conflict; Required Filings and Consents.................. A-13
Section 4.5 SEC Filings; Financial Statements........................... A-14
Section 4.6 Brokers..................................................... A-15
Section 4.7 No Undisclosed Material Liabilities......................... A-15
Section 4.8 Compliance with Laws and Court Orders....................... A-15
Section 4.9 Litigation.................................................. A-15
Section 4.10 Absence of Certain Changes or Events........................ A-16
Article 5 Conduct of Business Pending the Amalgamation........................... A-16
Section 5.1 Conduct of TyCom............................................ A-16
Article 6 Additional Agreements.................................................. A-16
Section 6.1 Proxy Statement/Prospectus; Registration Statement.......... A-16
Section 6.2 TyCom Shareholders Meeting.................................. A-17
Section 6.3 Access to Information; Confidentiality...................... A-18
Section 6.4 Stock Options; Restricted Shares; Other Benefit Plans....... A-18
Section 6.5 Notification of Certain Matters............................. A-19
Section 6.6 Public Announcements........................................ A-19
Section 6.7 Indemnification and Insurance............................... A-20
Section 6.8 Tyco Common Shares.......................................... A-21
Section 6.9 Further Action; Reasonable Best Efforts..................... A-21
A-i
Section 6.10 Agreements with respect to Affiliates....................... A-22
Article 7 Conditions to the Amalgamation......................................... A-22
Section 7.1 Conditions to the Obligations of Each Party................. A-22
Section 7.2 Conditions to the Obligations of TGN........................ A-22
Section 7.3 Conditions to the Obligations of TyCom...................... A-23
Article 8 Termination, Amendment and Waiver...................................... A-23
Section 8.1 Termination................................................. A-23
Section 8.2 Effect of Termination....................................... A-24
Section 8.3 Fees and Expenses........................................... A-24
Section 8.4 Amendment................................................... A-24
Section 8.5 Waiver...................................................... A-24
Article 9 Miscellaneous.......................................................... A-25
Section 9.1 Notices..................................................... A-25
Section 9.2 Severability................................................ A-26
Section 9.3 Entire Agreement; Assignment................................ A-26
Section 9.4 Parties in Interest......................................... A-26
Section 9.5 Specific Performance........................................ A-26
Section 9.6 Governing Law; Venue........................................ A-27
Section 9.7 Waiver of Jury Trial........................................ A-27
Section 9.8 Headings.................................................... A-27
Section 9.9 Counterparts................................................ A-27
Section 9.10 Performance of Guarantee.................................... A-27
A-ii
AGREEMENT AND PLAN OF AMALGAMATION
AGREEMENT AND PLAN OF AMALGAMATION, dated as of October 18, 2001,
("AGREEMENT") by and between TGN Holdings, Ltd., a Bermuda company ("TGN") and a
wholly-owned subsidiary of Tyco International Ltd., a Bermuda company
("GUARANTOR"), and TyCom Ltd., a Bermuda company ("TYCOM").
W I T N E S S E T H:
WHEREAS, TGN and TyCom desire TyCom and TGN to amalgamate (the
"AMALGAMATION"), upon the terms and subject to the conditions herein set forth,
whereby each issued and outstanding common share, U.S. $0.25 par value per
share, of TyCom ("TYCOM COMMON SHARES"), not owned by TGN, will be converted
into the right to receive 0.3133 of a common share, U.S. $0.20 par value, of
Guarantor ("TYCO COMMON SHARES");
WHEREAS, TGN owns an aggregate of 444,419,353 TyCom Common Shares and
Guarantor, through TGN, has proposed to the Board of Directors of TyCom
("BOARD") that TGN acquire the remaining issued and outstanding TyCom Common
Shares;
WHEREAS, TGN and TyCom intend to treat the conversion of TyCom Common Shares
into Tyco Common Shares in the Amalgamation as a taxable purchase of TyCom
Common Shares for United States federal income tax purposes;
WHEREAS, a special committee of the Board consisting of Brenda C. Barnes and
Frank P. Doyle, who are independent directors, (the "SPECIAL COMMITTEE") has
(i) determined that the Amalgamation and this Agreement are fair to, and in the
best interests of, TyCom's shareholders (excluding Guarantor, TGN and their
respective subsidiaries) and (ii) recommended that the Board approve this
Agreement and the Amalgamation;
WHEREAS, the Board, taking into account the findings and recommendation of
the Special Committee and the terms and conditions of this Agreement, the
Guarantee and the Voting Agreement, (i) has determined that the Amalgamation and
this Agreement are fair to, and in the best interests of, TyCom and TyCom's
shareholders (excluding Guarantor, TGN and their respective subsidiaries),
(ii) has approved and declared the advisability of this Agreement and the
Amalgamation and (iii) has resolved to recommend that the shareholders of TyCom
(other than Guarantor, TGN and their respective subsidiaries) approve this
Agreement;
WHEREAS, the Board of Directors of TGN has approved and declared the
advisability of this Agreement and the Amalgamation, and the shareholders of TGN
have approved this Agreement and the Amalgamation; and
WHEREAS, concurrently with the execution of this Agreement, and as a
condition and inducement to TyCom's willingness to enter into this Agreement,
TGN and TyCom are entering into a voting agreement (the "VOTING AGREEMENT")
pursuant to which, among other things, TGN has agreed to vote all of its TyCom
Common Shares in favor of the approval of the above-described Amalgamation and
adoption of this Agreement.
WHEREAS, concurrently with the execution of this Agreement, and as a
condition and inducement to TyCom's willingness to enter into this Agreement,
Guarantor has agreed to execute a Guarantee, pursuant to which it will, among
other things, fully and unconditionally guarantee all the representations,
warranties, covenants, agreements and other obligations of TGN and the
Amalgamated Company under this Agreement and under the Voting Agreement (the
"GUARANTEE").
NOW, THEREFORE, in consideration of the premises, representations,
warranties and agreements herein contained, the parties hereto agree as follows:
A-1
DEFINITIONS:
"ACTION" is defined in Section 6.9(b).
"ADJUSTED OPTION" is defined in Section 6.4(a).
"AFFILIATE" means, with respect to any person, any other person directly
or indirectly controlling, controlled by, or under common control with such
Person; provided, however, that, for the purposes of this Agreement, an
"Affiliate" of the Guarantor or of TGN shall not include TyCom and an
"Affiliate" of TyCom shall not include the Guarantor or TGN.
"AGREEMENT" is defined in the preamble.
"AMALGAMATED COMPANY" is defined in Section 1.1.
"AMALGAMATING COMPANIES" is defined in the preamble.
"AMALGAMATION" is defined in the recitals.
"AVERAGE SHARE PRICE" is defined in Section 2.2(e).
"BLUE SKY LAWS" is defined in Section 3.4(b).
"BOARD" is defined in the recitals.
"CERTIFICATES" is defined in Section 2.2(c).
"CLOSING" is defined in Section 1.2.
"CODE" is defined in Section 2.2(f).
"COMPANIES ACT" is defined in the Section 1.1.
"COVERED PERSON" is defined in Section 6.7(c).
"DAILY PER SHARE PRICE" is defined in Section 2.2(e).
"D&O INSURANCE" is defined in Section 6.7(d).
"EFFECTIVE TIME" is defined in Section 1.2.
"EXCHANGE ACT" is defined in Section 3.4(b).
"EXCHANGE AGENT" is defined in Section 2.2(a).
"EXCHANGE FUND" is defined in Section 2.2(b).
"EXCHANGE RATIO" is defined in Section 2.1(b).
"GAAP" is defined in Section 3.5(b).
"GOVERNMENTAL AUTHORITY" is defined in Section 3.4(b).
"GUARANTEE" is defined in the recitals.
"GUARANTOR" is defined in the preamble.
"INDEMNIFIED PARTIES" is defined in Section 6.7(b).
"J.P. MORGAN" is defined in Section 3.6.
"LAW" is defined in Section 3.4(a).
"MATERIAL ADVERSE EFFECT" is defined in Section 3.1(c).
"NYSE" is defined in Section 2.2(e).
A-2
"ORDER" is defined in Section 7.1(c).
"PARENT PERMITS" is defined in Section 4.8.
"POST-1998 TYCO SEC DOCUMENTS" is defined in Section 4.5(a).
"PROXY STATEMENT/PROSPECTUS" is defined in Section 6.1(a).
"REGISTRAR" is defined in Section 1.2.
"REGISTRATION STATEMENT" is defined in Section 6.1(a).
"REPRESENTATIVES" is defined in Section 6.3(a).
"RULE 145" is defined in Section 6.10.
"SECURITIES ACT" is defined in Section 3.4(b).
"SEC" is defined in Section 3.2(b).
"SPECIAL COMMITTEE" is defined in the recitals.
"SUBSIDIARY" is defined in Section 3.1(b).
"TGN" is defined in the preamble.
"TYCO COMMON SHARES" is defined in the recitals.
"TYCO SHARE OPTIONS" is defined in Section 4.2(a).
"TYCO PREFERENCE SHARES" is defined in Section 4.2(a).
"TYCO SEC DOCUMENTS" is defined in Section 4.2(b).
"TYCOM" is defined in the preamble.
"TYCOM AFFILIATE LETTER" is defined in Section 6.10.
"TYCOM COMMON SHARES" is defined in the recitals.
"TYCOM DEFERRED COMPENSATION PLAN" is defined in Section 6.4(f).
"TYCOM ESPP" is defined in Section 6.4(d).
"TYCOM LTIP" is defined in Section 2.5.
"TYCOM PREFERRED SHARES" is defined in Section 3.2(a).
"TYCOM RESTRICTED SHARES" is defined in Section 2.5.
"TYCOM SEC DOCUMENTS" is defined in Section 3.2(b).
"TYCOM SERP" is defined in Section 6.4(e).
"TYCOM SHAREHOLDERS MEETING" is defined in Section 6.2.
"TYCOM SHARE OPTION" is defined in Section 2.5.
"TYCOM SHARE OPTION PLANS" is defined in Section 2.5.
"VOTING AGREEMENT" is defined in the recitals.
"2001 GUARANTOR BALANCE SHEET" is defined in Section 4.7.
A-3
ARTICLE 1
THE AMALGAMATION
SECTION 1.1 THE AMALGAMATION.
Upon the terms and subject to the conditions herein set forth, and in
accordance with the Companies Act 1981 (Bermuda), as amended (the "COMPANIES
ACT"), TyCom and TGN shall make the appropriate filings with the Registrar of
Companies in Bermuda, and TyCom and TGN shall be amalgamated at the Effective
Time (as hereinafter defined). Following the Amalgamation, the separate
corporate existences of TyCom and TGN shall cease, and the resulting company
shall operate under the name of TyCom Ltd. (the "AMALGAMATED COMPANY") and shall
continue to exist as a company incorporated and governed by the laws of Bermuda.
SECTION 1.2 EFFECTIVE TIME.
The Amalgamation shall be consummated by filing with the Registrar of
Companies of Bermuda (the "REGISTRAR") a duly executed and verified application
for registration of the Amalgamated Company and such other documents as are
required by the Companies Act. The Amalgamation shall be effective on the date
shown in the Certificate of Amalgamation issued by the Registrar and at the time
of such issuance (the "EFFECTIVE TIME"). Prior to the filing referred to in this
Section 1.2, a closing (the "CLOSING") shall be held, which shall take place at
the offices of Wilmer, Cutler & Pickering, 2445 M Street, NW, Washington, DC
20037, at 12:01 p.m. (EST), on the first business day on which each of the
conditions set forth in Article 7 shall have been (and continues to be)
fulfilled or waived (if permissible under applicable law), or at such other time
and place as TGN and TyCom may agree.
SECTION 1.3 EFFECTS OF THE AMALGAMATION.
At the Effective Time, the effect of the Amalgamation shall be as provided
in the applicable provisions of the Companies Act and as set forth in this
Agreement. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time:
(a) the amalgamation of TGN and TyCom and their continuance as one company
shall become effective;
(b) the property of TGN and TyCom shall become the property of the
Amalgamated Company;
(c) the Amalgamated Company shall continue to be liable for the obligations
of each of TGN and TyCom;
(d) an existing cause of action, claim or liability to prosecution shall be
unaffected;
(e) a civil, criminal or administrative action or proceeding pending by or
against TGN or TyCom may be continued to be prosecuted by or against the
Amalgamated Company; and
(f) a conviction against, or ruling, order or judgment in favor of or
against TGN or TyCom may be enforced by or against the Amalgamated Company.
SECTION 1.4 MEMORANDUM OF ASSOCIATION; BYE-LAWS; DIRECTORS AND OFFICERS.
(a) At the Effective Time, the Memorandum of Association of TyCom, as in
effect immediately prior to the Effective Time, shall be the Memorandum of
Association of the Amalgamated Company until thereafter changed or amended as
provided therein or by applicable law.
(b) The Bye-Laws of TyCom, as in effect immediately prior to the Effective
Time, shall be the Bye-laws of the Amalgamated Company until thereafter changed
or amended as provided therein or as provided by applicable law.
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(c) The Board of Directors of the Amalgamated Company shall consist of not
less than three (3) directors to be designated by Guarantor, who shall serve
until their respective successors are duly elected and qualified. The names of
each of the individuals to serve as the initial directors of the Amalgamated
Company are as follows, and their addresses are as set forth for TGN in
Section 9.1 of this Agreement:
(i) L. Dennis Kozlowski;
(ii) Mark H. Swartz; and
(iii) Neil R. Garvey.
(d) The officers of TyCom immediately prior to the Effective Time shall be
the officers of the Amalgamated Company until their respective successors are
duly elected and qualified.
ARTICLE 2
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.1 CONVERSION OF SECURITIES.
As of the Effective Time, by virtue of the Amalgamation and without any
action on the part of TGN, TyCom, Guarantor or the holders of any of the
following securities:
(a) All TyCom Common Shares held by any of TyCom's Subsidiaries or held by
the Guarantor, TGN or any of their respective Subsidiaries shall be cancelled
and cease to exist without any payment in respect thereof and no Tyco Common
Shares or other consideration shall be delivered in exchange therefor.
(b) Each TyCom Common Share issued and outstanding immediately prior to the
Effective Time (other than shares to be cancelled in accordance with
Section 2.1(a) and subject to Section 2.4) shall be cancelled and cease to exist
and shall be converted into the right to receive 0.3133 (the "EXCHANGE RATIO")
of a validly issued and fully paid Tyco Common Share.
(c) Each ordinary share, par value U.S. $1.00, of TGN that is issued and
outstanding immediately prior to the Effective Time shall be converted into and
become one share of the Amalgamated Company by virtue of the Amalgamation and
without any action on the part of TGN or any holder of any ordinary shares of
TGN.
(d) The Exchange Ratio and any other relevant amounts and terms in this
Agreement shall be appropriately adjusted to reflect fully the effect of: any
stock split, reverse split, or distribution of any assets, securities, cash or
other property (other than cash dividends on the Tyco Common Shares on customary
record and payment dates and in an amount not greater than $0.0125 per share per
quarter) or any reorganization, recapitalization, reclassification,
readjustment, split up, combination or exchange of shares, or other like event,
in each case with respect to Tyco Common Shares or TyCom Common Shares, in any
case occurring after the date hereof and prior to the Effective Time or with a
record date after the date hereof and prior to the Effective Time. In the event
Guarantor engages in any merger or other corporate transaction after the date of
this Agreement and prior to the Effective Time that results in the conversion of
Tyco Common Shares into cash or any other asset, security or other property
prior to the Effective Time, TGN shall cause Guarantor to make appropriate
provisions to ensure that each holder of a TyCom Common Share will receive
consideration in the Amalgamation that is equivalent to the consideration such
holder would have received in the merger or other corporate transaction,
assuming for this purpose that the Amalgamation occurred immediately prior to
the consummation of such merger or other corporate transaction.
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SECTION 2.2 EXCHANGE OF CERTIFICATES.
(a) Exchange Agent. Prior to the Effective Time. TGN shall select a bank or
trust company reasonably acceptable to TyCom to act as the exchange agent (the
"EXCHANGE AGENT") in the Amalgamation.
(b) Exchange Fund. As necessary, from time to time following the Effective
Time, the Amalgamated Company shall, and shall, if necessary, cause Guarantor
to, make available to the Exchange Agent, for exchange in accordance with this
Article 2, (i) the Tyco Common Shares required for the exchange of TyCom Common
Shares into the Tyco Common Shares pursuant to Section 2.1(b), (ii) an amount of
cash sufficient to permit the Exchange Agent to make the necessary payments of
cash in lieu of fractional Tyco Common Shares in accordance with
Section 2.2(e) and (iii) any dividends or distributions payable pursuant to
Section 2.2(d) (such cash in lieu of fractional shares and Tyco Common Shares,
together with any dividends or distributions with respect thereto, are
hereinafter collectively referred to as the "EXCHANGE FUND").
(c) Exchange Procedures. Promptly after the Effective Time, the Amalgamated
Company shall instruct the Exchange Agent to mail to each holder of record, as
of the Effective Time, of a certificate or certificates ("CERTIFICATES"), which
immediately prior to the Effective Time represented outstanding TyCom Common
Shares, whose shares were converted into the right to receive Tyco Common Shares
pursuant to Section 2.1(b), (i) a letter of transmittal in customary form (that
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon proper delivery of the Certificates to the
Exchange Agent and shall contain such other customary provisions as the
Amalgamated Company may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for Tyco Common Shares,
cash in lieu of fractional shares and dividends or distributions payable
pursuant to Section 2.2. Upon surrender of Certificates for cancellation to the
Exchange Agent, together with such letter of transmittal, duly completed and
validly executed in accordance with the instructions thereto, the holders of
such Certificates shall be entitled to receive in exchange therefor solely that
number of whole Tyco Common Shares into which their TyCom Common Shares were
converted at the Effective Time pursuant to Section 2.1 (which may, but only
consistent with the Companies Act, be delivered in uncertificated form pursuant
to Guarantor's direct registration system), cash in lieu of fractional shares
that such holders have the right to receive pursuant to Section 2.2(e) and any
dividends or distributions payable pursuant to Section 2.2(d), and the
Certificates so surrendered shall forthwith be canceled. Until so surrendered,
outstanding Certificates will be deemed from and after the Effective Time, for
all corporate purposes, to evidence only the right to receive the whole number
of Tyco Common Shares into which such TyCom Common Shares shall have been so
converted and the right to receive an amount in cash in lieu of any fractional
shares in accordance with Section 2.2(e) and any dividends or distributions
payable pursuant to Section 2.2(d). No interest will be paid or accrued on any
cash in lieu of fractional Tyco Common Shares or on any unpaid dividends or
distributions payable to holders of Certificates. In the event of a transfer of
ownership of TyCom Common Shares that is not registered in the transfer records
of TyCom, the proper whole number of Tyco Common Shares (which may, but only
consistent with the Companies Act, be delivered in uncertificated form pursuant
to Guarantor's direct registration system) may be issued to a transferee if the
Certificate representing such TyCom Common Shares is presented to the Exchange
Agent, accompanied by all documents required to evidence and effect such
transfer and by evidence that any applicable stock transfer taxes have been
paid.
(d) Distributions With Respect to Unexchanged Shares. No dividends or other
distributions declared or made with respect to Tyco Common Shares with a record
date after the Effective Time will be paid to the holders of any unsurrendered
Certificates with respect to the Tyco Common Shares represented thereby until
the holders of record of such Certificates shall surrender such Certificates in
accordance with Section 2.2(c). Subject to applicable law, following surrender
of any such Certificates in accordance with Section 2.2(c), the Exchange Agent
shall deliver that whole number of Tyco
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Common Shares issued in exchange therefor, (which may, but only consistent with
the Companies Act, be delivered in uncertificated form pursuant to Guarantor's
direct registration system), without interest, at the time of such surrender,
cash in lieu of fractional Tyco Common Shares pursuant to Section 2.2(e), the
amount of dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole Tyco Common Shares
and, at the appropriate payment date, the amount of dividends or other
distributions with a record date after the Effective Time but prior to surrender
and a payment date occurring after surrender with respect to such whole Tyco
Common Shares.
(e) Fractional Shares. No certificate or scrip representing less than one
Tyco Common Share shall be issued in the Amalgamation upon the surrender for
exchange of Certificates, and such fractional Tyco Common Shares will not
entitle the owner thereof to vote or to any rights of a holder of Tyco Common
Shares. In lieu of any such fractional Tyco Common Shares, each holder of
Certificates who would otherwise have been entitled to a fraction of a Tyco
Common Share in exchange for such Certificate (after taking into account all
Certificates delivered by such holder) pursuant to this Section shall receive
from the Exchange Agent a cash payment in lieu of such fractional Tyco Common
Share, determined by multiplying (A) the fractional share interest to which such
holder would otherwise be entitled by (B) the Average Share Price. For purposes
of this Agreement, "AVERAGE SHARE PRICE" means the average of the Daily Per
Share Prices for the five consecutive trading days ending on the fourth trading
day prior to and not including the date of the Effective Time. "DAILY PER SHARE
PRICE" for any trading day means the volume-weighted average of the per share
selling prices on the New York Stock Exchange ("NYSE") of Tyco Common Shares for
that day, as reported by Bloomberg Financial Markets (or if such service is
unavailable, a service providing similar information selected by TGN and TyCom).
(f) Required Withholding. The Exchange Agent shall be entitled to deduct and
withhold from any consideration payable or otherwise deliverable pursuant to
this Agreement, and from any dividends or distributions payable pursuant to
Section 2.2(d), to any holder or former holder of TyCom Common Shares such
amounts as are required to be deducted or withheld therefrom with respect to the
making of such payment under the Internal Revenue Code of 1986, as amended (the
"CODE"), or under any provision of state, local or foreign tax law or under any
other applicable law. To the extent such amounts are so deducted or withheld,
such amounts shall be treated for all purposes under this Agreement as having
been paid to the person to whom such amounts would otherwise have been paid.
(g) Lost, Stolen or Destroyed Certificates. In the event that any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the person claiming such Certificate to
be lost, stolen or destroyed, solely that whole number of Tyco Common Shares
into which TyCom Common Shares represented by such Certificates were converted
pursuant to Section 2.1 (which may, but only consistent with the Companies Act,
be issued in uncertificated form pursuant to Guarantor's direct registration
system), cash in lieu of fractional Tyco Common Shares, if any, as may be
required pursuant to Section 2.2(e) and any dividends or distributions payable
pursuant to Section 2.2(d); provided, however, that TGN may, in its discretion
and as a condition precedent to the delivery of any Tyco Common Shares, cash and
other distributions, require such person to deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made against
Guarantor, TGN, the Amalgamated Company or the Exchange Agent with respect to
the Certificates alleged to have been lost, stolen or destroyed.
(h) No Liability. Notwithstanding anything to the contrary in this
Section 2.2, neither the Exchange Agent, Guarantor, the Amalgamated Company nor
their respective affiliates shall be liable to a holder of Tyco Common Shares or
TyCom Common Shares for any amount properly paid to a public official pursuant
to any applicable abandoned property, escheat or similar law.
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(i) Termination of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the holders of TyCom Common Shares for one year after
the Effective Time shall be delivered to the Amalgamated Company, upon demand,
and any holders of TyCom Common Shares who have not theretofore complied with
the provisions of this Section 2.2 shall thereafter look only to the Amalgamated
Company for (and the Amalgamated Company Common Shares, any cash in lieu of
fractional Tyco Common Shares to which they are entitled pursuant to
Section 2.2(e) and any dividends or other distributions with respect to Tyco
Common Shares to which they are entitled pursuant to Section 2.2(d), in each
case, without any interest thereon.
SECTION 2.3 NO FURTHER OWNERSHIP RIGHTS IN TYCOM COMMON SHARES.
All Tyco Common Shares issued in accordance with the terms hereof (including
any cash paid in respect thereof pursuant to Section 2.2(d) and Section 2.2(e))
shall be deemed to have been issued in full satisfaction of all rights
pertaining to TyCom Common Shares, and there shall be no further registration of
transfers on the records of the Amalgamated Company of TyCom Common Shares that
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Amalgamated Company for any
reason, they shall be canceled and exchanged as provided, and in accordance with
the procedures set forth, in this Article 2.
SECTION 2.4 SHARES OF DISSENTING SHAREHOLDERS.
Notwithstanding anything in this Agreement to the contrary, in connection
with the Amalgamation (if it becomes effective), holders of TyCom Common Shares
shall have rights pursuant to Section 106 of the Companies Act, provided such
holders comply with the provisions of such Section. In the event any such holder
fails to perfect or effectively withdraws or otherwise loses his right to
appraisal and payment under the Companies Act, such holder shall no longer have
any right thereunder. For the purposes of determining the right of a holder of
TyCom Common Shares to make application for an appraisal pursuant to
Section 106(6) of the Companies Act, the date of the giving of the notice
therein referred to shall be the date that such notice shall be deemed served
pursuant to Bye-law 126.2 of the Bye-laws of TyCom.
SECTION 2.5 STOCK OPTIONS; RESTRICTED SHARES.
At the Effective Time, (i) all options or rights to purchase TyCom Common
Shares (a "TYCOM SHARE OPTION") then outstanding under the TyCom Ltd. Long-Term
Incentive Plan (the "TYCOM LTIP") or the TyCom Ltd. Founders' Share Option
Program (collectively, the "TYCOM SHARE OPTION PLANS") and (ii) all restricted
TyCom Common Shares granted or awarded under the TyCom Share Option Plans (the
"TYCOM RESTRICTED SHARES") shall be treated in accordance with Section 6.4 of
this Agreement. TGN and TyCom acknowledge that the Amalgamation is not a "Change
of Control" for purposes of the TyCom Share Option Plans or any other TyCom
employee benefit plan.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF TYCOM
Except for any matter, fact or circumstance known as of the date of this
Agreement by Guarantor or any of its Subsidiaries, TyCom represents and warrants
to TGN that:
SECTION 3.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Except as set forth in Section 3.1 of the TyCom Disclosure Schedule,
each of TyCom and each Subsidiary of TyCom is duly organized, validly existing
and in good standing (to the extent the concept of good standing exists in the
applicable jurisdiction) under the laws of its jurisdiction and has the
requisite corporate or other power and authority and all necessary governmental
approvals to own,
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lease and operate its properties and to carry on its business as it is now being
conducted, except where the failure to be so organized, existing or in good
standing or to have such power, authority and governmental approvals would not
prevent or materially delay consummation of the Amalgamation or otherwise
prevent or materially delay TyCom from performing its obligations under this
Agreement and would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(b) "SUBSIDIARY" means, with respect to any person, any entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned by such person (provided, however,
when references are made herein to Subsidiaries of Guarantor or TGN (except in
the introductory clause of this Article 3), Subsidiary shall exclude TyCom and
its Subsidiaries).
(c) "MATERIAL ADVERSE EFFECT," when used in connection with TyCom or any of
its Subsidiaries or Guarantor, TGN or any of their respective Subsidiaries, as
the case may be, means any change, effect, development or circumstance that is
materially adverse to the business, assets (including intangible assets),
financial condition or results of operations of TyCom and its Subsidiaries or
TGN, Guarantor and their respective Subsidiaries, as the case may be, in each
case taken as a whole.
SECTION 3.2 CAPITALIZATION.
(a) The authorized share capital of TyCom consists of 3,000,000,000 TyCom
Common Shares and 600,000,000 preference shares, par value $1.00 per share (the
"TYCOM PREFERRED SHARES"). As of October 16, 2001, (i) 520,390,000 TyCom Common
Shares were issued and 500,999,100 were outstanding, all of which are validly
issued, fully paid and nonassessable, and none of which has been issued in
violation of preemptive or similar rights, (ii) 19,390,900 TyCom Common Shares
were held by subsidiaries of TyCom and (iii) 29,561,424 TyCom Common Shares were
reserved for existing option and restricted share grants and 22,261,619 TyCom
Common Shares were reserved for future option and restricted share grants
pursuant to the TyCom Share Option Plans. As of October 16, 2001, there were no
outstanding TyCom Preferred Shares.
(b) Except (i) as set forth in Section 3.2(a), (ii) for changes resulting
from the exercise of TyCom Share Options which were outstanding and exercisable
as of October 16, 2001 (or were outstanding as of October 16, 2001 and became
exercisable in accordance with their terms thereafter) or (iii) for changes
resulting from the grant of stock based compensation or options to directors or
employees pursuant to arrangements in existence as of the date of this
Agreement, there are no outstanding (x) capital shares or voting securities of
TyCom, (y) securities of TyCom convertible into or exchangeable for capital
shares or voting securities of TyCom or (z) options, warrants or other rights to
acquire from TyCom or other obligations of TyCom to issue or sell, any capital
shares, voting securities or securities convertible into or exchangeable for
capital shares or voting securities of TyCom.
(c) Except as set forth in Section 3.2 of the TyCom Disclosure Schedule or
in any of the reports, schedules, forms, statements, registration statements,
proxy statements and other documents filed by TyCom with the Securities and
Exchange Commission ("SEC") since March 10, 2000 and prior to the date of this
Agreement, including those incorporated by reference and not superseded by other
TyCom SEC documents (the "TYCOM SEC DOCUMENTS"), there are no obligations,
contingent or otherwise, of TyCom or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any TyCom Common Shares or the capital stock of any
Subsidiary. Except as set forth in Section 3.2 of the TyCom Disclosure Schedule,
or in any of the TyCom SEC Documents, all of the outstanding capital shares
(other than directors' qualifying shares) of each of TyCom's Subsidiaries are
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 TyCom or another
TyCom Subsidiary free and clear of all material security interests, liens,
claims, pledges, limitations on TyCom's voting rights, charges or other
encumbrances of any nature whatsoever. Except
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as set forth in Section 3.1, this Section 3.2, Section 3.2 of the TyCom
Disclosure Schedule or the TyCom SEC Documents and except for this Agreement,
there are no options, warrants or other rights to acquire from TyCom's
Subsidiaries, or other obligation of TyCom's Subsidiaries, to issue or sell
capital shares of, or other equity interests in, TyCom's Subsidiaries.
SECTION 3.3 AUTHORITY RELATIVE TO THIS AGREEMENT.
TyCom has all necessary corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
Amalgamation. The execution and delivery of this Agreement by TyCom, the
consummation by TyCom of the Amalgamation and the performance by TyCom of its
obligations hereunder have been duly and validly authorized by all necessary
corporate action on the part of TyCom and no other corporate proceedings are
necessary to authorize this Agreement or to consummate the Amalgamation (other
than the approval and adoption of this Agreement by the shareholders of TyCom
and the filing and recordation of appropriate amalgamation documents as required
by Bermuda Law). This Agreement has been duly executed and delivered by TyCom
and, assuming the due authorization, execution and delivery of this Agreement by
TGN and the Guarantee by Guarantor, this Agreement constitutes a valid and
binding obligation of TyCom, enforceable against TyCom in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy and
similar laws or by general principles of equity (whether considered in a
proceeding in equity or at law). The Board has approved this Agreement and the
Amalgamation.
SECTION 3.4 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by TyCom does not, and the
performance by TyCom of its obligations hereunder will not, (i) conflict with or
violate the Memorandum of Association or Bye-laws of TyCom or, (ii) assuming
that all consents, approvals, authorizations and other actions described in
Section 3.4(b) have been obtained and all filings and obligations described in
Section 3.4(b) have been made, conflict with or violate any United States or
non-United States statute, law, ordinance, regulation, rule, code, executive
order, injunction, judgment, decree or other order ("LAW") applicable to TyCom
or any of its Subsidiaries or by which any property or asset of TyCom or any of
its Subsidiaries is bound or affected or (iii) require any consent or other
action by any person under, constitute a default under, or give rise to any
right of termination, cancellation or acceleration of any right or obligation of
TyCom or any of its Subsidiaries or to a loss of any benefit to which TyCom or
any of its Subsidiaries is entitled under any provision of any agreement or
other instrument binding upon TyCom of any of its Subsidiaries or any license,
franchise, permit, certificate, approval or similar authorization affecting, or
relating in any way to, the assets or business of TyCom or any of its
Subsidiaries except, with respect to clause (iii), for any such conflicts or
violations, which would not prevent or materially delay consummation of the
Amalgamation or otherwise prevent TyCom from performing its material obligations
under this Agreement, and would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(b) The execution and delivery of this Agreement by TyCom does not, and the
performance by TyCom of its obligations hereunder will not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
United States federal, state, county or local or non-United States governmental,
regulatory or administrative authority, agency, instrumentality or commission or
any court, tribunal or judicial or arbitral body (a "GOVERNMENTAL AUTHORITY"),
except: (i) for compliance with applicable requirements, if any, of the
Securities Exchange Act of 1934, as amended (together with the rules and
regulations promulgated thereunder, the "EXCHANGE ACT"), the Securities Act of
1933, as amended (together with the rules and regulations promulgated
thereunder, the "SECURITIES ACT"), state securities or "blue sky" laws ("BLUE
SKY LAWS"), state takeover laws, the NYSE and the Bermuda Stock Exchange,
(ii) for the filing with the Registrar of Companies in Bermuda of an application
for registration of the Amalgamation and appropriate documents with the relevant
authorities of other
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states in which TyCom or any of its Subsidiaries is qualified to do business,
(iii) for receipt of consent from the Minister of Finance in Bermuda and the
Bermuda Monetary Authority, and (iv) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
would not prevent or materially delay consummation of the Amalgamation or
otherwise prevent TyCom from performing its material obligations under this
Agreement, and would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
SECTION 3.5 SEC FILINGS; FINANCIAL STATEMENTS.
(a) TyCom has filed with the SEC all periodic and other reports required to
be filed with the SEC since March 10, 2000 and, taking into account any
amendments and supplements filed prior to the date of this Agreement, each of
the TyCom SEC Documents, as of its filing date (or if amended and superseded by
a filing prior to the date of this Agreement, then on the date of such filing),
complied as to form in all material respects with the applicable requirements of
the Exchange Act and the Securities Act, as the case may be. Except as set forth
in the TyCom SEC Documents and taking into account any amendments and
supplements filed prior to the date of this Agreement, such TyCom SEC Documents,
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
necessary in order to make the statements made therein, in the light of and at
the time of the circumstances under which they were made, not misleading. None
of TyCom's Subsidiaries is required to file with the SEC periodic reports
pursuant to the Exchange Act.
(b) Each of the consolidated financial statements (including, in each case,
any related notes thereto) contained in the TyCom SEC Documents were prepared in
accordance with United States generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods involved (except as may be
indicated in the notes thereto or in the TyCom SEC Documents), and each fairly
presents in all material respects, the consolidated financial position of TyCom
and its consolidated subsidiaries at the respective dates thereof and the
consolidated results of operations and cash flows for the periods indicated,
except that for purposes of the foregoing representation, the unaudited interim
financial statements (i) should be read in conjunction with TyCom's consolidated
financial statements contained in TyCom's Form 10-K filed in 2000, and
(ii) were or are subject to normal and recurring year-end adjustments which were
not or are not expected to be material in amount.
SECTION 3.6 BROKERS.
Except for J.P. Morgan Securities Inc. ("J.P. MORGAN"), no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the Amalgamation based upon arrangements made by
or on behalf of the Special Committee. TyCom has heretofore furnished to TGN and
Guarantor a complete and correct copy of all agreements between TyCom and J.P.
Morgan pursuant to which such firm would be entitled to any payment relating to
the Amalgamation.
SECTION 3.7 OPINION OF FINANCIAL ADVISOR.
The Special Committee has received the opinion of J.P. Morgan to the effect
that, as of the date of this Agreement, the consideration to be received in the
Amalgamation by the shareholders of TyCom (other than the Guarantor, TGN and
their respective subsidiaries) is fair to such holders from a financial point of
view. A copy of the written opinion to the foregoing effect will be delivered to
Guarantor as promptly as practicable after the date hereof.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF TGN
TGN represents and warrants to TyCom that:
SECTION 4.1 ORGANIZATION AND QUALIFICATION.
Each of TGN and Guarantor and each of their respective Subsidiaries is duly
organized, validly existing and in good standing (to the extent the concept of
good standing exists in the applicable jurisdiction) under the laws of its
jurisdiction and has the requisite corporate or other power and authority and
all necessary governmental approvals to own, lease and operate its properties
and to carry on its business as it is now being conducted, except where the
failure to be so organized, existing or in good standing or to have such power,
authority and governmental approvals would not prevent or materially delay
consummation of the Amalgamation or otherwise prevent TGN or Guarantor from
performing its material obligations under this Agreement and the Guarantee and
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
SECTION 4.2 CAPITALIZATION OF GUARANTOR.
(a) As of the date of this Agreement, the authorized share capital of
Guarantor consists of 2,500,000,000 Tyco Common Shares and 125,000,000
Preference Shares, par value $1.00 per share ("TYCO PREFERENCE SHARES"). As of
October 16, 2001 (i) 1,996,071,860 Tyco Common Shares were issued and
1,979,313,919 were outstanding, all of which are duly authorized, validly
issued, fully paid and non-assessable, and none of which have been issued in
violation of preemptive or similar rights, (ii) one Tyco Preference Share has
been designated as a Special Voting Preference Share and is validly issued,
fully paid and non-assessable and not issued in violation of preemptive or
similar rights, (iii) no more than 16,751,941 Tyco Common Shares and no Tyco
Preference Shares were held by subsidiaries of Guarantor and (iv) no
Subsidiaries of Guarantor, other than TGN and Subsidiaries of TyCom, hold any
TyCom Common Shares. Included within Guarantor's issued and outstanding Tyco
Common Shares, as of October 16, 2001, are 4,035,632 Tyco Common Shares
representing the assumed exchange of 5,842,864 exchangeable shares (at 0.6907 of
a Tyco Common Share per exchangeable share). Exchangeable shares of CIT
Exchangeco, Inc., a wholly-owned subsidiary of Tyco Capital Corporation
(formerly "The CIT Group, Inc."), were issued by Tyco Capital Corporation prior
to its acquisition by Guarantor in June 2001. As of October 16, 2001, no more
than 132,125,386 Tyco Common Shares were reserved for issuance upon exercise of
stock options issued under Guarantor's stock option plans ("TYCO SHARE
OPTIONS").
(b) As of the date of this Agreement, except (i) as set forth in
Section 4.2(a), (ii) for changes resulting from the exercise of Tyco Share
Options which were outstanding and exercisable as of October 16, 2001 (or were
outstanding as of October 16, 2001 and became exercisable in accordance with
their terms thereafter), (iii) for securities of Guarantor or its Subsidiaries
convertible into or exchangeable for capital shares or voting securities of
Guarantor to the extent disclosed in any of the reports, schedules, forms,
statements, registration statements, proxy statements and other documents filed
by Guarantor with the SEC since September 30, 2000 and prior to the date of this
Agreement, including those incorporated by reference and not superseded by other
Tyco SEC Documents, (the "TYCO SEC DOCUMENTS") and the conversion or exchange
thereof, (iv) securities to be issued in connection with a merger or other
acquisition transaction with respect to which a registration statement has been
filed with the SEC as of the date hereof and (v) for other rights to acquire
immaterial (individually or in the aggregate) amounts of Tyco Common Shares and
changes to the extent resulting from the exercise thereof, there are no
outstanding (x) capital shares or voting securities of Guarantor,
(y) securities of Guarantor convertible into or exchangeable for capital shares
or voting securities of Guarantor or (z) options, warrants or other rights to
acquire from Guarantor or other obligations of
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Guarantor to issue or sell, any capital shares, voting securities or securities
convertible into or exchangeable for capital shares or voting securities of
Guarantor. Except as set forth in any of the Tyco SEC Documents, as of the date
of this Agreement there are no outstanding obligations, contingent or otherwise,
of Guarantor or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any Tyco Common Shares or the capital shares of any Subsidiary.
(c) The Tyco Common Shares to be delivered pursuant to this Agreement have
been duly authorized and, when issued and delivered in accordance with the terms
of this Agreement, will have been validly issued and will be fully paid and
nonassessable, and the issuance thereof is not subject to any preemptive or
other similar right.
(d) Except as set forth in any of the Tyco SEC Documents, all of the
outstanding capital shares of each of Guarantor's Subsidiaries are duly
authorized, validly issued, fully paid and nonassessable, and all such shares
are owned by Guarantor or another Subsidiary of Guarantor free and clear of all
material security interests, liens, claims, pledges, limitations on Guarantor's
voting rights, charges or other encumbrances of any nature whatsoever. Except as
set forth in Section 4.1, this Section 4.2, Section 4.2 of the TGN Disclosure
Schedule or the Tyco SEC Documents filed prior to the date of this Agreement,
there are no options, warrants or other rights to acquire from Guarantor's
Subsidiaries or other obligation of Guarantor's Subsidiaries to issue or sell
any capital shares of, or other equity interests in, Guarantor's Subsidiaries.
SECTION 4.3 AUTHORITY RELATIVE TO THIS AGREEMENT.
Each of TGN and Guarantor has all necessary corporate power and authority to
execute and deliver this Agreement and the Guarantee, respectively, to perform
its obligations hereunder and thereunder and to consummate the Amalgamation. The
execution and delivery of this Agreement by TGN and the Guarantee by Guarantor,
the consummation by TGN of the Amalgamation and the performance by TGN of its
obligations hereunder and by Guarantor of its obligations under the Guarantee
have been duly and validly authorized by all necessary corporate action and no
other corporate proceedings on the part of TGN or Guarantor are necessary to
authorize this Agreement or the Guarantee or to consummate the Amalgamation
(other than the filing and recordation of appropriate amalgamation documents as
required by Bermuda Law). This Agreement has been duly and validly executed and
delivered by TGN and the Guarantee has been duly and validly executed and
delivered by Guarantor and, assuming the due authorization, execution and
delivery by TyCom of this Agreement, this Agreement constitutes a valid and
binding obligation of TGN and the Guarantee constitutes a valid and binding
obligation of Guarantor enforceable against TGN and Guarantor, respectively, in
accordance with their respective terms, except as such enforceability may be
limited by applicable bankruptcy and similar laws or by general principles of
equity (whether considered in a proceeding in equity or at law).
SECTION 4.4 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by TGN and of the Guarantee
by Guarantor do not, and the performance by TGN of its obligations hereunder and
by Guarantor of its obligations under the Guarantee will not, (i) conflict with
or violate the Memorandum of Association or Bye-laws of either TGN or Guarantor,
(ii) assuming that all consents, approvals, authorizations and other actions
described in Section 4.4(b) have been obtained and all filings and obligations
described in Section 4.4(b) have been made, conflict with or violate any Law
applicable to TGN, Guarantor or any of their respective Subsidiaries or by which
any property or asset of any of them is bound or affected and (iii) require any
consent or other action by any person under, constitute a default under, or give
rise to any right of termination, cancellation or acceleration of any right or
obligation of TGN, Guarantor or any of their respective Subsidiaries or to a
loss of any benefit to which TGN, Guarantor or any of their respective
Subsidiaries is entitled under any provision of any agreement or other
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instrument binding upon TGN, Guarantor or any of their respective Subsidiaries
or any license, franchise, permit, certificate, approval or similar
authorization affecting, or relating in any way to, the assets or business of
TGN, Guarantor or any of their respective Subsidiaries except, with respect to
clause (iii), for any such conflicts or violations, which would not prevent or
materially delay consummation of the Amalgamation or otherwise prevent TGN and
Guarantor from performing their material obligations under this Agreement and
the Guarantee, and would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(b) The execution and delivery of this Agreement by TGN and the Guarantee by
Guarantor do not, and the performance by TGN of its obligations hereunder and by
Guarantor of its obligations under the Guarantee will not, require any consent,
approval, authorization or permit of, or filing with or notification to, any
Governmental Authority, except (i) for compliance with applicable requirements,
if any, of the Exchange Act, the Securities Act, Blue Sky Laws, state takeover
laws, the NYSE and the Bermuda Stock Exchange, (ii) for filing with the
Registrar of Companies in Bermuda of an application for registration of the
Amalgamation and appropriate documents with the relevant authorities of other
states in which, Guarantor, TGN or any of their respective Subsidiaries is
qualified to do business, (iii) for receipt of consent from the Minister of
Finance in Bermuda and the Bermuda Monetary Authority, and (iv) where the
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not prevent or materially delay
consummation of the Amalgamation or otherwise prevent TGN or Guarantor from
performing their material obligations under this Agreement and the Guarantee,
respectively, and would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
SECTION 4.5 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Guarantor has filed with the SEC all reports, schedules, forms,
statements and other documents (including all exhibits thereto) required to be
filed with the SEC since September 30, 1998 (the "POST-1998 TYCO SEC
DOCUMENTS"). Taking into account any amendments and supplements filed prior to
the date of this Agreement, each of the Post-1998 Tyco SEC Documents as of its
filing date (or if amended and superseded by a filing prior to the date of this
Agreement, then on the date of such filing) complied as to the form in all
material respects with the applicable requirements of the Exchange Act and the
Securities Act, as the case may be. Except as set forth in the Post-1998 Tyco
SEC Documents and taking into account any amendments and supplements filed prior
to the date of this Agreement, such Post-1998 Tyco SEC Documents 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 necessary in order to make
the statements therein, in the light of and at the time of the circumstances
under which they were made, not misleading. Except for TyCom and Tyco Capital
Corporation, none of Guarantor's Subsidiaries is required to file with the SEC
periodic reports pursuant to the Exchange Act.
(b) Each of the consolidated financial statements (including, in each case,
any related notes thereto) contained in the Post-1998 Tyco SEC Documents were
prepared in accordance with GAAP applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto or in the
Post-1998 Tyco SEC Documents), and each fairly presents in all material
respects, the consolidated financial position of Guarantor and its consolidated
subsidiaries at the respective dates thereof and the consolidated results of
operations and cash flows for the periods indicated, except that for purposes of
the foregoing representation, the unaudited interim financial statements
(i) should be read in conjunction with Guarantor's consolidated financial
statements contained in Guarantor's Form 10-K filed in 2000, and (ii) were or
are subject to normal and recurring year-end adjustments which were not or are
not expected to be material in amount.
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SECTION 4.6 BROKERS.
Except for Goldman, Sachs & Co., no broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the Amalgamation based upon arrangements made by or on behalf of TGN or
Guarantor.
SECTION 4.7 NO UNDISCLOSED MATERIAL LIABILITIES.
As of the date of this Agreement and except as set forth in the Tyco SEC
Documents, neither Guarantor nor any of its Subsidiaries has any liabilities
(absolute, accrued, contingent or otherwise), except liabilities (a) in the
aggregate adequately provided for in Guarantor's unaudited balance sheet
(including any related notes thereto) as of June 30, 2001 included in
Guarantor's Quarterly Report on Form 10-Q for the fiscal period ended June 30,
2001 (the "2001 GUARANTOR BALANCE SHEET"), (b) incurred in the ordinary course
of business and not required under GAAP to be reflected on the 2001 Guarantor
Balance Sheet, so long as such liability would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect,
(c) incurred since June 30, 2001 in the ordinary course of business, so long as
such liability would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect, (d) incurred in connection with this
Agreement or the Amalgamation or the other transactions contemplated hereby, so
long as such liability would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect, or (e) which would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
SECTION 4.8 COMPLIANCE WITH LAWS AND COURT ORDERS.
As of the date of this Agreement, Guarantor, TGN and their respective
Subsidiaries hold all permits, licenses, variances, exemptions, orders,
franchises and approvals of all governmental or regulatory authorities necessary
for the lawful conduct of their respective businesses, except where the failure
to so hold would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect (the "PARENT PERMITS"). Guarantor, TGN and
their respective Subsidiaries are in compliance with the terms of the Parent
Permits, except as disclosed in the Tyco SEC Documents and where the failure so
to comply would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. As of the date of this Agreement, the Guarantor,
TGN and each of their respective Subsidiaries is in compliance with, and to the
knowledge of Guarantor and TGN is not under investigation with respect to and
has not been threatened to be charged with or given notice of any violation of,
any applicable law, statute, ordinance, rule, regulation, judgment, injunction,
order or decree, except as disclosed in the Tyco SEC Documents and for failures
to comply or violations that have not had, and would not individually or in the
aggregate reasonably be expected to have, a Material Adverse Effect.
SECTION 4.9 LITIGATION.
As of the date of this Agreement, except as set forth in the Tyco SEC
Documents or arising out of the transactions contemplated by this Agreement,
there is no action, suit, investigation or proceeding pending against, or, to
the knowledge of Guarantor and TGN threatened against or affecting, the
Guarantor, TGN, any of their respective Subsidiaries, or any of their respective
properties before any court or arbitrator or before or by any governmental body,
agency or official, domestic, foreign or supranational, that would, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect or
that materially adversely effects the ability of TGN to perform timely the
obligations or consummate the transactions contemplated by this Agreement and,
in the case of the Guarantor, the Guarantee.
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SECTION 4.10 ABSENCE OF CERTAIN CHANGES OR EVENTS.
As of the date of this Agreement, Guarantor has not, since June 30, 2001,
suffered any Material Adverse Effect.
ARTICLE 5
CONDUCT OF BUSINESS PENDING THE AMALGAMATION
SECTION 5.1 CONDUCT OF TYCOM.
TyCom agrees that, between the date of this Agreement and the Effective
Time, unless TGN shall otherwise agree in writing, TyCom will, and will cause
its Subsidiaries to, conduct the businesses of TyCom and the Subsidiaries only
in, and TyCom and the Subsidiaries shall not take any action except in, the
ordinary course of business and in a manner consistent with past practice.
ARTICLE 6
ADDITIONAL AGREEMENTS
SECTION 6.1 PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT.
(a) As promptly as practicable after the execution of this Agreement, TyCom
shall, and TGN shall cause Guarantor to, jointly prepare and file with the SEC a
proxy statement/prospectus (the "PROXY STATEMENT/PROSPECTUS") and TGN shall
cause Guarantor to prepare and file with the SEC a registration statement on
Form S-4 (or on such other form as shall be appropriate) (together with all
amendments, schedules and exhibits thereto, the "REGISTRATION STATEMENT") under
the Securities Act with respect to the Tyco Common Shares issuable in the
Amalgamation. TyCom shall, and TGN shall cause Guarantor to, cause the
Registration Statement to comply as to form in all material respects with the
applicable provisions of the Exchange Act, the Securities Act and the rules and
regulations thereunder. TGN shall cause Guarantor to use its reasonable best
efforts, and TyCom will cooperate with Guarantor, to have the Registration
Statement declared effective by the SEC as promptly as practicable. TGN shall
also cause Guarantor to take all actions (other than qualifying to do business
in any jurisdiction in which it is not now so qualified or to file a general
consent to service of process) required to be taken under the applicable state
securities laws in connection with the issuance of Tyco Common Shares in
connection with the Amalgamation and TGN will cause Guarantor to pay all
expenses incident thereto. TyCom shall furnish to Guarantor all information
concerning TyCom and the holders of capital shares of TyCom as may be reasonably
requested in connection with any such action. The Registration Statement shall
include as a part thereof the Proxy Statement/Prospectus which will be mailed to
the shareholders of TyCom as promptly as practicable after the effectiveness of
the Registration Statement. TyCom shall, and TGN shall cause Guarantor to,
furnish all information concerning it required to be included in the
Registration Statement. TGN agrees that the Registration Statement, and each
amendment or supplement thereto, at the time it is filed or becomes effective,
and at the time that the Proxy Statement/Prospectus which forms a part thereof
is mailed to the shareholders of TyCom, will not include an untrue statement of
a material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; provided, however, that the foregoing shall not apply to the
extent that any such untrue statement of a material fact or omission to state a
material fact was made by Guarantor in reliance upon and in conformity with
written information concerning TyCom furnished to Guarantor by TyCom for use in
the Registration Statement. TGN agrees that it will cause Guarantor to comply
with the provisions of the preceding sentence. TyCom agrees that the information
provided by it for inclusion in the Registration Statement and each amendment or
supplement thereto will not, as of the time it is filed or becomes effective and
at the time that the Proxy Statement/Prospectus which forms a part thereof is
mailed to shareholders of TyCom, contain an untrue statement of a material fact
or omit to state a material fact
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necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(b) TyCom shall, and TGN shall cause Guarantor to, notify the other promptly
upon the receipt of any comments from the SEC or its staff or any other
government officials in connection with any filing made pursuant hereto and of
any request by the SEC or its staff or any other government officials for
amendments or supplements to the Registration Statement, the Proxy
Statement/Prospectus or any other filings or for additional information and will
supply the other with copies of all correspondence between such party or any of
its representatives, on the one hand, and the SEC, or its staff or any other
government officials, on the other hand, with respect to the Registration
Statement, the Proxy Statement/Prospectus, the Amalgamation or any other filing.
Neither Guarantor nor TyCom will file any amendment or supplement to, nor will
either engage in any correspondence with the SEC or its staff with respect to
the Registration Statement and the Proxy Statement/Prospectus without the prior
approval of the other, which shall not be unreasonably withheld or delayed.
(c) TGN will, and will cause Guarantor to, advise TyCom, promptly after
Guarantor receives notice thereof, of the time when the Registration Statement
has become effective or any supplement or amendment has been filed, the issuance
of any stop order, the suspension of the qualification of the Tyco Common Shares
issuable in connection with the Amalgamation for offering or sale in any
jurisdiction, or any request by the SEC or the NYSE for amendment of the
Registration Statement or comments thereon and responses thereto or requests by
the SEC for additional information.
(d) If at any time prior to the vote of shareholders of TyCom at the TyCom
Shareholders Meeting, any information relating to TyCom, the Guarantor or TGN,
or any of their respective affiliates, officers or directors, should be
discovered by TyCom, the Guarantor or TGN which should be set forth in an
amendment or supplement to either of the Registration Statement or the Proxy
Statement/Prospectus so that any of such documents would not include any
misstatement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, the entity which discovers such information shall promptly
notify the others and an appropriate amendment or supplement describing such
information shall be promptly filed with the SEC and, to the extent required by
law, disseminated to the shareholders of TyCom. Whenever any event occurs which
is required to be set forth in an amendment or supplement to the Registration
Statement, the Proxy Statement/Prospectus or any other filing, TyCom will, and
TGN will cause Guarantor to, as the case may be, promptly inform the other of
such occurrence and cooperate in filing with the SEC or its staff or any other
government officials and/or mailing to shareholders of TyCom, such amendment or
supplement.
(e) Subject to Section 6.2, the Proxy Statement/Prospectus shall include
(i) the Special Committee's determination that the Amalgamation and this
Agreement are fair to, and in the best interests of, TyCom's shareholders
(excluding Guarantor, TGN and their respective subsidiaries) and recommendation
that the Board approve this Agreement and the Amalgamation and (ii) taking into
account the findings and recommendation of the Special Committee and the terms
and conditions of this Agreement, the Guarantee and the Voting Agreement, the
Board's (x) determination that the Amalgamation and this Agreement are fair to,
and in the best interests of, TyCom and TyCom's shareholders (excluding
Guarantor, TGN and their respective subsidiaries), (y) approval of the
Amalgamation and (z) recommendation that the shareholders of TyCom (other than
Guarantor, TGN and their respective Affiliates) approve this Agreement.
SECTION 6.2 TYCOM SHAREHOLDERS MEETING.
TyCom shall establish a record date for, duly call, give notice of, convene
and hold a special general meeting of the TyCom shareholders ("TYCOM
SHAREHOLDERS MEETING") as promptly as practicable for the purpose of voting upon
the approval of this Agreement, and TyCom shall use all reasonable
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efforts to cause the Proxy Statement/Prospectus to be mailed to TyCom's
shareholders and to hold the TyCom Shareholders Meeting as promptly as
practicable after the Registration Statement is declared effective under the
Securities Act. TyCom shall solicit from its shareholders proxies in favor of
approval of this Agreement and shall take all other reasonable action necessary
or advisable to secure the vote or consent of its shareholders in favor of such
approval. Notwithstanding the foregoing, the Special Committee or the Board may,
at any time prior to the TyCom Shareholders Meeting and in accordance with its
fiduciary duties to TyCom's shareholders as advised by counsel, withdraw, modify
or change any recommendation or declaration regarding this Agreement or the
Amalgamation. Notwithstanding anything in this Agreement to the contrary, no
action by the Board permitted by this Section 6.2 shall constitute a breach of
this Agreement by TyCom. Nothing in this Section 6.2 shall affect TyCom's
obligation to seek the consent of its shareholders as contemplated by
Section 6.1 (regardless of whether the recommendation of the Special Committee
or the Board shall have been withdrawn, modified or changed).
SECTION 6.3 ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) From the date of this Agreement to the Effective Time, each of TGN and
TyCom shall, and TGN shall cause Guarantor to: (i) provide to the other (and to
the other's officers, directors, employees, accountants, consultants, legal
counsel, agents and other representatives (collectively, "REPRESENTATIVES"))
access at reasonable times upon prior notice to its officers, employees, agents,
properties, offices and other facilities and to its books and records and
(ii) furnish promptly such information concerning its business, properties,
contracts, assets, liabilities and personnel as the other or its Representatives
may reasonably request.
(b) Each party agrees to, and TGN shall cause Guarantor to, and each of the
foregoing shall cause its Representatives to: (i) treat and hold as confidential
all information relating to the other and its Subsidiaries, (ii) in the event
that any of the foregoing or any of its Representatives becomes legally
compelled to disclose any such information, provide the other with prompt
written notice of such requirement so that the other may seek a protective order
or other remedy or waive compliance with this Section 6.3(b), and (iii) in the
event that such protective order or other remedy is not obtained, or the other
waives compliance with this Section 6.3(b), furnish only that portion of such
confidential information which is legally required to be provided and exercise
its reasonable best efforts to obtain assurances that confidential treatment
will be accorded such information; provided, however, that this sentence shall
not apply to any information that, at the time of disclosure, is available
publicly and was not disclosed in breach of this Agreement by any of the
foregoing or any of its Representatives. The parties agree and acknowledge that
remedies at law for any breach of their obligations under this Section 6.3 are
inadequate and that in addition thereto such persons shall be entitled to seek
equitable relief, including injunction and specific performance, in the event of
any such breach.
(c) No investigation pursuant to this Section 6.3 shall affect any
representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto.
SECTION 6.4 STOCK OPTIONS; RESTRICTED SHARES; OTHER BENEFIT PLANS.
(a) At the Effective Time, the Amalgamated Company shall, and shall cause
its Affiliates and Guarantor to, take all necessary actions to provide that all
TyCom Share Options will continue to have, and be subject to, the same terms and
conditions set forth in the relevant TyCom Share Option Plan and applicable
award agreement immediately prior to the Effective Time; except that, (i) each
TyCom Share Option will be exercisable for that number of whole Tyco Common
Shares equal to the product of the number of TyCom Common Shares that were
issuable upon exercise of the TyCom Share Option immediately prior to the
Effective Time multiplied by the Exchange Ratio, rounded to the nearest whole
number of Tyco Common Shares, and (ii) the per share exercise price for the Tyco
Common Shares issuable upon exercise of such TyCom Share Option will be equal to
the quotient determined by
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dividing the exercise price per TyCom Common Share at which such TyCom Share
Option was exercisable immediately prior to the Effective Time by the Exchange
Ratio, rounded to the nearest whole cent (each such TyCom Share Option, as
modified, an "ADJUSTED OPTION").
(b) The Amalgamated Company shall cause Guarantor to take all corporate
action necessary to reserve for issuance as of or as soon as administratively
practicable after the Effective Time a sufficient number of Tyco Common Shares
for delivery upon exercise of the Adjusted Options and to deliver to holders of
Adjusted Options upon the exercise of such options Tyco Common Shares registered
pursuant to the Securities Act and listed on the NYSE.
(c) At the Effective time, the Amalgamated Company shall, and shall cause
its Affiliates and Guarantor to, take all necessary action to provide that all
TyCom Restricted Shares (i) will be converted into restricted Tyco Common Shares
under the Tyco International Ltd. Long Term Incentive Plan on the basis of the
Exchange Ratio and (ii) will continue to have, and be subject to, the same terms
and conditions as were applicable under the TyCom LTIP immediately prior to the
Effective Time.
(d) TyCom shall terminate all contributions to the TyCom Ltd. Employee Stock
Purchase Plan (the "TYCOM ESPP") as of November 30, 2001 or, if earlier, the day
prior to the Effective Date. All TyCom Common Shares purchased through the TyCom
ESPP shall be treated as all other TyCom Common Shares.
(e) As of the Effective Time or as soon as administratively feasible
thereafter, the TyCom Ltd. Supplemental Executive Retirement Plan (the "TYCOM
SERP") will be terminated and the Amalgamated Company shall, and shall cause its
Affiliates and Guarantor to, take all necessary action to provide that all
account balances of participants in the TyCom SERP will be transferred to, and
become balances in, the Tyco International (US) Inc. Supplemental Executive
Retirement Plan subject to the same terms and conditions as were in effect under
the TyCom SERP immediately prior to the Effective Time.
(f) As of the Effective Time, the TyCom Deferred Compensation Plan (the
"TYCOM DEFERRED COMPENSATION PLAN") will be terminated and the Amalgamated
Company shall, and shall cause its Affiliates and Guarantor to, take all
necessary action to provide that all account balances and outstanding deferral
and distribution elections of participants in the TyCom Deferred Compensation
Plan will be transferred to, and become balances in or elections under, the Tyco
Deferred Compensation Plan subject to the same terms and conditions as were in
effect under the TyCom Deferred Compensation Plan immediately prior to the
Effective Time.
SECTION 6.5 NOTIFICATION OF CERTAIN MATTERS.
TyCom shall give prompt notice to TGN, and TGN shall, and shall cause
Guarantor to, give prompt notice to TyCom, of (a) the occurrence, or
nonoccurrence, of any event the occurrence, or nonoccurrence, of which
reasonably could be expected to cause any representation or warranty contained
in this Agreement to be untrue or inaccurate in any material respect and
(b) any failure of TyCom or TGN, as the case may be, to comply with or satisfy
any covenant or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this Section 6.5
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
SECTION 6.6 PUBLIC ANNOUNCEMENTS.
TGN and TyCom shall, and TGN shall cause Guarantor to, consult with the
other before issuing (and in the case of TGN, before Guarantor issues) any press
release or making any written public statement with respect to the Amalgamation
or this Agreement and TGN and TyCom shall not, and
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TGN shall not permit Guarantor to, issue any such press release or make any such
public statement without the prior consent of the other, which shall not be
unreasonably withheld; provided, however, that TyCom and Guarantor may, without
the prior consent of the other, issue such press release or make such public
statement as may upon the advice of counsel be required by law (including,
without limitation, Rules 165 and 425 under the Securities Act and Rule 14a-12
under the Exchange Act) or the rules and regulations of the NYSE but only if it
has used all reasonable efforts to consult with the other before issuing such
press release or making such public statement.
SECTION 6.7 INDEMNIFICATION AND INSURANCE.
(a) The Memorandum of Association and the Bye-laws of the Amalgamated
Company shall contain all the provisions with respect to exculpation and
indemnification set forth in TyCom's Memorandum of Association and Bye-laws on
the date hereof, which provisions shall not be amended, modified or otherwise
repealed in any manner that would adversely affect the rights thereunder as of
the Effective Time of individuals who at or prior to the Effective Time were
directors, officers, employees or agents of TyCom, unless such modification is
required after the Effective Time by law and then only to the minimum extent
required by such law.
(b) The Amalgamated Company shall, and shall cause Guarantor to, to the
fullest extent permitted under applicable Law, indemnify and hold harmless each
present and former director or officer of TyCom 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 actual or
threatened claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative, (i) arising out of or pertaining to
the transactions contemplated by this Agreement or (ii) otherwise with respect
to any acts or omissions occurring at or prior to the Effective Time. In the
event of any such claim, action, suit, proceeding or investigation (whether
arising before or after the Effective Time) (x) any counsel retained by the
Indemnified Parties for any period after the Effective Time shall be reasonably
satisfactory to the Amalgamated Company, (y) after the Effective Time, the
Amalgamated Company shall pay the reasonable fees and expenses of such counsel,
promptly after statements therefor are received; provided, however, that the
Indemnified Parties shall be required to reimburse the Amalgamated Company for
such payments in the circumstances and to the extent required by TyCom's
Memorandum of Association and Bye-laws as in effect on the date hereof, any
applicable contract or agreement or applicable law and (iii) the Amalgamated
Company will cooperate in the defense of any such matter (it being understood
that the Amalgamated Company shall not be liable for any settlement effected
without its written consent (which consent shall not be unreasonably withheld)).
The Indemnified Parties as a group may retain only one law firm to represent
them in each applicable jurisdiction with respect to any single action unless
there is, under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more Indemnified Parties,
in which case each Indemnified Party with respect to whom such a conflict exists
(or group of such Indemnified Parties who among them have no such conflict) may
retain one separate law firm in each applicable jurisdiction.
(c) The Amalgamated Company shall, and cause shall Guarantor to, honor and
fulfill in all respects the obligations of TyCom pursuant to any indemnification
agreements and employment agreements (the parties under such agreements being
referred to as the "COVERED PERSONS") with TyCom's directors and officers
existing at or before the Effective Time.
(d) In addition, the Amalgamated Company shall, and shall cause Guarantor
to, provide, for a period of not less than the greater of six years after the
Effective Time or any applicable statute of limitations, TyCom's current
directors and officers with an insurance and indemnification policy that
provides coverage for events occurring at or prior to the Effective Time (the
"D&O INSURANCE") that is no less favorable than the existing policy and with
third party insurers of a similar or better A.M. Best
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rating or, if substantially equivalent insurance coverage is unavailable, the
best available coverage; provided, however, that the Amalgamated Company shall
not, and shall cause the Guarantor not to, be required to pay an annual premium
for the D&O Insurance in excess of 200% of the annual premium currently paid by
Guarantor for such insurance, but in such case shall purchase as much such
coverage as possible for such amount. In the event any claim is made against
TyCom's current directors and officers that is covered, in whole or in part, or
potentially so covered by insurance, neither the Amalgamated Company nor
Guarantor shall do anything that would forfeit, jeopardize, restrict or limit
the insurance coverage available for that claim until the final disposition of
that claim. All rights to indemnification and advancement of expenses now
existing in favor of the present directors or officers of TyCom as provided in
TyCom's Memorandum of Association Bye-Laws or otherwise in effect on the date
hereof shall remain in effect after the Amalgamation.
(e) This Section 6.7 shall survive the consummation of the Amalgamation at
the Effective Time, is intended to benefit TyCom, the Amalgamated Company, the
Indemnified Parties and the Covered Persons, shall be binding on the Amalgamated
Company and all successors and assigns of the Amalgamated Company and is for the
benefit of and shall be enforceable by the Indemnified Parties and the Covered
Persons. If the Amalgamated Company or any of their respective successors or
assigns (i) consolidates with or mergers into any other corporation or entity
and is not the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties or assets to any individual, corporation or any other entity, in each
such case, proper provision shall be made so that the successors and assigns of
the Amalgamated Company, shall assume the obligations of the Amalgamated Company
set forth in this Section 6.7(e).
SECTION 6.8 TYCO COMMON SHARES.
(a) TGN shall take, and shall cause Guarantor to take, all action necessary
to enable TGN to deliver to the Exchange Agent the Tyco Common Shares to be
delivered to the holders of TyCom Common Shares in the Amalgamation.
(b) TGN shall, and shall cause Guarantor to, promptly prepare and submit to
the NYSE, a listing application covering the Tyco Common Shares issuable in the
Amalgamation, and shall, and shall cause Guarantor to, use its reasonable best
efforts to obtain, prior to the Effective Time, approval for listing of such
Tyco Common Shares, subject to official notice of issuance.
SECTION 6.9 FURTHER ACTION; REASONABLE BEST EFFORTS.
(a) Upon the terms and subject to the conditions hereof, each of the parties
hereto shall, and TGN shall cause Guarantor to, use its reasonable best efforts
to take, or cause to be taken, all appropriate action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the Amalgamation, including making
all filings with Governmental Authorities necessary to consummate the
Amalgamation and using its reasonable best efforts to obtain all franchises,
grants, authorizations, licenses, permits, easements, variances, exceptions,
certificates, consents, approvals, authorizations, qualifications and orders of
Governmental Authorities and parties to contracts as are necessary for the
consummation of the Amalgamation and to fulfill the conditions to the
Amalgamation. In case, at any time after the Effective Time, any further action
is necessary or desirable to carry out the purposes of this Agreement or the
Voting Agreement, the proper officers and directors of each of the parties
hereto shall use their, and TGN shall cause Guarantor to use its, reasonable
best efforts to take all such action.
(b) Each of the parties hereto agrees to, and TGN shall cause Guarantor to,
cooperate and use its reasonable best efforts to defend any litigation, suit,
claim, action, proceeding or investigation (an "ACTION"), including
administrative or judicial Action, and to have vacated, lifted, reversed or
overturned any decree, judgment, injunction or other order (whether temporary,
preliminary or
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permanent) that is in effect and that restricts, prevents or prohibits
consummation of the Amalgamation, including by vigorously pursuing all available
avenues of administrative and judicial appeal.
SECTION 6.10 AGREEMENTS WITH RESPECT TO AFFILIATES.
TyCom shall deliver to TGN, prior to the date the Registration Statement
becomes effective under the Securities Act, a letter (the "TYCOM AFFILIATE
LETTER") identifying all persons who are, at the time of the TyCom Shareholders
Meeting, anticipated to be "affiliates" of TyCom for purposes of Rule 145 under
the Securities Act ("RULE 145"). TyCom shall use its reasonable best efforts to
cause each person who is identified as an "affiliate" in the TyCom Affiliate
Letter to deliver to TGN prior to the Effective Time a written agreement in
connection with restrictions on affiliates under Rule 145, in a form mutually
agreeable to TyCom and TGN.
ARTICLE 7
CONDITIONS TO THE AMALGAMATION
SECTION 7.1 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY.
The obligations of TyCom and TGN to consummate the Amalgamation are subject
to the satisfaction or waiver (where permissible under applicable law) of the
following conditions:
(a) REGISTRATION STATEMENT EFFECTIVE. The Registration Statement shall have
been declared effective by the SEC under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement shall be in effect
and no proceeding for that purpose shall be pending before or threatened by the
SEC.
(b) SHAREHOLDER APPROVAL. The Amalgamation and this Agreement shall have
been approved and adopted by the requisite affirmative vote of the respective
shareholders of TyCom in accordance with Bermuda Law and TyCom's Memorandum of
Association and Bye-Laws.
(c) NO ORDER. No Governmental Authority shall have enacted, issued,
promulgated, enforced or entered any Law that is then in effect and has the
effect of making the Amalgamation illegal or otherwise prohibiting consummation
of the Amalgamation; provided, however, that each of the parties to this
Agreement shall use its reasonable best efforts to cause any such Law to be
vacated or lifted.
(d) ALL GOVERNMENTAL FILINGS AND CONSENTS. All governmental consents, orders
and approvals legally required for the consummation of the Amalgamation and the
transactions contemplated hereby shall have been obtained and be in effect at
the Effective Time, except where the failure to obtain any such consent would
not have a Material Adverse Effect.
(e) NYSE LISTING. The Tyco Common Shares to be issued in the Amalgamation
shall have been authorized for listing on the NYSE, subject to official notice
of issuance.
(f) APPRAISAL RIGHTS. The number of TyCom Common Shares with respect to
which shareholders of TyCom (excluding Guarantor, TGN and their respective
Affiliates) have exercised rights pursuant to Section 106(6) of the Companies
Act shall not exceed 5,600,000 TyCom Common Shares.
SECTION 7.2 CONDITIONS TO THE OBLIGATIONS OF TGN.
The obligations of TGN to consummate the Amalgamation are subject to the
satisfaction or waiver (where permissible under applicable law) of the following
additional conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of TyCom contained in this Agreement that is qualified by reference
to a Material Adverse Effect shall be true and correct as of the Effective Time,
as though made on and as of the Effective Time, except that such
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representations and warranties that address matters only as of a particular date
shall remain true and correct as of such date. Each of the representations and
warranties of TyCom contained in this Agreement that is not qualified by
reference to a Material Adverse Effect shall be true and correct in all material
respects as of the Effective Time, as though made on and as of the Effective
Time, except that such representations and warranties that address matters only
as of a particular date shall remain true and correct as of such date. TGN shall
have received a certificate of an authorized officer of TyCom to these effects.
(b) AGREEMENTS AND COVENANTS. TyCom 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
TGN shall have received a certificate of an authorized officer of TyCom to these
effects.
SECTION 7.3 CONDITIONS TO THE OBLIGATIONS OF TYCOM.
The obligations of TyCom to consummate the Amalgamation are subject to the
satisfaction or waiver (where permissible under applicable law) of the following
additional conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of TGN contained in this Agreement that is qualified by reference to
a Material Adverse Effect shall be true and correct as of the Effective Time, as
though made on and as of the Effective Time, except that such representations
and warranties that address matters only as of a particular date shall remain
true and correct as of such date. Each of the representations and warranties of
TGN contained in this Agreement that is not qualified by reference to a Material
Adverse Effect shall be true and correct in all material respects as of the
Effective Time, as though made on and as of the Effective Time, except that such
representations and warranties that address matters only as of a particular date
shall remain true and correct as of such date. TyCom shall have received a
certificate of an authorized officer of TGN to these effects.
(b) AGREEMENTS AND COVENANTS. TGN shall have performed or complied in all
material respects with all agreements and covenants required by this Agreement
and the Voting Agreement, and Guarantor shall have performed or complied in all
material respects with all agreements and covenants required by the Guarantee,
in each case, to be performed or complied with by such Person on or prior to the
Effective Time, and TyCom shall have received a certificate of an authorized
officer of TGN and Guarantor to that effect.
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1 TERMINATION.
This Agreement may be terminated and the Amalgamation may be abandoned at
any time prior to the Effective Time, notwithstanding any requisite adoption of
this Agreement by the shareholders of TyCom:
(a) by mutual written consent duly authorized by the Boards of Directors of
each of TGN and (only upon recommendation of the Special Committee) TyCom;
(b) by either TGN or (only upon recommendation of the Special Committee)
TyCom if any Governmental Authority shall have enacted, issued, promulgated,
enforced or entered any Law restraining, enjoining or otherwise prohibiting the
Amalgamation and such Law shall have become final and nonappealable;
(c) by TGN or (only upon recommendation of the Special Committee) TyCom if
the Effective Time shall not have occurred on or before June 30, 2002; provided,
however, that the right to
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terminate this Agreement under this Section 8.1(c) shall not be available to any
party whose failure to fulfill any obligation under this Agreement or, the
Voting Agreement has been the cause of, or resulted in, the failure of the
Effective Time to occur by such time; or
(d) by TGN if the Special Committee withdraws, modifies or changes its
recommendation of this Agreement or the Amalgamation in a manner adverse to
Guarantor or TGN or shall have resolved to do any of the foregoing.
SECTION 8.2 EFFECT OF TERMINATION.
In the event of the termination of this Agreement pursuant to Section 8.1,
this Agreement shall forthwith become void, and there shall be no liability on
the part of any party hereto, except (a) as set forth in Section 8.3 and
(b) nothing herein shall relieve any party from liability for any breach hereof
prior to the date of such termination. The provisions of Section 9.6 and
Section 9.7 shall survive any termination hereof pursuant to Section 8.1.
SECTION 8.3 FEES AND EXPENSES.
Except as otherwise provided in Section 6.1(a), all costs and expenses
incurred in connection with this Agreement and the Amalgamation shall be paid by
the party incurring such expenses, whether or not any Amalgamation is
consummated.
SECTION 8.4 AMENDMENT.
This Agreement may be amended by the parties hereto at any time prior to the
Effective Time with the prior written approval of the Special Committee;
provided, however, after approval of this Agreement by the shareholders of
TyCom, 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 each of the parties hereto.
SECTION 8.5 WAIVER.
At any time prior to the Effective Time, any party hereto may (a) extend the
time for the performance of any obligation or other act of any other party
hereto, (b) waive inaccuracy in the representations and warranties of any other
party contained herein or in any document delivered pursuant hereto and
(c) waive compliance with any agreement of any other party or any condition to
its own obligations contained herein; provided, however, that no extension or
waiver by TyCom pursuant to this Section 8.5 shall be effective without the
prior written approval of the Special Committee. Any such extension or waiver
must be set forth in an instrument in writing signed by the party or parties to
be bound thereby.
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ARTICLE 9
MISCELLANEOUS
SECTION 9.1 NOTICES.
All notices and other communications given or made by one party to the other
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made if and when delivered personally or by overnight courier to the parties
at the following addresses or sent by electronic transmission, with confirmation
received, to the telecopy numbers specified below (or at such other address or
telecopy number for a party as shall be specified by like notice):
if to TGN, to:
TGN Holdings, Ltd.
The Zurich Centre, Second Floor
90 Pitts Bay Road
Pembroke, HM 08
Bermuda
Attention: President
with a copy (which shall not constitute notice) to:
Tyco International (US) Inc.
One Tyco Park
Exeter, NH 03833
Attention: Chief Corporate Counsel
Telecopy: (603) 778-7700
and
Wilmer, Cutler & Pickering
2445 M Street, N.W.
Washington, D.C. 20037
Attention: Meredith Cross
Telecopy: (202) 663-6363
if to TyCom, to:
TyCom Ltd.
Crown House
4 Par la Ville Road
Hamilton, HM 08
Bermuda
Attention: Chief Executive Officer
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with a copy (which shall not constitute notice) to:
c/o TyCom (US) Inc.
10 Park Avenue
Morristown, NJ 07960
Attention: General Counsel
Telecopy: (973) 753-3393
and
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: Phillip Mills
Telecopy: (212) 450-4800
SECTION 9.2 SEVERABILITY.
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 Amalgamation
is not affected in any manner materially 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 a mutually acceptable manner in order that the Amalgamation be
consummated as originally contemplated to the fullest extent possible.
SECTION 9.3 ENTIRE AGREEMENT; ASSIGNMENT.
This Agreement and the Voting Agreement constitute the entire agreement
among the parties with respect to the subject matter hereof and thereof and
supersede all prior agreements and undertakings, both written and oral, among
the parties, or any of them, with respect to the subject matter hereof and
thereof. This Agreement shall not be assigned by operation of law or otherwise,
except that any or all of the rights of TGN hereunder may be assigned to
Guarantor or any direct or indirect wholly owned subsidiary of Guarantor and
except for any assignment as a result of the Amalgamation; provided that its
assignment shall not relieve the assigning party of its obligations hereunder
and thereof.
SECTION 9.4 PARTIES IN INTEREST.
This Agreement shall be binding upon and inure solely to the benefit of each
party hereto and its successors, 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 2.1,
Section 2.2 and Section 6.8 (which are for the benefit of holders of TyCom
Common Shares may be enforced by them) and Section 6.7 (which is intended to be
for the benefit of the Indemnified Parties and Covered Persons, and may be
enforced by such Indemnified Parties and Covered Persons).
SECTION 9.5 SPECIFIC PERFORMANCE.
The parties hereto agree that irreparable damage would occur in the event
any provision of this Agreement were not performed in accordance with the terms
hereof and that the parties shall be entitled to specific performance of the
terms hereof, in addition to any other remedy at law or equity.
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SECTION 9.6 GOVERNING LAW; VENUE
This Agreement shall be governed by, and construed in accordance with, the
laws of Bermuda, regardless of the laws that might otherwise govern under
applicable principles of conflict of laws of such country. In the event that any
legal proceedings are instituted concerning the interpretation or enforcement of
this Agreement, exclusive venue over such proceedings shall be vested in the
courts of Bermuda.
SECTION 9.7 WAIVER OF JURY TRIAL.
Each of the parties hereto hereby waives to the fullest extent permitted by
applicable law any right it may have to a trial by jury with respect to any
litigation directly or indirectly arising out of, under or in connection with
this Agreement or the Amalgamation. Each of the parties hereto (a) certifies
that no representative, agent or attorney of any other party has represented,
expressly or otherwise, that such other party would not, in the event of
litigation, seek to enforce that foregoing waiver and (b) acknowledges that it
and the other hereto have been induced to enter into this Agreement and the
Amalgamation, as applicable, by, among other things, the mutual waivers and
certifications in this Section 9.7
SECTION 9.8 HEADINGS.
The descriptive headings contained in this Agreement are included for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 9.9 COUNTERPARTS.
This Agreement may be executed and delivered (including by facsimile
transmission) 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 9.10 PERFORMANCE OF GUARANTEE.
TGN shall cause Guarantor to perform all of its obligations under the
Guarantee.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
TGN HOLDINGS, LTD.
By: /s/ Glen J. Miskiewicz
----------------------------------------
Name: Glen J. Miskiewicz
Title: President
TYCOM LTD.
By: /s/ Frank P. Doyle
----------------------------------------
Name: Frank P. Doyle
Title: Member, Special Committee
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GUARANTEE
Tyco International Ltd. ("Guarantor") irrevocably guarantees each and every
representation, warranty, covenant, agreement and other obligation of TGN and
the Amalgamated Company, and/or any of their respective permitted successors and
assigns (and where any such representation or warranty is made to the knowledge
of TGN, such representation or warranty shall be deemed made to the knowledge of
Guarantor) contained in the Agreement and/or the Voting Agreement, and the full
and timely performance of their respective obligations under the provisions of
the Agreement and the Voting Agreement. This is a guarantee of payment and
performance, and not of collection, and Guarantor acknowledges and agrees that
this Guarantee is full and unconditional, and no release or extinguishment of
TGN's or the Amalgamated Company's obligations or liabilities (other than in
accordance with the terms of the Agreement or the Voting Agreement), whether by
decree in any bankruptcy proceeding or otherwise, shall affect the continuing
validity and enforceability of this Guarantee, as well as any provision
requiring or contemplating performance by Guarantor. For the avoidance of doubt,
Guarantor acknowledges and agrees that this Guarantee shall survive the
termination of the Agreement with respect to those provisions of the Agreement
identified in Section 8.2 thereof and the termination of the Voting Agreement
with respect to those provisions of the Voting Agreement identified in
Section 6 thereof.
Capitalized terms used herein and not otherwise defined shall have the
meanings given such terms in the Agreement.
Guarantor hereby waives, for the benefit of TyCom, (i) any right to require
TyCom as a condition of payment or performance by Guarantor, to proceed against
TGN or the Amalgamated Company or pursue any other remedy whatsoever and
(ii) to the fullest extent permitted by law, any defenses or benefits that may
be derived from or afforded by law which limit the liability of or exonerate
guarantors or sureties, except to the extent that any such defense is available
to TGN or the Amalgamated Company.
Without limiting in any way the foregoing, Guarantor covenants and agrees to
take all action to enable TGN and the Amalgamated Company to adhere to the
provisions of Section 2.1(d), Section 2.2(b), Section 6.1, Section 6.7 and
Section 6.9, and each provision of the Agreement and the Voting Agreement which
requires an act or omission on the part of Guarantor or any of its subsidiaries
to enable TGN or the Amalgamated Company, as the case may be, to comply with
their respective obligations under the Agreement or the Voting Agreement, as the
case may be.
The provisions of Article 9 of the Agreement are incorporated herein,
mutatis mutandis, except that notices and other communications hereunder to
Guarantor shall be delivered to Tyco International Ltd., The Zurich Centre,
Second Floor, 90 Pitts Bay Road, Pembroke HM 08, Bermuda, Attn: Chief Corporate
Counsel, Telecopy no. (441) 295-9647, Confirm No. (441) 292-8674 (with a copy as
provided therefor in Section 9.1).
As a condition and inducement to TyCom's willingness to enter into the
Agreement, Guarantor has agreed to execute this Guarantee. Guarantor understands
that TyCom is relying on this Guarantee in entering into the Agreement and may
enforce this Guarantee as if TyCom were a party hereto and as if Guarantor were
a party to the Agreement and the Voting Agreement. The Guarantor agrees that
irreparable damage would occur in the event any provision of the Agreement or
the Guarantee were not performed in accordance with the terms thereof and hereof
and that TyCom shall be entitled to specific performance of the terms hereof in
addition to any other remedy of law or in equity.
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Guarantor will make proper provision so that the successors and assigns of
Guarantor shall assume the obligations of Guarantor set forth in this Guarantee.
TYCO INTERNATIONAL LTD.
By: /s/ MARK H. SWARTZ
----------------------------------------
Name: Mark H. Swartz
Title: Executive Vice President and
Chief Financial Officer
Date: October 18, 2001
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ANNEX B
VOTING AGREEMENT
This Voting Agreement (the "AGREEMENT") dated as of October 18, 2001 by and
between TGN Holdings, Ltd., a Bermuda company ("TGN"), and an indirect,
wholly-owned subsidiary of Tyco International Ltd. ("GUARANTOR"), a Bermuda
company, and TyCom Ltd., a Bermuda company ("TYCOM").
WHEREAS, TGN and TyCom are concurrently with the execution and delivery of
this Agreement entering into an Agreement and Plan of Amalgamation (the
"AMALGAMATION AGREEMENT") pursuant to which TyCom will amalgamate with TGN (the
"AMALGAMATION") on the terms and conditions set forth therein;
WHEREAS, TGN owns and has the right to vote the Shares (as hereinafter
defined) which represent the requisite vote for the approval of the Amalgamation
Agreement and the Amalgamation; and
WHEREAS, in order to induce TyCom to enter into the Amalgamation Agreement,
TyCom has requested TGN, and TGN has agreed, to enter into this Agreement
pursuant to which TGN agrees to vote in favor of the Amalgamation Agreement and
the Amalgamation as owner of the Shares (as defined below).
NOW, THEREFORE, the parties hereto agree as follows:
Section 1. DEFINITIONS. Capitalized terms used and not defined herein
shall have the meaning assigned to such terms in the Amalgamation Agreement.
Section 2. AGREEMENT TO VOTE. TGN irrevocably agrees to vote all TyCom
Common Shares (as hereinafter defined) that TGN is entitled to vote at the time
of any vote at any annual or special general meeting of the shareholders of
TyCom, and at any adjournment thereof, (a) in favor of the adoption of the
Amalgamation Agreement and each of the transactions contemplated thereby,
including the Amalgamation, and (b) against (i) any proposal made in opposition
to or in competition with the Amalgamation and the transactions contemplated by
the Amalgamation Agreement, including the Amalgamation, (ii) any amalgamation,
scheme of arrangements, merger, reorganization, consolidation, share exchange,
business combination, sale of assets, recapitalization, liquidation, winding up,
extraordinary dividend or distribution, significant share repurchase or other
similar transaction with or involving TyCom, other than the Amalgamation
Agreement and the transactions contemplated thereby, including the Amalgamation,
or (iii) any other action the consummation of which would reasonably be expected
to impede, frustrate, interfere with, impair, delay or prevent consummation of
the transactions contemplated by the Amalgamation Agreement, including the
Amalgamation.
Section 3. PROXY.
(a) If requested by the Special Committee, TGN shall (subject to Section 6
of this Agreement) irrevocably grant to, and appoint individually each member of
the Special Committee (the "GRANTEES") TGN's proxy and attorney-in-fact, for and
in the name, place and stead of TGN, to vote all TyCom Common Shares
Beneficially Owned (as hereinafter defined) by TGN or execute and deliver a
proxy to vote such shares, (i) in favor of the adoption of the Amalgamation and
the Amalgamation Agreement and approval of the terms thereof and each of the
other transactions contemplated by the Amalgamation Agreement; (ii) against any
other matter referred to in Section 2(b) hereof, and (iii) in the discretion of
the Grantees, with respect to any proposed postponements or adjournments of any
general meeting of the shareholders of TyCom.
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(b) TGN represents and warrants to TyCom that any proxies heretofore given
in respect of any or all of its Shares are revocable, and that any such previous
proxies are hereby revoked.
(c) TGN hereby affirms that its agreement to grant the proxy set forth in
this Section 3 is given in connection with, and in consideration of, the
execution of the Amalgamation Agreement by TyCom, and that such proxy is given
to secure the performance of the duties of TGN under this Agreement. TGN hereby
further affirms that the proxy is coupled with an interest and may not be
revoked except upon termination of this Agreement pursuant to Section 6 of this
Agreement. TGN hereby ratifies and confirms all that such proxy may lawfully do
or cause to be done by virtue hereof. Subject to Section 6 of this Agreement,
the proxy contained herein is intended to be irrevocable in accordance with the
Bermuda law.
Section 4. REPRESENTATIONS AND WARRANTIES OF TGN. TGN hereby represents
and warrants to TyCom that:
(a) OWNERSHIP OF SHARES. TGN is the sole Beneficial Owner, and sole owner
of record, of 444,419,353 common shares (the "SHARES"), par value U.S. $0.25 per
share, of TyCom (the "TYCOM COMMON SHARES"). TGN has good and marketable title
to the Shares, free and clear of any Lien and free of any other limitation or
restriction (including any restriction on the right to vote or otherwise dispose
of the Shares). TGN has sole voting power, sole power of disposition and sole
power to issue instructions with respect to the matters set forth in Section 2
hereof with no limitations, qualifications or restrictions on such rights.
Without limiting the foregoing, none of the Shares is subject to any voting
trust or other agreement, proxy (except as provided in Section 2 and Section 3
hereof) or other arrangement with respect to the voting of such Shares. TGN has
not committed or omitted to take any action if such action or omission could
restrict or otherwise affect TGN's legal power, authority and right to vote all
the Shares as provided in Section 2 hereof. TGN has not entered into any
contract, option or other arrangement or understanding with respect to the
direct or indirect sale, assignment, transfer, encumbrance or other disposition
of, any Shares. Except for the Shares, TGN does not Beneficially Own any (x)
capital shares or voting securities of TyCom, (y) securities of TyCom
convertible into or exchangeable for capital shares or voting securities of
TyCom or (z) options or other rights to acquire from TyCom any capital shares,
voting securities or securities convertible into or exchangeable for capital
shares or voting securities of TyCom. "BENEFICIALLY OWNED" or "BENEFICIAL
OWNERSHIP" with respect to any securities means having beneficial ownership of
such securities (as determined pursuant to Rule 13d-3 under the 1934 Act,
disregarding the phrase "within 60 days" in paragraph (d)(1)(i) thereof),
including pursuant to any agreement, arrangement or understanding, whether or
not in writing (except for any common shares of TyCom held by any Subsidiaries
of TyCom). Without duplicative counting of the same securities by the same
holder, securities Beneficially Owned by a Person shall include securities
Beneficially Owned by all Affiliates of such Person and all other Persons with
whom such Person would constitute a "Group" within the meaning of Section 13(d)
of the 1934 Act and the rules promulgated thereunder. "Beneficial Owner" with
respect to any securities means a Person that has Beneficial Ownership of such
securities.
(b) CORPORATE AUTHORIZATION. TGN has all necessary corporate power and
authority to execute and deliver this Agreement, and to perform its obligations
hereunder. The execution and delivery of this Agreement by TGN and the
performance by TGN of its obligations hereunder have been duly and validly
authorized by all necessary corporate action and no other corporate proceedings
on the part of TGN are necessary to authorize this Agreement. This Agreement has
been duly and validly executed and delivered by TGN and, assuming the due
authorization, execution and delivery by TyCom of this Agreement, this Agreement
constitutes a valid and binding obligation of TGN enforceable against TGN, in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy and similar laws or by general principles of equity
(whether considered in a proceeding in equity or at law).
B-2
(c) NON-CONTRAVENTION. The execution and delivery of this Agreement by TGN
does not, and the performance by TGN of its obligations hereunder will not, (i)
conflict with or violate the Memorandum of Association or Bye-laws of TGN, (ii)
conflict with or violate any Law applicable to TGN or any of its Subsidiaries,
(iii) require any consent or other action by any person under, constitute a
default under, or give rise to any right of termination, cancellation or
acceleration of any right or obligation of TGN or any of its Subsidiaries or to
a loss of any benefit to which TGN or any of its Subsidiaries is entitled under
any provision of any agreement or other instrument binding upon TGN or any of
its Subsidiaries, and (iv) require any consent, approval, authorization or
permit of, or filing with or notification to, any Governmental Authority.
(d) TYCOM'S RELIANCE. TGN understands and acknowledges that TyCom is
entering into the Amalgamation Agreement in reliance upon TGN's execution,
delivery and performance of this Agreement. TGN acknowledges that the agreement
to vote in Section 2 and the agreement to grant the proxy in Section 3 hereof is
granted in consideration of the execution and delivery of the Amalgamation
Agreement by TyCom.
Section 5. TGN COVENANT AS TO THE SHARES. TGN shall not without the prior
written consent of TyCom, directly or indirectly (a) except for the agreement to
vote pursuant to Section 2 hereof and the agreement to grant the proxy under
Section 3 hereof, each of which are contemplated by the Amalgamation Agreement,
grant any proxies or enter into any voting trust or other agreement or
arrangement limiting or affecting TGN's legal power, authority or right to vote
the Shares as provided in Section 2 hereof, or (b) sell, assign, transfer,
encumber or otherwise dispose of, or enter into any contract, option or other
arrangement or understanding with respect to the direct or indirect sale,
assignment, transfer, encumbrance or other disposition of, any Shares during the
term of this Agreement; provided, however, TGN shall be able to transfer the
Shares to any Affiliate that agrees to be bound by the terms of this Agreement
and to execute a new proxy on the terms set forth in Section 3 hereof.
Section 6. TERMINATION.
(a) This Agreement may be terminated (i) by mutual written consent duly
authorized by the Boards of Directors of each of TGN and (only upon
recommendation of the Special Committee) TyCom; (ii) upon termination of the
Amalgamation Agreement, or (iii) at the Effective Time.
(b) In the event of the termination of this Agreement pursuant to Section 6,
this Agreement shall forthwith become void, and there shall be no liability on
the part of any party hereto, except (a) as set forth in Section 7 and (b)
nothing herein shall relieve any party from liability for any breach hereof
prior to the date of such termination. The provisions of Sections 7, 11, 12, 13
and 14 will survive any termination of this Agreement pursuant to Section 6.
Section 7. EXPENSES. Except as otherwise provided in this Agreement, all
costs and expenses incurred in connection with this Agreement shall be paid by
the party incurring such cost or expense.
Section 8. NOTICES.
All notices and other communications given or made by one party to the other
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made if and when delivered personally or by overnight courier to the parties
at the following addresses or sent by electronic transmission, with confirmation
received, to the telecopy numbers specified below (or at such other address or
telecopy number for a party as shall be specified by like notice):
B-3
if to TGN, to:
TGN Holdings, Ltd.
The Zurich Centre, Second Floor
90 Pitts Bay Road
Pembroke, HM 08
Bermuda
Attention: President
with a copy (which shall not constitute notice) to:
Tyco International (US) Inc.
One Tyco Park
Exeter, NH 03833
Attention: Chief Corporate Counsel
Telecopy: (603) 778-7700
and
Wilmer, Cutler & Pickering
2445 M Street, N.W.
Washington, D.C. 20037
Attention: Meredith Cross
Telecopy: (202) 663-6363
if to TyCom, to:
TyCom Ltd.
Crown House
4 Par la Ville Road
Hamilton, HM 08
Bermuda
Attention: Chief Executive Officer
with a copy (which shall not constitute notice) to:
c/o TyCom (US) Inc.
10 Park Avenue
Morristown, NJ 07960
Attention: General Counsel
Telecopy: (973) 753-3393
and
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: Phillip Mills
Telecopy: (212) 450-4800
Section 9. AMENDMENTS; WAIVERS.
(a) This Agreement may be amended by the parties hereto at any time prior to
the Effective Time with the prior written approval of the Special Committee.
This Agreement may not be amended except by an instrument in writing signed by
each of the parties hereto.
B-4
(b) Any party hereto may (a) extend the time for the performance of any
obligation or other act of any other party hereto, (b) waive inaccuracy in the
representations and warranties of any other party contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any agreement
of any other party or any condition to its own obligations contained herein;
provided, however, that no extension or waiver by TyCom pursuant to this Section
9(b) shall be effective without the prior written approval of the Special
Committee. Any such extension or waiver must be set forth in an instrument in
writing signed by the party or parties to be bound thereby.
Section 10. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns.
Section 11. GOVERNING LAW; VENUE. This Agreement shall be governed by, and
construed in accordance with, the laws of Bermuda, regardless of the laws that
might otherwise govern under applicable principles of conflict of laws of such
country. In the event that any legal proceedings are instituted concerning the
interpretation or enforcement of this Agreement, exclusive venue over such
proceedings shall be vested in the courts of Bermuda.
Section 12. WAIVER OF JURY TRIAL. Each of the parties hereto hereby waives
to the fullest extent permitted by applicable law any right it may have to a
trial by jury with respect to any litigation directly or indirectly arising out
of, under or in connection with this Agreement. Each of the parties hereto
certifies that no representative, agent or attorney of any other party has
represented, expressly or otherwise, that such other party would not, in the
event of litigation, seek to enforce that foregoing waiver.
Section 13. COUNTERPARTS; EFFECTIVENESS; BENEFIT. This Agreement may be
executed and delivered (including by facsimile transmission) 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. No provision of this
Agreement is intended to confer any rights, benefits, remedies, obligations, or
liabilities hereunder upon any Person other than the parties hereto and their
respective successors and assigns.
Section 14. ENTIRE AGREEMENT. This Agreement, the Amalgamation Agreement
and the Guarantee constitute the entire agreement among the parties with respect
to the subject matter hereof and thereof and supersede all prior agreements and
undertakings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof and thereof.
Section 15. CAPTIONS. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
Section 16. SEVERABILITY. 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 Amalgamation is not affected in any manner materially 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 a mutually acceptable manner in order that the
Amalgamation be consummated as originally contemplated to the fullest extent
possible.
Section 17. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement were
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.
B-5
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
TGN Holdings, Ltd.
By: /s/ Glen J. Miskiewicz
------------------------------------------------------------------
Name: Glen J. Miskiewicz
Title: President
TyCom Ltd.
By: /s/ Frank P. Doyle
----------------------------------------------------------------
Name: Frank P. Doyle
Title: Member, Special Committee
B-6
ANNEX C
[LOGO]
October 18, 2001
The Special Committee of the Board of Directors
The Board of Directors
TyCom Ltd.
Crown House
4 Par-la-Ville Road
Hamilton, HM 08
Bermuda
Members of the Special Committee of the Board of Directors and
Members of the Board of Directors:
You have requested our opinion as to the fairness, from a financial point of
view, to the holders of common stock, par value $0.25 per share (the "Company
Common Stock"), of TyCom Ltd. (the "Company") of the consideration to be
received by such holders (other than Tyco International Ltd. and its
subsidiaries) in the proposed amalgamation (the "Amalgamation") of the Company
and TGN Holdings, Ltd. ("TGN"), a wholly-owned subsidiary of Tyco International
Ltd. ("Tyco"). We have been advised that Tyco owns approximately 89% of the
outstanding shares of the Company Common Stock. Pursuant to the Agreement and
Plan of Amalgamation (the "Agreement"), by and between the Company and TGN, the
Company will become a wholly-owned subsidiary of Tyco, and each outstanding
share of Company Common Stock, other than shares of Company Common Stock held by
any of the Company's subsidiaries or held by Tyco, TGN or any of their
respective subsidiaries, all of which shares will be canceled, and other than
shares as to which appraisal rights shall be perfected, will be converted into
the right to receive 0.3133 shares of Tyco's common stock, par value $0.20 per
share (the "Tyco Common Stock").
In arriving at our opinion, we have (i) reviewed the Agreement dated
October 18, 2001; (ii) reviewed certain publicly available business and
financial information concerning the Company and Tyco and the industries in
which they operate; (iii) compared the proposed financial terms of the
Amalgamation with the publicly available financial terms of certain transactions
involving certain companies we deemed relevant and the consideration received
for such companies; (iv) compared the financial and operating performance of the
Company and Tyco with publicly available information concerning certain other
companies we deemed relevant and reviewed the current and historical market
prices of the Company Common Stock and Tyco Common Stock and certain other
publicly traded securities of such other companies; (v) reviewed certain
internal financial analyses and forecasts prepared by the management of the
Company relating to its business; and (vi) performed such other financial
studies and analyses and considered such other information as we deemed
appropriate for the purposes of this opinion.
In addition, we have held discussions with certain members of the management
of the Company and Tyco with respect to certain aspects of the Amalgamation, and
the past and current business operations of the Company and Tyco, the financial
condition and future prospects and operations of the Company and Tyco, the
effects of the Amalgamation on the financial condition and future
C-1
prospects of the Company and Tyco, and certain other matters we believed
necessary or appropriate to our inquiry. We did not receive any forecast from
Tyco as to its projected financial performance other than guidance that we could
rely on Tyco's previously announced earnings estimates for the years 2001 and
2002.
In giving our opinion, we have relied upon and assumed, without independent
verification, the accuracy and completeness of all information that was publicly
available or was furnished to us by the Company and Tyco or otherwise reviewed
by us, and we have not assumed any responsibility or liability therefor. We have
not conducted any valuation or appraisal of any assets or liabilities, nor have
any such valuations or appraisals been provided to us. In relying on financial
analyses, forecasts and guidance provided to us, we have assumed that they have
been reasonably prepared based on assumptions reflecting the best currently
available estimates and judgments by management as to the expected future
results of operations and financial condition of the Company and Tyco to which
such analyses, forecasts or guidance relate. We have also assumed that the
Amalgamation will have the tax consequences described in discussions with, and
materials furnished to us by, representatives of the Company, and that the
Amalgamation and the other transactions contemplated by the Agreement will be
consummated as described in the Agreement. We have relied as to all legal
matters relevant to rendering our opinion upon the advice of counsel. We have
further assumed that all material governmental, regulatory or other consents and
approvals necessary for the consummation of the Amalgamation will be obtained
without any adverse effect on the Company or Tyco or on the contemplated
benefits of the Amalgamation.
Our opinion is necessarily based on economic, market and other conditions as
in effect on, and the information made available to us as of, the date hereof.
It should be understood that subsequent developments may affect this opinion and
that we do not have any obligation to update, revise, or reaffirm this opinion.
Our opinion is limited to the fairness, from a financial point of view, of the
consideration to be received by the holders of the Company Common Stock (other
than Tyco and its subsidiaries) in the proposed Amalgamation and we express no
opinion as to the underlying decision by the Company to engage in the
Amalgamation. We are expressing no opinion herein as to the price at which the
Company Common Stock or the Tyco Common Stock will trade at any future time.
We note that we were not authorized to and did not solicit any expressions
of interest from any other parties with respect to the sale of all or any part
of the Company or any other alternative transaction. Consequently, we have
assumed that such terms are the most beneficial terms from the Company's
perspective that could under the circumstances be negotiated among the parties
to such transactions, and no opinion is expressed whether any alternative
transaction might produce consideration for the Company's shareholders in an
amount in excess of that contemplated in the Amalgamation.
We have acted as financial advisor to the Special Committee of the Board of
Directors (the "Special Committee") with respect to the proposed Amalgamation
and will receive a fee from the Company for our services. We will also receive
an additional fee if the proposed Amalgamation is consummated. Please be advised
that we and certain of our affiliates have provided various investment banking
and commercial banking services to each of the Company and Tyco, for which we
have received customary compensation including the following recent services: in
July 2001, we acted as lead manager for a $1.8 billion offering of senior notes
of Tyco; in February 2001, we acted as sole lead arranger for a $5.855 billion
senior unsecured credit facility of Tyco and as co-manager for a $2.0 billion
offering of senior notes of Tyco; in April 2000, we acted as bookrunner for a
E600 million Eurobond issuance of Tyco; and in January 1999, we acted as
bookrunner for a $1.2 billion issuance of senior notes. In addition, in July
2000, one of our affiliates acted as senior co-manager of the Company's initial
public offering. In the ordinary course of our businesses, we and our affiliates
may actively trade the debt and equity securities of the Company or Tyco for our
own account or for the
C-2
accounts of customers and, accordingly, we may at any time hold long or short
positions in such securities.
On the basis of and subject to the foregoing, it is our opinion as of the
date hereof that the consideration to be received by the holders of the Company
Common Stock (other than Tyco and its subsidiaries) in the proposed Amalgamation
is fair, from a financial point of view, to such holders.
This letter is provided to the Special Committee and the Board of Directors
of the Company in connection with and for the purposes of their evaluation of
the Amalgamation. This opinion does not constitute a recommendation to any
shareholder of the Company as to how such shareholder should vote with respect
to the Amalgamation or any other matter. This opinion may not be disclosed,
referred to, or communicated (in whole or in part) to any third party for any
purpose whatsoever except with our prior written approval. This opinion may be
reproduced in full in Registration Statement filed on Form S-4 and any
prospectus and/or any proxy or information statement mailed to shareholders of
the Company but may not otherwise be disclosed publicly in any manner without
our prior written approval.
Very truly yours,
J.P. MORGAN SECURITIES INC.
C-3
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Bye-Law 102 of the Tyco Bye-Laws provides, in part, that Tyco shall
indemnify its directors and other officers for all costs, losses and expenses
which they may incur in the performance of their duties as director or officer,
provided that such indemnification is not otherwise prohibited under the
Companies Act 1981 of Bermuda. Section 98 of the Companies Act 1981 prohibits
such indemnification against any liability arising out of the fraud or
dishonesty of the director or officer. However, such section permits Tyco to
indemnify a director or officer against any liability incurred by him in
defending any proceedings, whether civil or criminal, in which judgment is given
in his favor or in which he is acquitted or when other similar relief is granted
to him.
The Registrant maintains $250,000,000 of insurance to reimburse the
directors and officers of Tyco and its subsidiaries for charges and expenses
incurred by them for wrongful acts claimed against them by reason of their being
or having been directors or officers of the Registrant or any subsidiary
thereof. Such insurance specifically excludes reimbursement of any director or
officer for any charge or expense incurred in connection with various designated
matters, including libel or slander, illegally obtained personal profits,
profits recovered by the Registrant pursuant to Section 16(b) of the Exchange
Act and deliberate dishonesty.
ITEM 21. EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
--------------------- ------------------------------------------------------------
2.1 Agreement and Plan of Amalgamation by and between TGN
Holdings, Ltd. and TyCom Ltd., dated as of October 18, 2001,
including the related guarantee by Tyco International Ltd.
(included as Annex A to the proxy statement/prospectus which
forms a part of this registration statement)
2.2 Voting Agreement by and between TGN Holdings, Ltd. and TyCom
Ltd., dated as of October 18, 2001, guaranteed by Tyco
International Ltd. (included as Annex B to the proxy
statement/prospectus which forms a part of this registration
statement)
5 Opinion of Appleby Spurling & Kempe regarding the validity
of the Tyco common shares registered hereunder*
8 Tax Opinion of Appleby Spurling & Kempe*
23.1 Consent of PricewaterhouseCoopers
23.2 Consent of Arthur Andersen LLP
23.3 Consent of KPMG LLP
23.4 Consent of PricewaterhouseCoopers
23.5 Consent of Appleby Spurling & Kempe (contained in Exhibit 5
and Exhibit 8)*
24.1 Power of Attorney (included on the signature page hereto)
99.1 Form of Proxy Card of TyCom Ltd.*
99.2 Consent of J.P. Morgan Securities Inc.
------------------------
* To be filed by amendment.
II-1
ITEM 22. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of this registration statement (or most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in this registration
statement. Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities offered would
not exceed that which was registered) and any deviation from the low or high
end of the maximum aggregate offering range may be reflected in the form of
prospectus filed with the Securities and Exchange Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price represent
no more than 20 percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the effective
registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or any
material change to such information in this registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) of this section do not
apply if the registration statement is on Form S-3, Form S-8, or Form F-3,
and the information required to be included in post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished to
the Securities and Exchange Commission by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The Registrant undertakes that, for purposes of determining any liability
under the Securities Act of 1933, each filing of the Registrant's annual report
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act of 1934) that is incorporated by
reference in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
The undersigned Registrant hereby undertakes as follows: that prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the information called
for by the other items of the applicable form.
The Registrant undertakes that every prospectus: (i) that is filed pursuant
to the paragraph immediately preceding, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the
II-2
Securities Act of 1933 and is used in connection with an offering of securities
subject to Rule 415, will be filed as a part of an amendment to the registration
statement and will not be used until such amendment is effective, and that, for
purposes of determining any liability under the Securities Act of 1933, each
such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request.
The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-4 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Town of Exeter, State of New Hampshire, on the 23rd day of
October, 2001.
TYCO INTERNATIONAL LTD.
By: /s/ MARK H. SWARTZ
-----------------------------------------
Mark H. Swartz
EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
(PRINCIPAL FINANCIAL
AND ACCOUNTING OFFICER)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned constitutes and
appoints L. DENNIS KOZLOWSKI AND MARK H. SWARTZ, and each of them, his or her
true and lawful attorneys-in-fact and agents, with full power of substitution
and resubstitution, for him or her and in his or her name, place and stead, in
any and all capacities, to sign this registration statement (including all
pre-effective and post-effective amendments thereto and all registration
statements filed pursuant to Rule 462(b) which incorporate this registration
statement by reference), and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto such attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that such attorneys-in-fact and agents or any of them, or
their or his or her substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons on October 23,
2001 in the capacities indicated below.
NAME TITLE
---- -----
/s/ L. DENNIS KOZLOWSKI Chairman of the Board, President, Chief
------------------------------------------- Executive Officer and Director (Principal
L. Dennis Kozlowski Executive Officer)
/s/ LORD ASHCROFT KCMG
------------------------------------------- Director
Lord Ashcroft KCMG
/s/ JOSHUA M. BERMAN
------------------------------------------- Director
Joshua M. Berman
/s/ RICHARD S. BODMAN
------------------------------------------- Director
Richard S. Bodman
II-4
NAME TITLE
---- -----
/s/ JOHN F. FORT
------------------------------------------- Director
John F. Fort
/s/ STEPHEN W. FOSS
------------------------------------------- Director
Stephen W. Foss
/s/ WENDY E. LANE
------------------------------------------- Director
Wendy E. Lane
/s/ JAMES S. PASMAN, JR.
------------------------------------------- Director
James S. Pasman, Jr.
/s/ W. PETER SLUSSER
------------------------------------------- Director
W. Peter Slusser
/s/ MARK H. SWARTZ Executive Vice President, Chief Financial
------------------------------------------- Officer and Director (Principal Financial
Mark H. Swartz and Accounting Officer)
/s/ FRANK E. WALSH, JR.
------------------------------------------- Director
Frank E. Walsh, Jr.
/s/ JOSEPH F. WELCH
------------------------------------------- Director
Joseph F. Welch
II-5
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
--------------------- -----------
2.1 Agreement and Plan of Amalgamation by and between TGN
Holdings, Ltd. and TyCom Ltd., dated as of October 18, 2001,
and the related guarantee by Tyco International Ltd.
(included as Annex A to the proxy statement/prospectus which
forms a part of this registration statement)
2.2 Voting Agreement by and between TGN Holdings, Ltd. and Tycom
Ltd., dated as of October 18, 2001, guaranteed by Tyco
International Ltd. (included as Annex B to the proxy
statement/prospectus which forms a part of this registration
statement)
5 Opinion of Appleby Spurling & Kempe regarding the validity
of the Tyco common shares registered hereunder*
8 Tax Opinion of Appleby Spurling & Kempe*
23.1 Consent of PricewaterhouseCoopers
23.2 Consent of Arthur Andersen LLP
23.3 Consent of KPMG LLP
23.4 Consent of PricewaterhouseCoopers
23.5 Consent of Appleby Spurling & Kempe (contained in Exhibit 5
and Exhibit 8)*
24.1 Power of Attorney (included on the signature page hereto)
99.1 Form of Proxy Card of TyCom Ltd.*
99.2 Consent of J.P. Morgan Securities Inc.
------------------------
* To be filed by amendment.
EX-23.1
3
a2061223zex-23_1.txt
EXHIBIT 23.1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-4 of Tyco International Ltd. of our report dated
October 24, 2000, except as to Note 25 which is as of December 4, 2000, relating
to the financial statements and financial statement schedule, which appears in
Tyco International Ltd.'s Annual Report on Form 10-K for the year ended
September 30, 2000. We also consent to the reference to us under the heading
"Experts" in such Registration Statement.
/s/ PricewaterhouseCoopers
Hamilton, Bermuda
October 18, 2001
EX-23.2
4
a2061223zex-23_2.txt
EXHIBIT 23.2
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement on Form S-4 of Tyco International Ltd.
of our report dated February 12, 1999 (except with respect to the matter
disclosed in Note 18 Merger with Tyco International Ltd., as to which the date
is April 2, 1999) on our audit of the consolidated balance sheet of AMP
Incorporated and subsidiaries as of September 30, 1998, and the related
consolidated statements of income, shareholders' equity and cash flows for the
year ended September 30, 1998, included in the Tyco International Ltd.
Form 10-K filed December 21, 2000 and to all references to our Firm included in
this Registration Statement.
/s/ Arthur Andersen LLP
Philadelphia, Pennsylvania
October 18, 2001
EX-23.3
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a2061223zex-23_3.txt
EXHIBIT 23.3
EXHIBIT 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors
The CIT Group, Inc.
We consent to the use of our report dated January 25, 2001, except as to
Note 25, which is as of March 13, 2001, relating to the consolidated balance
sheets of The CIT Group, Inc. and subsidiaries as of December 31, 2000 and 1999,
and the related consolidated statements of income, changes in stockholders'
equity, and cash flows for each of the years in the three-year period ended
December 31, 2000, incorporated by reference in the Registration Statement on
Form S-4 of Tyco International Ltd., which report appears in the April 3, 2001
Current Report on Form 8-K of Tyco International Ltd., which is also
incorporated by reference herein, and to the reference to our firm under the
heading "Experts" in the Registration Statement.
/s/ KPMG LLP
Short Hills, New Jersey
October 18, 2001
EX-23.4
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a2061223zex-23_4.txt
EXHIBIT 23.4
EXHIBIT 23.4
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-4 of TyCom Ltd. of our report dated October 24, 2000, except
as to Note 19, which is as of December 8, 2000, relating to the financial
statements and financial statement schedule, which appears in TyCom Ltd.'s
Annual Report on Form 10-K for the year ended September 30, 2000. We also
consent to the reference to us under the heading "Experts" in such Registration
Statement.
/s/ PricewaterhouseCoopers
Hamilton, Bermuda
October 18, 2001
EX-99.2
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a2061223zex-99_2.txt
EXHIBIT 99.2
EXHIBIT 99.2
CONSENT OF J.P. MORGAN SECURITIES INC.
The Special Committee of the
Board of Directors
TyCom Ltd.
Crown House
4 Par-la-Ville Road
Hamilton, HM 08
Bermuda
We hereby consent to the use of the opinion letter of J.P. Morgan Securities
Inc. dated October 18, 2001 to Members of the Special Committee of the Board of
Directors and the Board of Directors of TyCom Ltd. (the "Company") included as
Annex C to the proxy statement/prospectus which forms a part of the Registration
Statement on Form S-4 of Tyco International Ltd. ("Tyco") relating to the
proposed amalgamation of the Company with and into TGN Holdings, Ltd., a wholly-
owned subsidiary of Tyco, and to the references to such opinion in such proxy
statement/prospectus under the caption "Opinion of Financial Advisor to the
Special Committee." In giving such consent, we do not admit that we come within
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder, nor do we hereby admit that we
are experts with respect to any part of such Registration Statement within the
meaning of the term "experts" as used in the Securities Act of 1933, as amended,
or the rules and regulations of the Securities and Exchange Commission
thereunder.
J.P. MORGAN SECURITIES INC.
By: /s/ Wyatt Crowell
--------------------------------------
Name: Wyatt Crowell
Title: Vice President
October 22, 2001