-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OTvYFM5XM8B2d5p84Ur6o/qmjNskWRZzz1GD7ymDz1xDCodmyRmfE+l2msgoWV+Z hhSPWT6h9nIqLNtBOTGa6A== 0000912057-02-035700.txt : 20020917 0000912057-02-035700.hdr.sgml : 20020917 20020917093010 ACCESSION NUMBER: 0000912057-02-035700 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 20020910 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20020917 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TYCO INTERNATIONAL LTD /BER/ CENTRAL INDEX KEY: 0000833444 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC CONNECTORS [3678] IRS NUMBER: 000000000 STATE OF INCORPORATION: D0 FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13836 FILM NUMBER: 02765445 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 8-K 1 a2089398z8-k.txt FORM 8-K ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------- FORM 8-K CURRENT REPORT --------------------- PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) September 10, 2002 001-13836 (Commission File Number) TYCO INTERNATIONAL LTD. (Exact name of registrant as specified in its charter) BERMUDA 04-2297459 (Jurisdiction of Incorporation) (IRS Employer Identification Number) THE ZURICH CENTRE, SECOND FLOOR, 90 PITTS BAY ROAD PEMBROKE, HM 08, BERMUDA (Address of registrant's principal executive office) 441-292-8674 (Registrant's telephone number) ================================================================================ Item 5. Other Events and Regulation FD Disclosure I. The appointment of Edward D. Breen as Chairman of the Board of Directors and Chief Executive Officer of Tyco International Ltd. ("Tyco" or the "Company"), announced on July 25, 2002, was reported in Tyco's Form 8-K filed on July 26, 2002. Since that filing, Tyco has made a series of announcements about appointments of directors and officers that are reflected in the following press releases. As previously reported in Tyco's Quarterly Report Form 10-Q for the period ended June 30, 2002, Tyco announced the appointment on August 6, 2002 of John A. Krol, former Chairman and CEO of E. I. DuPont, to the Board of Directors. Tyco's press release announcing this appointment is attached as Exhibit 99.1 to this report. Also as previously reported in Tyco's Quarterly Report Form 10-Q for the period ended June 30, 2002, Tyco announced the appointment on August 6, 2002 of Eric M. Pillmore as Senior Vice President of Corporate Governance. Tyco's press release announcing these actions is attached as Exhibit 99.2 to this report. On September 10, 2002, Tyco appointed David J. FitzPatrick as Executive Vice President and Chief Financial Officer. Tyco's press release announcing this appointment is attached as Exhibit 99.3 to this report. On September 12, 2002, Tyco appointed William B. Lytton as Executive Vice President and General Counsel. Tyco's press release announcing this appointment is attached as Exhibit 99.4 to this report. Also on September 12, 2002, the Board of Directors nominated and elected five business leaders, Jerome B. York, Mackey J. McDonald, George W. Buckley, Bruce S. Gordon and Sandra Wijnberg, to fill expected vacancies on the Board of Directors before the next Annual General Meeting and nominated those same five persons for election to the Board at the next Annual General Meeting. The Board also voted not to nominate or support for re-election at the Company's 2003 annual meeting any of the nine current members of the Board who were members of the Board prior to July 25 of this year. Tyco's press release announcing these actions is attached as Exhibit 99.5 to this report. II. On April 30, 2002 the Corporate Governance and Nominating Committee of the Board of Directors of Tyco retained Boies, Schiller & Flexner LLP ("the Boies Firm") "to represent Tyco in connection with the Committee's review and analysis of transactions between and among Tyco and its subsidiaries and certain of Tyco's directors and officers, and any litigation arising from or relating to that review." The members of the Corporate Governance and Nominating Committee were Lord Michael Ashcroft KCMG, Joshua M. Berman, Richard A. Bodman, and John F. Fort, III. A written agreement dated May 17, 2002 confirmed the terms of that retention. The initial focus of the Boies Firm's work related to the facts and circumstances concerning $20 million in payments made to and for the benefit of former Tyco Director Frank E. Walsh, Jr. during the time Mr. Walsh was a director of Tyco, and to the conduct of Tyco's Chairman and Chief Executive Officer (L. Dennis Kozlowski), Executive Vice President and Chief Financial Officer (Mark H. Swartz), and Executive Vice President and Chief Corporate Counsel (Mark A. Belnick) relating to such payments. In connection with the Boies Firm's review and analysis during May 2002, lawyers from the Boies Firm interviewed Tyco officers and directors and began an analysis of Company documents and data made available by the Company. On Saturday, June 1, 2002, Tyco's Board of Directors was informed that its Chairman and Chief Executive Officer ("CEO") L. Dennis Kozlowski was the target of a criminal investigation being undertaken by the District Attorney of the County of New York into possible violations of state sales tax laws. Thereafter, on June 1 and June 2, the Board was informed that Mr. Kozlowski and the Company's Chief Corporate Counsel Mark A. Belnick had been aware of the investigation since on or about May 3, 2002; that the Company itself had received a subpoena in connection with the investigation; that Mr. Belnick had retained counsel to represent the Company in the investigation; that the Company's counsel had met with prosecutors and had furnished prosecutors with data and documents; that it was now expected that Mr. Kozlowski would be indicted; but that no member of the Board of Directors other than Mr. Kozlowski and Mark H. Swartz had been informed of the investigation prior to the evening of May 31, 2002. On Sunday, June 2, 2002, Tyco retained the Boies Firm to represent it in connection with negotiations with Mr. Kozlowski regarding his possible resignation. Those negotiations led to Mr. Kozlowski's resigning from the Tyco Board and from his position as the Company's Chief Executive Officer early in the morning of June 3, 2002. (On June 4, Mr. Kozlowski was in fact indicted by the District Attorney of the County of New York for violations of state sales tax laws and, on June 26, 2002 he was charged in a superseding indictment with obstruction of justice relating to the removal of documents subpoenaed by the District Attorney. The People of the State of New York v. L. Dennis Kozlowski - -Indictment No. 3418/02.) Upon Mr. Kozlowski's resignation, the Board assigned primary executive responsibilities for the Company to Tyco's Lead Director, John F. Fort, III. At that time, Mr. Fort retained the Boies Firm to (as Mr. Fort stated) undertake a "full and complete" investigation, review, and analysis of transactions between and among the Company and its subsidiaries and the Company's officers and directors. That retention was unanimously confirmed by the Tyco Board in the afternoon of June 3, 2002. During the week of June 3, 2002, the Boies Firm expanded its interviews of Tyco officers and directors and its review and analysis of data and documents. That work has continued through the present and is continuing. On June 13, 2002 Tyco further expanded the scope of the Boies Firm's work to include "the use of company funds" and "the Company's accounting and disclosures." In Tyco's Quarterly Report Form 10-Q for the period ended June 30, 2002 Tyco confirmed the expanded scope of the Boies Firm's 2 representation and stated that following the completion of the first phase of the Boies Firm's review and analysis, the Company would file an 8-K. On June 17, 2002, Tyco filed a civil complaint in the United States District Court for the Southern District of New York against Frank E. Walsh, Jr., its former Lead Director, alleging breach of fiduciary duty, inducing breaches of fiduciary duty, and related wrongful conduct involving the $20 million payments made to him and on his behalf during the time he served as a director without authorization by the Company, as required by law. The action alleges causes of action for restitution, breach of fiduciary duty and inducing breach of fiduciary duty, conversion, unjust enrichment, and a constructive trust, and seeks recovery for all of the losses suffered by the Company as a result of the former director's conduct. TYCO INTERNATIONAL LTD. V. FRANK E. WALSH, JR., No. 02-CV-4633 (DLC). Tyco's complaint in that action is attached as Exhibit 99.6 to this report and was previously disclosed in Tyco's Quarterly Report Form 10-Q for the period ended June 30, 2002. Also on June 17, 2002, Tyco filed a civil complaint in the United States District Court for the Southern District of New York against Mark A. Belnick, its former Executive Vice President and Chief Corporate Counsel, alleging breach of fiduciary duty and other wrongful conduct. The suit alleges and seeks to recover unapproved compensation and profits received from his employment at the Company, repayment of all loans fraudulently procured, with interest, damages for the harm caused to the Company, and punitive damages. TYCO INTERNATIONAL LTD. V. MARK A. BELNICK, No. 02-CV-4644 (SWK). Tyco's complaint in that action is attached as Exhibit 99.7 to this report and was previously disclosed in Tyco's Quarterly Report Form 10-Q for the period ended June 30, 2002. On September 12, 2002, the Company filed a civil complaint in the United States District Court for the Southern District of New York against its former Chairman and Chief Executive Officer, L. Dennis Kozlowski, alleging breach of fiduciary duty (including his own breaches, inducing the breaches of others, and conspiring to breach fiduciary duties), fraud, and other wrongful conduct. TYCO INTERNATIONAL LTD. AND TYCO INTERNATIONAL (US) INC. V. L. DENNIS KOZLOWSKI, No. 02-CV-7317 (TPG). The suit seeks to recover actual and consequential damages, including misappropriated or otherwise unauthorized payments fraudulently made at Mr. Kozlowski's direction to himself, to Frank Walsh, and other senior executives and key managers; repayment of outstanding loans made to Mr. Kozlowski by a Company subsidiary; disgorgement of all compensation paid to Mr. Kozlowski from 1997 through 2002; forfeiture of all benefits awarded to Mr. Kozlowski from 1997 through 2002; and compensatory, consequential, special, and punitive damages suffered by Tyco as a result of Mr. Kozlowski's wrongful conduct, including his breaches of fiduciary duty and misappropriations of Tyco funds and assets. Tyco's complaint in that action is attached as Exhibit 99.8 to this report. Since June 3, 2002, Tyco has cooperated on an ongoing basis with the investigation that was then underway by the District Attorney of the County of New York, as well as with the investigation subsequently undertaken by the Securities and Exchange Commission ("SEC"). Tyco has furnished the District Attorney and the SEC 3 the information contained in this filing, and related and additional data and documents. The evidence and information furnished by Tyco contributed to the District Attorney's investigation, which led to a further indictment of L. Dennis Kozlowski and to indictments of Mark H. Swartz and Mark A. Belnick, and to the commencement by the SEC of civil fraud actions against those three former Tyco executives. Also, on an ongoing basis, Tyco has cooperated with and provided information and documents to the following authorities: the Committee on Energy and Commerce of the United States House of Representatives, the United States Attorney for the District of New Hampshire, and the Bureau of Securities Regulation of the State of New Hampshire. On September 12, 2002, indictments were filed in the Supreme Court of the State of New York against Mr. Kozlowski and Mr. Swartz alleging enterprise corruption, fraud, conspiracy, grand larceny, falsifying certain business records and other crimes, and against Mr. Belnick alleging falsification of business records. THE PEOPLE OF THE STATE OF NEW YORK V. L. DENNIS KOZLOWSKI AND MARK H. SWARTZ (Indictment No. 5259/02) and THE PEOPLE OF THE STATE OF NEW YORK V. MARK A. BELNICK (Indictment No. 5258/02). Also on September 12, 2002, the Securities and Exchange Commission filed a civil fraud enforcement action in the United States District Court for the Southern District of New York against Messrs. Kozlowski, Swartz and Belnick alleging violation of certain of the antifraud, proxy, periodic reporting and record keeping provisions of the federal securities laws and seeking injunctions, penalties and other equitable relief. SECURITIES AND EXCHANGE COMMISSION V. L. DENNIS KOZLOWSKI, MARK H. SWARTZ AND MARK A. BELNICK, No. 02-CV-7312 (RWS). On September 13, 2002, in conjunction with the above-mentioned action, THE PEOPLE OF THE STATE OF NEW YORK V. L. DENNIS KOZLOWSKI AND MARK H. SWARTZ, Tyco was served with an Order to Show Cause with Temporary Restraining Order freezing the assets and property of Messrs. Kozlowski and Swartz and their families and dependents, or property in which either of them has a legal, equitable, custodial or beneficial interest and upon any debts owing to them. ROBERT N. MORGENTHAU V. L. DENNIS KOZLOWSKI AND MARK H. SWARTZ. The improper and unlawful conduct of Tyco's former CEO, CFO and Chief Corporate Counsel in enriching themselves at the expense of the Company with no colorable benefit to the Company has damaged Tyco. The amount of money improperly diverted by Tyco's former executives from the Company to themselves is very small in comparison with Tyco's total revenues and profits, but it is very large by any other relevant comparison; and the extent of the former executives' misconduct has harmed Tyco's reputation and credibility with investors, lenders, and others. Therefore, in the interest of restoring confidence in the Company, the extent of the Company's disclosures in this filing will go beyond what the law requires, or what might ordinarily be disclosed in other circumstances. 4 III. During at least the five years prior to June 3, 2002, Tyco's three top corporate officers - its CEO, its CFO, and its Chief Corporate Counsel - engaged in a pattern of improper and illegal conduct by which they enriched themselves at the expense of the Company with no colorable benefit to the Company and concealed their conduct from the Board and its relevant committees. The nature of such conduct to the extent it is now known by Tyco is described in this filing and its exhibits. A. RELOCATION PROGRAMS ------------------- In March 1995, Mr. Kozlowski decided to open Tyco offices in New York City and relocate some employees from Exeter, N.H. to New York City and he proposed a relocation program that would have benefited five or six executives. Following a legal opinion that the benefits of such an individually-tailored plan would likely be subject to disclosure as compensation for named executive officers in the Company's proxy statements, in August of 1995 a broader relocation program was proposed to, and adopted by, the Compensation Committee and reported to the Board of Directors (hereafter, the "approved program"). The approved program was "intended not to discriminate in scope, terms or operation in favor of executive officers or directors of the Company and is to be available generally to all applicable salaried employees." (As such it did not need to be disclosed in the Company's proxy statements because SEC Regulation S-K Item 402(a)(3) Instruction (7)(ii) authorized public companies to omit compensation associated with such a general relocation plan from compensation proxy disclosures of named executive officers.) However, Mr. Kozlowski then implemented a different, more generous New York relocation plan, tailored to the individual circumstances of five or six executives and one assistant, which had not been authorized by the Compensation Committee of the Board. For example, the unauthorized plan permitted reimbursement of school tuition, and provided for "gross-up" payments of additional compensation to offset the taxes due on imputed income from the program. After Tyco's 1997 reverse merger with ADT Ltd., a Bermuda company that conducted its U.S. operations from Boca Raton, Florida, Mr. Kozlowski decided to relocate more than 40 corporate employees from Tyco's Exeter, N.H. headquarters to Boca Raton, FL. Without obtaining the approval of the Board or the Compensation Committee, Mr. Kozlowski implemented a program similar in appearance to the New York Relocation Program. As was the case with the New York relocation, two versions of the program document were crafted: one for general application, administered through the Human Resources Department; and a second, more generous plan, maintained in the files of the then-Treasurer, for use by certain executives only. The second, more generous Florida plan for selected executives only did not condition participation in the program upon the sale of a principal residence elsewhere, as did the general program. As a result of the foregoing, certain executive officers used the relocation program to receive non-qualifying loans and unauthorized benefits that were not 5 generally available to all salaried employees affected by relocations, or were not related to any Tyco relocation, enriching themselves with no colorable benefit to Tyco. L. DENNIS KOZLOWSKI ------------------- Mr. Kozlowski improperly borrowed approximately $29,756,000 in non-qualifying relocation loans to purchase land and construct a home in Boca Raton, Florida during the years 1997 to 2000, and improperly borrowed approximately $7,012,000 in non-qualifying relocation loans to purchase a cooperative apartment in New York City in 2000. Pursuant to the unapproved New York plan, Mr. Kozlowski: a. Rented an apartment at 817 Fifth Avenue, New York City, with annual rent of $264,000 paid for by the Company, from 1997 to 2001. b. Purchased, using interest-free relocation loans, a $7 million Tyco-owned apartment at 610 Park Avenue, New York City in 2000, at depreciated book value and without appraisals, which Mr. Kozlowski deeded to his ex-wife a few months later. c. Sold his house at 10 Runnymede, North Hampton, New Hampshire to the Company in 2000 without appraisals for an amount approximately three times its market value. Less than 24 months later, the Company wrote down this asset by approximately $3 million. d. Caused Tyco to purchase a second apartment for his use (with Mr. Kozlowski as nominee owner) at 950 Fifth Avenue, New York in 2001 for $16.8 million, and then caused Tyco to spend $3 million in improvements and $11 million in furnishings for that apartment. e. Received "gross-up" benefits to avoid having to pay any state income tax liability incurred after relocating to New York. Mr. Kozlowski repeatedly abused the New York relocation program solely for his personal benefit, at the expense of the Company, and in a way that did not advance the interests of the Company in any colorable way. For example, for the apartment that was provided to him in New York at 950 Fifth Avenue and that he maintained for his exclusive use, he caused Tyco to purchase fine art worth millions of dollars and failed to pay sales taxes. He purchased and decorated the apartment with appointments and furnishings lacking any legitimate business justification, including: o a shower curtain for $6,000; o a dog umbrella stand for $15,000; o a sewing basket for $6,300; 6 o a traveling toilette box for $17,100; o a gilt metal wastebasket for $2,200; o coat hangers for $2,900; o two sets of sheets for $5,960; o a notebook for $1,650; and o a pincushion for $445. Pursuant to the unapproved Florida plan, Mr. Kozlowski purchased lots and built a home at 4101 Ibis Point Circle, Boca Raton, Florida, located in a development called "The Sanctuary." No mortgages were recorded on the Florida properties, as required by the purported program guidelines and as required to qualify for tax-exempt status under IRS regulations for interest-free relocation loans. The following table sets forth the interest-free "relocation loans" taken by Mr. Kozlowski since the inception of his relocation program account, including all loans and charges reflected in the Company's records for Mr. Kozlowski's relocation account.
- ----------------------------------------------------------------------------------------------- L. DENNIS KOZLOWSKI APRIL 1, 1996 - JUNE 30, 2002 - ----------------------------------------------------------------------------------------------- DATE DESCRIPTION AMOUNT BALANCES - ----------------------------------------------------------------------------------------------- 04/01/96 Beginning Balance $ -- $ -- 04/02/96 Nantucket house 750,000 04/03/96 Nantucket house 168,750 05/31/96 Nantucket house 56,250 08/30/96 Nantucket house 1,000,000 09/30/96 Balance 1,975,000 11/29/96 Nantucket house 100,000 01/24/97 Nantucket house 2,225,000 04/25/97 Connecticut house 475,000 04/25/97 Connecticut house 4,375,000 05/30/97 Nantucket house 1,340,532 06/27/97 Nantucket house 150,000 09/30/97 Balance 10,640,532 12/24/97 1st Union Bank - Lot 55, Sanctuary 220,000 12/29/97 Nantucket house 20,174 12/29/97 Nantucket house 96,355 12/29/97 Nantucket house 14,725 12/29/97 Nantucket house 33,550 12/29/97 Nantucket house - paid (5,955,336) 12/29/97 Connecticut house 450,000 12/30/97 Dickenson Murdoch, Rex & Sloan 4,705,957 01/30/98 Wire Transfer - Fleet Bank 1,000,000 7 - ----------------------------------------------------------------------------------------------- L. DENNIS KOZLOWSKI APRIL 1, 1996 - JUNE 30, 2002 - ----------------------------------------------------------------------------------------------- DATE DESCRIPTION AMOUNT BALANCES - ----------------------------------------------------------------------------------------------- 02/12/98 Wire Transfer - Fleet Bank 600,000 03/04/98 Wire Transfer - Fleet Bank 600,000 03/10/98 1st Union Bank - Lot 55, Sanctuary 157,000 03/26/98 Wire Transfer - additional payment 500,000 03/31/98 Connecticut house 500,000 04/08/98 Aprea Mare - Italian boat per Michael Castania 147,371 04/15/98 Wire Transfer 600,000 04/25/98 Connecticut house 500,000 04/27/98 Wire Transfer 500,000 04/27/98 Purchase Lot 55, The Sanctuary 1,410,028 05/28/98 Wire Transfer 500,000 05/31/98 Rye Beach house 2,705,930 05/31/98 Rye Beach house 198,703 06/03/98 Mark Michaels Interiors 250,000 06/23/98 Wire Transfer - Citizen's Bank 500,000 07/08/98 Wire Transfer - Fleet Bank 500,000 07/15/98 Wire Transfer - 1st United Bank 1,000,000 07/30/98 Wire Transfer - Addison Construction 500,000 08/06/98 Wire Transfer 250,000 08/11/98 Michael Castania 20,000 08/15/98 Wire Transfer 200,000 08/24/98 Vern's Elec Custom AV System - Custom Audio / Video System 32,139 08/24/98 Vern's Elec Custom AV System - Custom Audio / Video System 69,053 08/31/98 Addison Construction 76,118 09/15/98 Wire Transfer 500,000 09/18/98 German Friers - K Project 216,000 09/22/98 Wire Transfer 500,000 09/22/98 Kemp Interior 2,111 09/22/98 Real Estate Taxes re: 60 East 88 Street 6,646 09/25/98 Seaquin Cottage 858,960 09/30/98 Balance 25,626,016 10/01/98 Reclass to KEL Account (978,757) 10/05/98 Addison Construction 317,900 10/16/98 Addison Construction 131,389 10/20/98 Devonshire Lantern Fountain - fountains / lantern 23,755 10/20/98 Floral Emporium - flowers 1,857 10/20/98 Howard Kaplans 15,458 10/20/98 Paris Province 25,980 10/20/98 Nevel Art Galleries 4,059 10/20/98 Reclass to KEL Account 1,590 10/28/98 McDougall Fine Arts - Art frame & repair 1,505 10/29/98 Andalusian Floors - Lanterns throughout house 6,950 10/29/98 Pottery Kingdom - Italian fountain 2,685 11/05/98 Mark Michaels Interiors - final payment of balance due 750,000 11/05/98 American Express - Glassware / Crystal 19,771 11/11/98 Dickenson Murdoch, Rex & Sloan - Addison Construction bal. due 903,139 11/12/98 Addison Construction - additions 45,280 11/15/98 Payment - paid Ct., Nantucket, & Rye Beach (10,063,593) 8 - ----------------------------------------------------------------------------------------------- L. DENNIS KOZLOWSKI APRIL 1, 1996 - JUNE 30, 2002 - ----------------------------------------------------------------------------------------------- DATE DESCRIPTION AMOUNT BALANCES - ----------------------------------------------------------------------------------------------- 11/16/98 K Project Omohundro 226,756 11/23/98 Final Payment Addison - Final payment re: Lot 70, Sanctuary 300,000 11/24/98 Wire Transfer - First Union Bank 150,000 12/01/98 Lasting Impressions Landscape 4,317 12/01/98 Muscle & Wrench 225 12/08/98 Wire Transfer - Fleet Bank 500,000 12/11/98 Wire Transfer - Mark Michaels 600,000 01/01/99 Reclass to KEL Account (231,298) 01/01/99 Reclass from KEL 668,829 01/07/99 Addison Construction - additions 54,133 01/13/99 Wire Transfer - Fleet Bank 500,000 01/26/99 Wire Transfer - Addison Construction 150,000 02/10/99 Mark Michaels Interiors - balance due additions 329,341 02/12/99 John Munford Yachting 42,864 02/17/99 Vern's Elec Custom AV System - Custom Audio / Video System 14,605 02/28/99 Masterpiece Gallery 9,413 03/01/99 Reclass to K Project (to CIP) (711,693) 03/05/99 Floral Emporium 14,551 03/09/99 Vern's Elec Custom AV System - Custom Audio / Video System 1,055 03/09/99 Rosado Propane Sales 582 03/09/99 Reclass to KEL Account 3,319 03/19/99 Addison Construction - additions 15,210 04/20/99 Dickenson Murdoch, Rex & Sloan - Lot 72, Sanctuary 220,000 04/27/99 Floral Emporium 19,330 05/04/99 Wire Transfer - deposit for property in Florida 335,000 05/07/99 Arbor - flowers 5,973 05/21/99 Mark Michaels Interiors - additions 150,603 06/04/99 Addison Construction - Lot 71, Sanctuary 7,567 06/08/99 Dickenson Murdoch, Rex & Sloan 4,974,438 06/08/99 Hinckley - start of hull molding 211,250 06/17/99 Addison Construction - Lot 55 & 73, Sanctuary 100,000 06/23/99 Wire Transfer - First Union Bank 1,000,000 06/24/99 Addison Construction - deposit re: Lot 73 demolition 50,000 07/01/99 Mandel Weisman & Kirschner 125,000 07/15/99 Aquatic Sales 322 07/15/99 Floral Emporium 1,323 07/23/99 Wire Transfer - Karen Mayo - First Union Bank 1,000,000 08/04/99 Seldom Scene 126,500 08/08/99 Mark Michaels Interiors - includes deposit re: Tennis and Party house 85,929 08/15/99 Addison Construction 100,000 08/15/99 Preferred Air conditioner 250 08/15/99 Highland Beach - date uncertain 500,000 08/15/99 Highland Beach - date uncertain 50,000 08/15/99 Vern's Elec Custom AV System - date uncertain 1,233 09/10/99 Hinckley - reimbursed Dennis for Hinckley 284,219 09/30/99 From KEL loan 6,481,636 09/30/99 Balance 35,307,668 9 - ----------------------------------------------------------------------------------------------- L. DENNIS KOZLOWSKI APRIL 1, 1996 - JUNE 30, 2002 - ----------------------------------------------------------------------------------------------- DATE DESCRIPTION AMOUNT BALANCES - ----------------------------------------------------------------------------------------------- 10/21/99 Hinckley 3,205 10/25/99 Hinckley 291,719 10/25/99 Boca Tropics 10,632 11/28/99 Palm Beach Property 285,000 12/26/99 Addison Construction 250,000 01/01/00 Reclass to KEL Account (18,631,825) 01/23/00 Addison Construction 350,000 02/27/00 Addison Construction 100,000 02/29/00 R.V. Electric 11,144 02/29/00 Veronica Butler Landscape 21,234 05/01/00 Boca Tropics 7,679 05/26/00 Addison Construction 100,000 05/29/00 Reclass 610 Park Ave 7,011,669 09/25/00 Forgiveness of Relo Loans (19,439,392) 09/25/00 Payment (5,678,734) 09/30/00 Balance 0 09/30/01 Balance 0 06/30/02 Balance $ 0 $ 0 - -----------------------------------------------------------------------------------------------
In short: o $7,011,669 in interest free loans was charged by Mr. Kozlowski for purported New York relocations that did not qualify under the New York Relocation Program, o $29,756,110 in interest free loans was charged by Mr. Kozlowski for the acquisition of property under an unauthorized Florida relocation program, and o $24,922,849 in interest free loans was borrowed by Mr. Kozlowski for the acquisitions of other properties that were not authorized by any relocation program. Of Mr. Kozlowski's total $61,690,628 of unauthorized interest free relocation loans: o $21,697,303 were actually repaid by him, but without interest; o $19,439,392 were repaid through unauthorized forgiveness, discussed in the next section, that he bestowed upon himself; and o $20,553,933 were reclassified to other Mr. Kozlowski loan accounts that he maintained with the Company. 10 MARK H. SWARTZ -------------- Mr. Swartz was Tyco's CFO from 1995 through August 2002, and a Tyco director from February 2001 through August 2002. In March 1996, Mr. Swartz used relocation program loans to purchase two properties: one at 24 Straw's Points Road, Rye, New Hampshire and another in the Trump International Hotel and Tower Condominium, 1 Central Park West, New York. Mr. Swartz's New Hampshire purchase did not qualify for a relocation loan. The purchase price of Mr. Swartz's New York apartment exceeded the maximum amount Mr. Swartz was authorized to borrow under the approved New York relocation program, and he used relocation loans to finance 100% of the purchase price, which was not permitted under the approved relocation program. Mr. Swartz's New York loan also violated the approved relocation program terms because Mr. Swartz did not make that property his principal residence. Mr. Swartz also borrowed approximately $20,992,000 in unauthorized relocation loans purportedly to purchase property in Boca Raton, Florida during the period 1997-2000. Neither of these programs was authorized by the Compensation Committee or the Board. The following table sets forth the interest-free "relocation loans" taken by Mr. Swartz since the inception of his relocation program account, including all loans and charges reflected in the Company's records for Mr. Swartz's relocation account.
- --------------------------------------------------------------------------------------------------- MARK H. SWARTZ JANUARY 1, 1996 - JUNE 30, 2002 - --------------------------------------------------------------------------------------------------- DATE DESCRIPTION AMOUNT BALANCES - --------------------------------------------------------------------------------------------------- $ -- $ -- 01/07/96 Other Cash 55,000 01/07/96 r/c APAT Purch (55,000) 01/08/96 MHS NY APT (10% of $943750) 94,375 03/31/96 (90% of 943,750 = $849,375) (80.6% of $1,220,000 =$985,000) (Rye, NH) 1,834,375 03/31/96 Belongs to Dave Brownell [error] 100,000 03/31/96 Belongs to Dave Brownell [error] 201,424 03/31/96 Reclass to Dave Brownell done backwards [error] 301,424 03/31/96 Correct Reclass to Dave Brownell Note B (602,849) 09/30/96 Balance 1,928,750 06/27/97 r/c Cash payments 279,000 07/27/97 Other Cash 295,000 09/30/97 To rec pymt of K.E. Loan (998,199) 09/30/97 To cor record repayment (81,176) 09/30/97 Balance 1,423,375 11/01/97 R/C SUSP ITEMS 735,272 01/30/98 Citizen's Bank New Hampshire 400,000 04/24/98 Trojan 440 Express Yacht 357,500 04/24/98 [End Documentation] 633,280 11 - --------------------------------------------------------------------------------------------------- MARK H. SWARTZ JANUARY 1, 1996 - JUNE 30, 2002 - --------------------------------------------------------------------------------------------------- DATE DESCRIPTION AMOUNT BALANCES - --------------------------------------------------------------------------------------------------- 06/01/98 R/C M.SWARTZ CONDO'S from TME fixed assets 5,166,000 07/01/98 MELLON CONCENTRATION ACCT RECO 50% deposit on Lot 52/53 3,600,000 07/01/98 RECLASS MHS ITEMS FOR KEL (6,677,872) 07/01/98 CLOSING COSTS MHS NY APTS (661,618) 07/01/98 NYC DEPARTMENT OF FINANCE 178 07/01/98 NYC DEPARTMENT OF FINANCE 1,649 07/01/98 TRUMP INTERNATIONAL HOTEL & TO 2,626 08/01/98 FRANKFURT GARBUS KURNIT 5,511 08/01/98 TRUMP INTERNATIONAL HOTEL 2,622 09/01/98 TRUMP INTERNATIONAL HOTEL 2,631 09/30/98 Balance 4,991,155 10/01/98 Reclass Key Emp Loan (2,678) 10/01/98 BOCA RATON RESORT & CLUB 45 10/01/98 MIAMI DOLPHINS LTD 2,016 10/01/98 TRUMP INTERNATIONAL HOTEL 2,633 10/15/98 Wire 10/15 to MHS 1,600,000 11/01/98 Reclass from Note F to Note C Payoff via Restricted Stock vesting (4,000,000) 11/01/98 CRANE NATIONAL VENDOR 2,189 11/01/98 NYC DEPARTMENT OF FINANCE 170 12/01/98 MELLON DEPOSIT 12/15/98 (2,189) 12/01/98 [No Documentation] (8,736) 12/01/98 NYC DEPARTMENT OF FINANCE 5 01/01/99 Reclass N/R C (1,143) 01/01/99 Reclass charge to Key EE loan (109,406) 01/04/99 Net Cash Activ 1/1-1/22 3,000,000 02/01/99 Posting from AP 40 2,188 02/01/99 reclass 109,406 02/01/99 misc entries (109,406) 03/01/99 MELLON DEPOSIT 3/18/99 (9,716) 03/01/99 MARK SWARTZ Credit from expense report (4,000) 04/13/99 Net Cash Activ 4/1-23 4/13 wire to MHS 2.5m, 4/19 1.1 wire 2,500,000 04/19/99 Highland Beach 1,125,000 04/19/99 Reclass M Swartz KEL Reclass 4/19 wire Highland Beach project (1,125,000) 09/01/99 reclass kel to boca relo 500,000 09/29/99 $6,040,478.11 total; $5,440,478.11 KEL (600,000) 09/30/99 Balance 7,862,532 10/01/99 Reclass from TME FA 10/1/99 447 Primavera Way Palm Beach 50% LDK 285,000 12/01/99 TLC Share Equivalent RS vesting applied to loan (5,487,965) 01/03/00 Net Cash 1/3-21/00 109,406 01/11/00 SHARE EQUIVALENT 1/11/00 (2,768,972) Balance -0- 04/01/00 Net Cash 4/1-21/00 Wire 4/4/00 Merrill Lynch for MHS 7,000,000 09/04/00 Net Cash 9/4-22/2000 9/11/00 wire to MHS 1,333,333 09/29/00 NET CASH 9/25-9/29/00 9/26/00 wire to MHS 1,458,667 12 - --------------------------------------------------------------------------------------------------- MARK H. SWARTZ JANUARY 1, 1996 - JUNE 30, 2002 - --------------------------------------------------------------------------------------------------- DATE DESCRIPTION AMOUNT BALANCES - --------------------------------------------------------------------------------------------------- 09/30/00 9/30/00 payroll entry (9,792,000) 09/30/00 Balance -- -- 09/30/01 Balance -- -- 06/30/02 Balance $ -- $ -- - ---------------------------------------------------------------------------------------------------
In short: o $7,668,750 in interest free loans were taken by Mr. Swartz for property acquisitions in New York and New Hampshire under the unauthorized New York Relocation Program, o $20,992,000 in interest free loans were taken by Mr. Swartz under an unauthorized Florida relocation program, and o $4,437,175 was borrowed, interest-free, for the acquisition of other properties that were not authorized by any relocation program. Of Mr. Swartz's total $33,097,925 of unauthorized interest free relocation loans: o $10,786,977 was repaid by him, but without interest; o $9,792,000 was repaid through forgiveness that Mr. Kozlowski was not authorized to bestow; and o $12,518,948 was reclassified to other Mr. Swartz loan accounts that he maintained with the Company. MARK A. BELNICK - --------------- Mr. Belnick served as Tyco's Executive Vice President and Chief Corporate Counsel from September 1998 until June 10, 2002. Mr. Belnick used the unauthorized version of the New York relocation program to borrow approximately $4,217,000 from September 1998 through May 2001 for the purchase and improvement of a cooperative apartment in New York City at 300 Central Park West. Prior to purchasing that apartment, Mr. Belnick lived at 103 Pleasant Ridge Road, Harrison, New York, less than 50 miles from 300 Central Park West, and his prior employer was also located in New York City. Thus Mr. Belnick's interest free loans could not qualify as tax-exempt below market loans under the Internal Revenue Code. And because his loans were pursuant to the unauthorized plan, Mr. Belnick's indebtedness did not qualify for nondisclosure in the Company's proxies. Mr. Belnick also used the relocation program to pay his rent for several months while his new apartment was being renovated. 13 From 2001 through March 2002, Mr. Belnick borrowed an additional $10,418,599 to purchase land and build a home at 3468 West Crest Court, Park City, Utah. Mr. Belnick then charged Tyco $1600 per month for his home office located in that house. The Company maintains no corporate offices in Utah, and Mr. Belnick was not requested to relocate to Utah. A trust agreement, not a mortgage, was recorded on the property to secure the loans made by Tyco. In addition, Mr. Belnick executed none of the documents required by the program. In short, this indebtedness was not incurred through an authorized employee relocation plan available generally to all salaried employees, and as such was not exempt from disclosure in the Company's proxies. There was no colorable benefit to Tyco for any of Belnick's loans. In the civil action against Mr. Belnick referred to above, Tyco is seeking recovery of, INTER ALIA, all costs and expenses incurred by Tyco as a result of Mr. Belnick's unauthorized relocation loans, plus interest, a constructive trust on the property Mr. Belnick wrongfully obtained, and other damages. OTHER EXECUTIVE OFFICERS ------------------------ The following describes the relocation loan activity of Tyco's executive officers as defined by Section 16 of the Securities Exchange Act of 1934 and identified in Tyco's proxy statements during the Relevant Period. JERRY R. BOGGESS. Mr. Boggess is currently President of Tyco's Fire and Security Services division. Mr. Boggess borrowed a total of $5,000,000 in relocation loans to purchase property in Boca Raton in 1997. This loan was forgiven and grossed-up as part of the TyCom Bonus in September 2000 discussed in the next section, which had not been approved by the Compensation Committee. Mr. Boggess also borrowed an additional amount which was purportedly forgiven by Mr. Kozlowski in January 2002. Upon learning that Mr. Kozlowski was not authorized to have forgiven this loan, Mr. Boggess requested the reinstatement of the loan, with reversal of the related gross-up as if the loan had not been forgiven and he has now repaid this loan. STEPHEN B. MCDONOUGH. Mr. McDonough served as the President of Tyco Engineered Products and Services and later as President of Tyco's Plastics division until one month ago, when his employment with Tyco terminated. Mr. McDonough borrowed $1,750,000 in relocation loans to move from Tyco offices in New Jersey to Massachusetts. This was a genuine relocation, but it was not part of a broad based plan. His outstanding relocation loan balance of $1,750,000 is payable within ninety days. NEIL R. GARVEY. Mr. Garvey served as President and Chief Executive Officer of TyCom Ltd., a Tyco subsidiary, until July 19, 2002. Mr. Garvey borrowed $5,000,000 in relocation loans related to his relocation to New Hampshire in 2000. Mr. Garvey's loan exceeded approved program guidelines by $472,703. Mr. Garvey's entire $5,000,000 loan is outstanding, and the Company is seeking repayment of the balance. 14 B. THE "TYCOM BONUS" MISAPPROPRIATION ---------------------------------- The Compensation Committee of the Tyco Board of Directors was established to oversee the compensation and benefits of the executive officers and key managers of the Company and its principal subsidiaries. (July 7, 1997 Organizational Meeting for the post-merger entities. Unanimous Written Resolution of the Board of Directors of ADT Limited at 2.) Tyco's 2000 proxy statement indicates that the Compensation Committee "sets the Compensation and benefits of executive officers and key managers of the Company...and approves all of the policies under which compensation is paid or awarded to the Company's executive officers and key managers and oversees the administration of executive compensation programs." (Definitive Proxy Statement, Form DEF 14A, filed March 1, 2000 at 7 and 16.) In September 2000, Mr. Kozlowski caused Tyco to pay a special, unapproved bonus to 51 employees who had relocation loans with the Company. (The entire list is set forth in Exhibit 99.8 to this report at 115.) The bonus was calculated to forgive the relocation loans of all 51 employees, at a total cost of $56,415,037, and to pay compensation sufficient to discharge all of the tax liability due as a result of the forgiveness of those loans. This action was purportedly related to the successful completion of the TyCom Initial Public Offering. The total gross wages paid by the Company in this loan forgiveness program were $95,962,000, of which amount Mr. Kozlowski received $32,976,000 and Mr. Swartz $16,611,000. The distribution of this benefit is summarized in the following chart:
-------------------------------------------------------------------------------------------------- EMPLOYEES LOAN BALANCES FORGIVEN GROSSED UP PERCENTAGE OF TOTAL FORGIVENESS -------------------------------------------------------------------------------------------------- Executive Officers $29,231,392 $49,586,754 52% Key Managers $13,534,523 $22,959,339 24% Others $13,649,122 $23,416,560 24% -------------------------------------------------------------------------------------------------- Total $56,415,037 $95,962,653 100% --------------------------------------------------------------------------------------------------
The components of the Executive Officer totals are as follows:
---------------------------------------------------------------------------- NAME LOAN BALANCES GROSSED UP FORGIVEN ---------------------------------------------------------------------------- L. D. Kozlowski $19,439,392 $32,976,067 Mark Swartz $9,792,000 $16,610,687 ---------------------------------------------------------------------------- Total $29,231,392 $49,586,754 ----------------------------------------------------------------------------
Listed below are key managers of Tyco in addition to Messrs. Kozlowski and Swartz who received unauthorized loan forgiveness and "gross-up" bonuses pursuant to the September 2000 program conceived and implemented by Mr. Kozlowski. The Company is not aware of any evidence that any senior executives or key managers participated with Mr. Kozlowski in developing the loan forgiveness and gross-up bonus program. 15
---------------------------------------------------------------------------- NAME LOAN BALANCES GROSSED UP FORGIVEN ---------------------------------------------------------------------------- Jerry Boggess $ 5,000,000 $ 8,481,764 Irving Gutin $ 3,109,971 $ 5,275,608 Jeffrey Mattfolk $ 825,000 $ 1,399,491 Brad McGee $ 1,942,026 $ 3,294,361 Patricia Prue $ 748,309 $ 1,269,396 Michael Robinson $ 1,063,355 $ 1,803,826 Scott Stevenson $ 845,869 $ 1,434,893 ---------------------------------------------------------------------------- Total $13,534,523 $22,959,338 ----------------------------------------------------------------------------
These benefits were not approved by, or disclosed to, the Compensation Committee or the Board of Directors. Indeed, the opposite occurred: each of the fifty-one participating employees who was offered the forgiveness was asked to sign a confidentiality agreement in which they agreed not to disclose either the fact of the bonus or its terms to anyone other than the recipient's personal financial, tax or legal advisors. Breach of this confidentiality agreement would result in forfeiture of the bonus. Some employee beneficiaries of this forgiveness were not even permitted to keep a copy of their signed agreement. According to Ms. Patricia Prue, Tyco's Senior VP of Human Resources, Mr. Kozlowski told her to process the forgiveness and the gross-ups and asserted that the Board had approved the program. Upon Ms. Prue's request for documentation of the authorization, Mr. Kozlowski sent her and her supervisor, Mark Swartz, a memo on September 11, 2000, for her files indicating that "a decision has been made to forgive the relocation loans for those individuals . . ..whose efforts were instrumental to successfully completing the TyCom IPO." Attached to the memorandum was the list of employees who were to receive the forgiveness benefit. Mark Foley, a Vice President of Finance prepared a memorandum signed by Mr. Swartz that explained the accounting treatment for the near-$100 million charge. The memo stated: "The sale of 14% of TyCom generated a one-time gain of approximately $1.76 billion on the books of Tyco. We have decided to award special bonuses to various Tyco employees for their efforts over the past few years in enhancing the value of TyCom and thereby contributing to this gain. Selected employees will receive their bonus in the form of cash, forgiveness of relocation loans, and/or Tyco Common shares under Tyco's restricted stock program." As a result of this accounting treatment, this extraordinary $100 million charge was allocated to several different accounts and appears in the general ledger and financial statements as follows: 16
------------------------------------------------------------------------------------------------- ACCOUNT EXPENSE ------------------------------------------------------------------------------------------------- TYCOM OFFERING EXPENSE $44,642,065 On the Income Statement of Tyco US as a component of "Other (Income) Expense" ------------------------------------------------------------------------------------------------- ACCRUED G & A EXPENSES ABalance Sheet account and offsets previous $11,772,973 overaccruals of General & Administrative Expenses. ------------------------------------------------------------------------------------------------- ACCRUED FEDERAL INCOME TAX $40,977,616 A Balance Sheet account used for corporate income taxes. ------------------------------------------------------------------------------------------------- TOTAL $97,392,654 -------------------------------------------------------------------------------------------------
In short, the program was discriminatory in scope, terms or operation in favor of executive officers. First, forgiveness was offered to some people who never moved, some people at the operating division level who were never part of the corporate relocation to Florida and people who did not even have a Tyco mortgage. Second, forgiveness was never offered to those who were originally eligible for relocation, yet declined to move. In short, forgiveness was never part of the Florida Relocation Program, but rather was an extra-program benefit. Regardless of advice that may have been offered relating to the disclosure requirements for nondiscriminatory relocation benefits, the forgiveness benefit was not applied in a nondiscriminatory fashion as part of a nondiscriminatory program and, therefore, should not have qualified for nondisclosure. All of the forgiveness benefits were individually reported on separate W-2s, yet none of the income associated with the forgiveness benefits was reported in the Company's proxies for the Named Officers, i.e. Kozlowski and Swartz in the year 2000. The civil action against Mr. Kozlowski referred to above seeks recovery of all funds misappropriated by Mr. Kozlowski from Tyco, including any unpaid balances of non-qualifying relocation loans and all debts and obligations improperly forgiven by Mr. Kozlowski, including all related costs and expenses of benefits bestowed by him on other Tyco personnel under the TyCom Bonus program. The Company also intends to seek comparable remedies against Mr. Swartz in arbitration. C. THE "ADT AUTOMOTIVE BONUS" MISAPPROPRIATIONS -------------------------------------------- Only a few weeks after the unauthorized forgiveness and gross-up of Florida relocation loan liability, Mr. Kozlowski introduced a second bonus program. On November 13, 2000, Mr. Kozlowski sent a letter to 16 of the Company's executive officers and key managers thanking them for their many contributions towards the successful divestiture of Tyco's ADT Automotive business and enclosing bonuses and "relocation" payments. Each of the intended recipients of the purported relocation benefits had already recovered all of the grossed-up costs associated with their recent relocations as part of the near- $100 million unauthorized forgiveness program just 17 completed. The total of the additional ADT Automotive cash bonus and "relocation" benefits were $3,979,000 and $32,009,641, respectively. Mr. Kozlowski's letter noted that information regarding the vested shares had already been previously communicated and that the amounts listed were reviewed and approved by the Chairman of Tyco's Compensation Committee. The total number of shares awarded was 261,500 with a then market value of $14,804,038. Ms. Prue and Mr. McGee received additional awards at the same time amounting to $5,161,776, although these benefits were accounted for differently. Thus, the total benefits awarded at the time of the ADT Automotive divestiture were, and total cost the Company was, approximately $55,954,455. The distribution of this benefit is summarized in the following chart:
-------------------- ------------------ -------------------- -------------------- ------------------- CASH VALUE OF "RELOCATION" TOTAL EMPLOYEES BONUS RESTRICTED SHARES BENEFITS -------------------- ------------------ -------------------- -------------------- ------------------- Kozlowski $ 700,000 $ 8,378,576 $16,488,034 $25,566,610 Swartz $ 350,000 $ 4,189,288 $ 8,305,344 $12,844,632 Foley $ 100,000 $ 113,224 $ 422,180 $ 635,404 Gutin $ 500,000 $ 2,637,804 $ 3,137,804 Mattfolk $ 312,500 $ 424,590 $ 699,746 $ 1,436,836 McGee $ 500,000 $ 424,590 $ 1,647,181 $ 2,572,771 Prue $ 312,500 $ 424,590 $ 737,090 Robinson $ 312,500 $ 424,590 $ 901,913 $ 1,639,003 Stevenson $ 312,500 $ 424,590 $ 717,447 $ 1,454,537 Other Employees $ 579,000 $ 189,992 $ 768,992 $3,979,000 $14,804,038 $32,009,641 $50,792,679
Again, there is no record that this ADT Bonus program or any of its elements, which cost the Company over $55 million, was ever approved, discussed, or even known, by the Compensation Committee or the Board of Directors, despite the fact that Compensation Committee approval was required for the compensation and benefits of executive officers and key managers of the Company. (Definitive Proxy Statement, Form DEF 14A, filed March 1, 2000 at 7.) Since no records exist to suggest the accuracy of the Mr. Kozlowski assertion and since no one member of the Compensation Committee was empowered to bind the entire Committee in any event, the award of the ADT Automotive bonus was also an unauthorized and unilateral award by Mr. Kozlowski. As with the TyCom unauthorized bonus, other senior executives were led by Mr. Kozlowski to believe that the ADT Automotive award of restricted shares was a Board-approved program. Mark Foley, Senior Vice President of Finance, produced from his files a memorandum from Mark Swartz, that explains the accounting treatment for approximately $50 million of associated charges. The memo states: The automotive business was sold for $1 billion and generated a one-time gain in excess of $400 million on the books of Tyco. We have 18 decided to award special bonuses to various Tyco employees for their efforts over the past few years in enhancing the value of the Automotive business, and thereby contributing to this gain. Selected employees will receive their bonus in the form of Cash, forgiveness or relocation loans, and/or Tyco Common shares under Tyco's restricted stock program. The associated personnel charges were netted against the direct selling costs associated with the ADT Automotive divestiture. The separate awards to two officers received at the same time amounting to $5,161,776 were not booked to the direct selling costs of the ADT Automotive divestiture. As was the case with the TyCom Forgiveness Bonus, the unauthorized purported relocation benefits were individually reported on the employee's 2000 W-2s - again on a separate W-2. None of these benefits was approved by, or disclosed to, the Compensation Committee or the Board of Directors. Moreover, the existence and extent of the program was concealed from the Board by Mr. Kozlowski who had only a few months earlier signed a proxy solicitation stating that the role of the Compensation Committee included the approval of "all of the policies under which compensation is paid or awarded to the Company's executive officers and key managers." In short, in November 2000, Mr. Kozlowski authorized Tyco to pay cash, award property and restricted shares of Tyco common stock, and purportedly forgive the same relocation loans (and make related tax payments) to those Tyco officers and employees - notwithstanding that the relocation loans of each of these persons had already been paid in full as a result of the September 2000 misappropriation described above. The civil action against Mr. Kozlowski referred to above seeks recovery of all funds misappropriated by him from Tyco, including cash, stock and purported "relocation loans" improperly forgiven by Mr. Kozlowski, including all related costs and expenses of benefits bestowed by him on other Tyco personnel. The Company also believes that Mr. Swartz is jointly and severally liable with Mr. Kozlowski for this misappropriation, and intends to seek comparable remedies against Mr. Swartz in arbitration. D. KEY EMPLOYEE LOAN PROGRAM ------------------------- As previously disclosed in Tyco proxy statements and Forms 10-K, the Key Employee Loan Program was intended to encourage ownership of Tyco common shares by executive officers and other key employees. The Program was intended to provide loans ("KEL" loans) on favorable terms to these officers to enable them to pay taxes due upon the vesting of shares granted under Tyco's restricted share ownership plan without having to sell the shares at the time of vesting to pay the resultant tax liability. During the fiscal years from 1997 to the present (the "Relevant Period"), certain executive officers used KEL loans for purposes other than the payment of taxes due upon the vesting of restricted shares, borrowed more than the limits allowed under the program's terms, or both. (Loans that were used for purposes other than the payment of 19 taxes on vested shares are referred to herein as "non-program loans.") Neither the Compensation Committee nor the Board of Directors was aware of any non-program loans or loans in excess of program limits. L. DENNIS KOZLOWSKI. ------------------- Mr. Kozlowski, a member of the Tyco Board, a longtime Tyco officer and a signatory of Tyco's annual proxy statements, knew the KEL loan program's stated purpose and its limitation on the amounts that could be borrowed. During the Relevant Period, Mr. Kozlowski borrowed funds for purposes other than those stated in the KEL program and used the KEL program like an unlimited line of credit. In addition to taking non-program loans, Kozlowksi borrowed in excess of the KEL program's limits. Mr. Kozlowski concealed his misuse of the KEL program from the Board and Compensation Committee. Mr. Kozlowski's non-program KEL borrowing principally occurred in 1999 and afterwards. As of August 1998, Mr. Kozlowski's total KEL account balance was $132,310. By August 1999, Mr. Kozlowski's outstanding balance had increased to over $55.9 million. By the end of 2001, Mr. Kozlowski had taken over 200 KEL loans - some for millions of dollars, and some as small as $100. Mr. Kozlowski used these loans to purchase, develop and speculate in real estate; to fund investments in various business ventures and partnerships (including private ventures in which both he and Mr. Swartz used Tyco KEL loans to invest); and for miscellaneous personal uses having nothing to do with any taxes due on the vesting of his shares of Tyco stock. According to Tyco records excerpted below, approximately 90% of Mr. Kozlowski's KEL loans were non-program loans, which he used to fund his personal lifestyle, including speculating in real estate, acquisition of antiques and furnishings for his properties (including properties purchased with unauthorized "relocation loans"), and the purchase and maintenance of his yacht. The following table sets forth each of Mr. Kozlowski's KEL loans, including the journal entry used to describe the purpose for which the money was used and the resulting total loan balance (including both authorized program uses and non-authorized non-program loans), during the Relevant Period. Balances after the date of August 31, 1999, reflect the effect of a $25 million unauthorized credit (discussed INFRA) that has been reversed by Tyco and all balances thereafter should be adjusted accordingly. KEL ACCOUNT L. DENNIS KOZLOWSKI OCTOBER 1, 1997 - JUNE 30, 2002
DATE DESCRIPTION PROGRAM NON-PROGRAM BALANCES ----- ----------- ------- ----------- --------- 10/01/97 Balance $4,096,378.40 $4,096,378.40 10/01/97 WT LDK 5,000.00 10/02/97 WT A. Kozlowski CT Hse Renovation 200,000.00 10/14/97 WT Tiffany's - LDK 200,000.00 10/17/97 AP Tucker Associates 200,000.00
20 KEL ACCOUNT L. DENNIS KOZLOWSKI OCTOBER 1, 1997 - JUNE 30, 2002
DATE DESCRIPTION PROGRAM NON-PROGRAM BALANCES ----- ----------- ------- ----------- --------- 10/23/97 FCI Raymond Partners -LDK 79,200.00 11/07/97 AP Tucker Associates 200,000.00 11/10/97 WT Karen Mayo -Rye Beach House 100,000.00 11/24/97 WT LDK 150,000.00 12/01/97 WT Woodmeister Corp - Nantucket Property 55,000.00 12/19/97 AP 100,000.00 12/29/97 R/C Waldorf rent -Sept (139,118.04) 12/29/97 R/C Cavendish White LTD Yachting (10,000.00) 12/29/97 R/C CT House & Relo (451,109.50) 12/29/97 R/C 817 Fifth Ave -Kemp Invoice (249,149.75) 12/29/97 R/C Nantucket Insurance (20,174.08) 12/29/97 R/C Nantucket -Landry Arcori (96,355.00) 12/29/97 R/C Nantucket -Wine Cellar (14,725.00) 12/29/97 R/C Nantucket -Kemp Invoice (33,550.00) 12/29/97 Interest payment 1996 372,768.42 12/29/97 Wentworth Land/Runneymead 2,262,607.28 12/29/97 Record Payments -Nantucket Property 5,955,336.15 01/05/98 WT LDK Nantucket -personal 20,000.00 01/12/98 WT LDK Nantucket -personal 200,000.00 01/16/98 AP 5,172.15 01/21/98 WT LDK Aprea Mare of North America 25,000.00 01/23/98 AP Tucker Associates 100,000.00 01/30/98 AP 250.00 02/12/98 Full Circle Invest WT -LDK Enclosures Hld 30,000.00 02/12/98 DLJ Minnennium Partners - LDK WT 27,157.11 02/13/98 AP Tucker Associates 100,000.00 03/06/98 AP 18,692.62 03/20/98 AP Tucker Associates 50,000.00 03/20/98 AP 1,050.00 03/31/98 Merrill Lynch for LDK 3/17/98 WT 500,000.00 04/14/98 LDK 600,000.00 04/14/98 LDK -taxes 7,700,000.00 04/17/98 AP Tucker Associates 50,000.00 04/24/98 A/P Pars Oriental Rugs 108.00 04/25/98 Chubb & Son -Insurance Rye property 166.00 04/25/98 Flood insurance for Nantucket property 2,761.00 04/25/98 R/C W/T 1/21/98 Aprea Mare LDK (25,000.00) 04/25/98 R/C Bonus portion not invested (429,988.29) 04/25/98 R/C Merrill Lynch 3/17/98 (500,000.00) 04/25/98 R/C Kemp Interior 1,347.01 04/25/98 R/C rent paid on Waldorf -LDK 21,089.96 04/30/98 A/P Custom Electric 59 Harbor Rd 1,419.19 05/14/98 Loan-Vesting- 3/25/98 amended W-2 7/97 vesting $2,847,673.64 05/15/98 A/P Chubbs (3 invoices) 7,888.00 05/31/98 RECLASS AMEX LDK PERS ITEMS 66,316.86 05/31/98 RECLASS LDK RYE NOTE (2,705,930.00) 05/31/98 RECLASS FROM KEL TO BOCA NOTE A (600,000.00) 05/31/98 RECLASS FROM KEL to Furniture & Fixtures (6,868.46) 05/31/98 RECLASS FROM KEL to miscellaneous expense (4,200.00) 05/31/98 RECLASS FROM KEL to miscellaneous expense (39,600.00) 05/31/98 RECLASS FROM KEL to miscellaneous expense (6,331.31)
21 KEL ACCOUNT L. DENNIS KOZLOWSKI OCTOBER 1, 1997 - JUNE 30, 2002
DATE DESCRIPTION PROGRAM NON-PROGRAM BALANCES ----- ----------- ------- ----------- --------- 05/31/98 RECLASS FROM KEL to deposit re: 60 East 88 Street (44,000.00) 05/31/98 RECLASS FROM KEL to miscellaneous expense (2,173.00) 05/31/98 RECLASS FROM KEL to miscellaneous expense (4,250.00) 05/31/98 RECLASS FROM KEL to restructuring costs (137,405.00) 06/30/98 R/C LDK LOANS TO RYE PROP (1,527.19) 06/30/98 Tucker Associates - LDK 142,843.64 06/30/98 GRINNELL INTERCO CHARGES JUNE 918.83 06/30/98 R/C Cash item for 817 5th 240,000.00 07/22/98 Payment (2,847,673.64) 07/28/98 DLJ Millennium Partners WT -LDK 22,620.25 07/28/98 Board of Enclosures WT LDK 190,580.31 07/28/98 Merrill Lynch Pierce Fenner WT LDK 50,000.00 07/28/98 Madred Apt WT LDK (paid by Wormald) 14,809.60 07/31/98 AP Chubb Group of Insurance -LDK 1,615.00 07/31/98 AP Kemp Interior - LDK 2,110.88 07/31/98 LDK/NJ SPORTS PARTNERSHIP 1,700,000.00 07/31/98 LDK LOAN 60,000.00 07/31/98 PROPERLY RECORD W/T 7/24/98 LDK 59,750,014.00 07/31/98 R/C LDK VAUGHN & DALE WT 7/2/98 92,500.00 07/31/98 RECLASS LDK ITEMS (382,843.64) 07/31/98 R/C KEMP INTER AND CHUBB LDK (3,725.88) 07/31/98 Payment to KEL - LDK (79,796,686.36) 08/31/98 AP D.G.C. Livery Corporation -LDK 50.00 08/31/98 R/C AUDI PURCHASE NY LDK 64,250.00 09/30/98 R/C INS REFUNDS LDK PROPERTY (760.00) 09/30/98 RC LDK NY TRAVEL (50.00) 09/30/98 AP Chubb Group of Insurance-LDK 359.00 09/30/98 AP Chubb Group of Insurance-LDK 1,118.00 09/30/98 AP Florida Windstorm Underwriting-LDK 7,077.00 09/30/98 AP S&H 88th Street Associates -LDK 277,200.00 09/30/98 John Munford -K Project 11,094.45 09/30/98 Psilos Partners 262,500.00 09/30/98 LDK AMEX PERS ITEMS 131,133.55 9/30/98 Balance 0.00 821,982.16 821,982.16 10/01/98 Reclass from Note A -- LDK short-term advance 978,756.88 account 10/01/98 Marsh & McClennan 4,074.00 10/01/98 IRA Motor Group W/T Automobile 90,406.04 10/01/98 A/P Items 23,043.52 10/01/98 John Munford Yacht Stylist 31,856.89 10/01/98 Hinckley Invoice 11,104.18 10/13/98 Loan- Goldman Sachs capital call 154,833.00 10/18/98 Adjustment (310,003.56) 10/18/98 Vesting 2,134,911.16 10/18/98 Payment (1,979,909.34) 10/22/98 Payment (155,001.82) (807,855.26) 10/29/98 Loan- Advance 100,000.00 11/01/98 Chubb Group 14.00 11/01/98 Progressive 405.00 11/01/98 Town of Rye 11,779.05 11/01/98 AmEx LDK Personal 80,015.13
22 KEL ACCOUNT L. DENNIS KOZLOWSKI OCTOBER 1, 1997 - JUNE 30, 2002
DATE DESCRIPTION PROGRAM NON-PROGRAM BALANCES ----- ----------- ------- ----------- --------- 11/01/98 Reclass- Note A - Dave Brownell 258,255.44 11/01/98 Reclass- Herman Ager (14,000.00) 12/01/98 GW NJ Sports 8,300,000.00 12/01/98 Berkshire Fund V Partnership 19,205.93 12/01/98 Goldman Sachs 75,204.60 12/01/98 Herman Tickets Cabaret 1,000.00 12/01/98 Taxes Lot 55 Property Sanctuary 21,083.53 12/01/98 Taxes Lot 70-71 Property Sanctuary 38,923.25 12/01/98 Florida Windstorm Insurance 22,874.00 12/01/98 Seacoast Underwriters 5,710.42 12/01/98 TIG Premier Flood Insurance 1,079.00 12/01/98 Tucker Associates 9,521.42 12/01/98 Busy Body Home Fitness 859.79 12/01/98 Chubb Group Insurance 302.00 12/01/98 Chubb Group Insurance 13,163.00 12/01/98 Elliot Drafchin Pest Control 125.00 12/01/98 Florida Power & Light 540.06 12/01/98 Progressive 324.00 12/01/98 Star Trac by Unisen 4,422.70 12/01/98 Trump Corporation 19,036.12 12/01/98 Utilities Processing Center 140.00 12/01/98 Utilities Processing Center 77.16 12/01/98 Berkshire Fund 10,548.00 12/01/98 Admiral Marine Works 17,856.00 12/01/98 Fulbright & Jaworski 280,000.00 12/01/98 Bonus Comp. Error 21,223.83 12/16/98 Loan 243,562.50 12/21/98 German Frers 72,000.00 12/22/98 Goldman Sachs 88,476.00 12/23/98 Loan 300,000.00 12/31/98 Chubb Group Insurance (257.00) 12/31/98 Florida Windstorm Insurance (4.00) 01/01/99 Reclass- Note A 231,298.38 01/01/99 Sale of Wentworth land (202,142.92) 01/01/99 Reclass- Note A (668,828.83) 01/01/99 Reclass- TME (4,508.10) 01/01/99 Reclass- TME (16,696.68) 01/01/99 Reclass- Other (13,180.92) 01/01/99 Adj 3,556.92 01/01/99 Mellon Deposits (3,698.39) 01/08/99 North Sails 40,000.00 01/08/99 Admiral Marine 227,896.00 01/13/99 Addison Construction 54,133.31 01/13/99 Appleby Supurling & Kemper 5,500.00 01/13/99 Aquatic Isles Pool Service 137.80 01/13/99 Ares Cleaning Service 3,000.00 01/13/99 Chubb Insurance 7,107.00 01/13/99 Milan Sabouri Expense Report 422.18 01/13/99 John Taylor Expense Report 1,934.55 01/13/99 Florida Power & Light 1,500.01 01/13/99 Marsh & McClennan 339.00 01/20/99 Loan 2,700,000.00
23 KEL ACCOUNT L. DENNIS KOZLOWSKI OCTOBER 1, 1997 - JUNE 30, 2002
DATE DESCRIPTION PROGRAM NON-PROGRAM BALANCES ---- ----------- ------- ----------- --------- 01/21/99 Psilos Group partners 312,500.00 01/27/99 Mandel weisman & Kirschner 125,000.00 01/31/99 Michael Castania Expenses 9,845.45 01/31/99 Payroll & Fringe KDM 10,583.34 01/31/99 Florida Windstorm (4,746.52) 01/31/99 Lots 70 & 71 sanctuary (54,133.31) 01/31/99 RC Kemp Interior 817 5th Ave. (2,110.88) 01/31/99 Reclass K Project 72,540.33 02/05/99 Loan 675,000.00 02/19/99 Loan 5,000,000.00 02/22/99 FCI Enclosures Partners 168,149.00 02/28/99 610 Park Ave. 8,368.36 02/28/99 Aquagemix Land-Water Tech 99.00 02/28/99 Aquatic Isles Pool Service 173.25 02/28/99 Ares Cleaning Service 2,800.00 02/28/99 Elliott Krafchin Pest Control 125.00 02/28/99 Florida Power & Light 964.70 02/28/99 Marsh & McClennan 2,106.00 02/28/99 Rio Enterprises 2,800.00 02/28/99 salary & Fringe-feb 3,528.03 02/28/99 Mellon Deposit (2/10/99) (67.00) 03/31/99 Payroll & Fringe- march 3,528.03 03/31/99 Aquatic Isles Pool Service 77.00 03/31/99 Elliot Krafchin Pest Control 125.00 03/31/99 No explanation 875.31 03/31/99 CIP (42,951.34) 03/31/99 610 Park Ave. 3,074.60 03/31/99 Return funds to KEL (96,355.73) 04/13/99 Loan 10,500,000.00 04/19/99 Highland Beach 500,000.00 04/30/99 610 Park Ave. 3,098.10 04/30/99 Deposit (4/13/99) (2,252.00) 05/01/99 Fleet- FBO GTMI 500,000.00 05/01/99 610 Park Ave. 3,149.50 05/31/99 Payroll & Fringe- April 3,528.03 05/31/99 Payroll & Fringe- May 3,528.03 06/01/99 Karen Mayo 949,660.53 06/01/99 Martian A. Katz Co. 1,085,000.00 06/01/99 610 Park Ave 105.37 06/30/99 Payroll & Fringe- June 3,528.03 07/01/99 Payroll & Fringe July 3,528.03 07/02/99 Sirios Capital Partners II 5,000,000.00 07/19/99 MLPFS 15,000,000.00 07/31/99 610 Park Ave. 3,170.81 08/12/99 Loan 1,000,000.00 08/17/99 GTMI LLC 500,000.00 08/23/99 Terrace Food Group 150,000.00 08/25/99 Terrace Food Group 100,000.00 08/26/99 Loan 1,000,000.00 08/31/99 R/C Salary & Fringe alloc 10,318.74 08/31/99 610 Park Ave. 6,149.20 08/31/99 Addison construction- Highland Beach 50,000.00
24 KEL ACCOUNT L. DENNIS KOZLOWSKI OCTOBER 1, 1997 - JUNE 30, 2002
DATE DESCRIPTION PROGRAM NON-PROGRAM BALANCES ----- ----------- ------- ----------- --------- 08/31/99 Payment- Bonus (25,000,000.00) 09/01/99 Reclass- highland Beach Payment (675,000.00) 09/16/99 Loan 750,000.00 09/27/99 K Corp LLC 13,500,000.00 09/29/99 Payment- Wire (38,600,000.00) 09/30/99 GTMI, LLC 500,000.00 09/30/99 Reclass- Note A (6,481,636.35) 09/30/99 610 Park Ave. 17.05 09/30/99 Salary & Fringe 3,528.03 09/30/99 KDM Salary alloc 5,159.37 09/30/99 Other adjustments 50,560.79 09/30/99 Salary & Fringe 3,528.03 09/30/99 Balance 0.00 0.00 0.00 10/01/99 Sal & Fringe- Oct 3,528.03 10/31/99 610 Park Ave. 3,116.64 10/31/99 Loan 2,000,000.00 10/31/99 610 Park Ave. 3,187.91 11/01/99 Salary & Fringe- Nov. 3,528.03 11/12/99 Tyco Int'l Australia- Castania 3,563.07 11/22/99 Loan 1,500,000.00 12/01/99 610 Park Ave. 3,262.57 12/31/99 Payment- Share Equivalent (from Program) (10,194,525.47) 12/31/99 Salary & Fringe 12,700.00 01/03/00 Aprea Mare- wire 50% to Note C 109,405.86 01/31/00 610 Park Ave 3,074.60 01/31/00 Salary & Fringe 11,641.66 01/31/00 Reclass- from AR 865,606.33 01/31/00 Reclass- from Note A 18,631,824.63 01/31/00 Reclass- from TME (FIT) 1,500,000.00 01/31/00 loan- KDM Salary 8,284.37 02/01/00 Payment Stock (14,344,076.48) 02/01/00 Various 1,739.10 02/28/00 Salary & Fringe 11,641.66 02/28/00 610 Park Ave. 6,819.70 03/31/00 610 Park Ave. 3,324.60 03/31/00 Various 11,641.66 04/01/00 Various (1,514.74) 04/24/00 Loan 1,000,000.00 04/30/00 610 Park Ave. 3,367.55 04/30/00 Various 11,641.66 05/31/00 610 Park Ave. 3,622.78 05/31/00 S Harrison Landscape 424.00 05/31/00 Tucker Associates 50,000.00 05/31/00 Salary & Fringe 11,641.66 06/06/00 Loan 2,000,000.00 06/16/00 Loan 350,000.00 06/30/00 Salary & Fringe 11,641.66 06/30/00 610 Park Ave. 3,373.10 07/01/00 NY Dept of Finance 40,959.81 07/07/00 Loan 4,000,000.00
25 KEL ACCOUNT L. DENNIS KOZLOWSKI OCTOBER 1, 1997 - JUNE 30, 2002
DATE DESCRIPTION PROGRAM NON-PROGRAM BALANCES ----- ----------- ------- ----------- --------- 07/11/00 Paul, Weiss Rifkind 200,000.00 07/21/00 Loan 2,000,000.00 07/31/00 610 Park Ave 3,436.58 07/31/00 Salary & Fringe 11,641.66 08/01/00 K. McRae Salary 12,700.00 08/01/00 Correct CIP Items 942,570.00 08/01/00 Correct CIP Items (118,100.00) 08/15/00 Loan 2,000,000.00 08/31/00 610 Park Ave. 3,431.96 08/31/00 Salary & Fringe 11,641.66 09/29/00 Payment- Wire (12,725,855.04) 09/30/00 Vesting 5,025,986.95 09/30/00 Payment (5,026,990.42) 09/30/00 610 Park Ave. 3,449.04 09/30/00 Reclass to Non- Program 1,003.47 (1,003.47) 09/30/00 Salary & Fringe 11,641.66 09/30/00 Balance 0.00 0.00 0.00 10/31/00 610 Park Ave. 133.96 10/31/00 Salary & Fringe 54,416.66 10/31/00 vesting 9,259,225.96 10/31/00 Loan- vesting (9,259,225.96) 11/01/00 vesting 2,467,490.63 11/01/00 loan-vesting (2,467,490.63) 11/01/00 Salary & Fringe 11,641.66 12/29/00 Cambridge University 1,000,000.00 12/31/00 Salary & Fringe 20,137.50 12/31/00 Salary & Fringe 20,137.50 12/31/00 Salary & Fringe 10,866.61 12/31/00 Salary & Fringe 40,246.70 01/01/01 Salary & Fringe 14,816.66 02/01/01 Salary & Fringe 12,700.00 03/01/01 Salary & Fringe 12,700.00 03/01/01 Reclass- K IV 933,736.47 03/01/01 Reclass- K IV 1,317,493.27 04/12/01 Loan 13,760,000.00 04/18/01 Loan 149,109.93 04/30/01 Salary & Fringe 12,700.00 05/01/01 Interest rolled into principal 209,858.78 05/18/01 Loan- wire 393,635.27 05/31/01 Salary & Fringe 12,700.00 05/31/01 Salary & Fringe and Adj (40,275.00) 06/07/01 Loan- wire 5,038,000.00 06/30/01 Salary & Fringe 12,700.00 07/10/01 Reclass and Adj-salary & fringe 10,855.00 07/10/01 Reclass and Adj- salary & fringe (11,558.35) 07/10/01 Reclass and Adj (42,775.00) 08/09/01 Payment- wire (8,219,650.00) 08/13/01 Payment - Sale Proceeds (292,175.00) 08/31/01 Reclass- from K IV to Tyco Sailing (2,644,865.01) 08/31/01 Reclass to AR- Interest (209,858.78)
26 KEL ACCOUNT L. DENNIS KOZLOWSKI OCTOBER 1, 1997 - JUNE 30, 2002
DATE DESCRIPTION PROGRAM NON-PROGRAM BALANCES ----- ----------- ------- ----------- --------- 08/31/01 Salary & Fringe- Ares ($65,024 less $95149.69) (30,125.69) 08/31/01 Salary & Fringe 8,163.75 09/27/01 Payment- Wire (includes interest) (10,286,175.00) 09/30/01 see jnl 9424 4/18/01; Wire K IV (149,109.93) 09/30/01 Other adjustments (130,048.00) 09/30/01 Adjust (133.96) 09/30/01 Reclass- Cambridge (1,000,000.00) 09/30/01 Balance 0.00 0.00 0.00 11/02/01 vesting 2,446,623.99 11/02/01 loan-vesting (2,446,623.99) 11/07/01 vesting 3,229,872.33 11/07/01 loan-vesting (3,229,872.33) 12/18/01 Loan- Wire 10,000,000.00 12/19/01 Richard Green (Fine Paintings) 8,800,000.00 01/03/02 Alexander Apsis Fine Art 3,950,000.00 01/10/02 Loan- Wire 3,500,000.00 01/22/02 Vesting 1,394,889.28 01/22/02 Payment (1,394,889.28) 01/22/02 Payment (6,709,539.03) 01/31/02 Reclass- Shakleton (700,000.00) JE to correct 8/99 entry 25,000,000.00 06/30/02 Balance $43,840,460.97 $43,840,460.97
RECAP OF ALL ACTIVITY
DATE DESCRIPTION PROGRAM NON-PROGRAM BALANCES ----- ----------- ------- ----------- --------- 10/01/97 Beginning Balance 0.00 $4,096,378.40 $4,096,378.40 Loans and reclassifications from other accounts $28,807,677.41 241,301,395.81 270,109,073.22 Payments and reclassifications to other accounts (28,807,677.41) (201,557,313.24) (230,364,990.65) 06/30/02 Final Balance 0.00 $43,840,460.97 $43,840,460.97
Because Mr. Kozlowski generally abandoned his investment in the Company by selling substantially all of his restricted shares when they vested (or shortly thereafter - thus violating both the spirit and the letter of the KEL program), all of his loans are now due and payable. As described above, Mr. Kozlowski was indicted on September 12, 2002 for using the KEL loan program as a vehicle for misappropriating millions of dollars from Tyco. Mr. Kozlowski's total principal outstanding balance under the KEL program (including adjustments for improperly classified loans), as of June 30, 2002, was approximately $43,841,000, plus accrued interest. MARK H. SWARTZ As Chief Financial Officer since 1995, a Tyco director since 2001, and signatory of Tyco's Proxy Statements, Mr. Swartz knew the authorized purpose for the KEL 27 program and of the limits on the amounts that could be borrowed under the program. Mr. Swartz was responsible for approving and monitoring the KEL loans of senior management, including Mr. Kozlowski's KEL loans. As such, he was aware of the nature and extent of Mr. Kozlowski's loans. As a Tyco director, Mr. Swartz was responsible for reporting any issues relating to those loans to the Compensation Committee. Mr. Swartz, like Mr. Kozlowski, borrowed millions in non-program loans. Like Mr. Kozlowski, Mr. Swartz used those unauthorized loans to purchase, develop and speculate in real estate; to fund investments in various business ventures and partnerships (including private ventures in which both he and Mr. Kozlowski used Tyco KEL loans to invest); and for miscellaneous personal uses having nothing to do with the ownership of Tyco stock. In general, Mr. Swartz's loans were for short duration and he generally reduced his indebtedness to zero each year. The following table sets forth each of Mr. Swartz's KEL loans, including the journal entry used to describe the purpose for which the money was used and the resulting total loan balance (including both authorized program uses and non-authorized non-program loans), during the Relevant Period. Balances after the date of August 31, 1999, reflect the effect of a $12.5 million unauthorized credit (discussed INFRA) that has been reversed by Tyco and all balances thereafter should be adjusted accordingly.
KEL ACCOUNT MARK H. SWARTZ OCTOBER 1, 1997 - JULY 18, 2002 DATE DESCRIPTION PROGRAM NON-PROGRAM BALANCES ---- ----------- ------- ----------- -------- 10/01/97 Balance $81,175.90 $81,175.90 01/30/98 WT MHS 50% Relo 50% KEL $400,000.00 04/14/98 MHS--taxes 3,000,000.00 05/12/98 Reloc/KEL Swartz 858,830.58 05/14/98 Loan--Vesting 1,601,703.04 07/15/98 Reclass MHS Items for KEL 6,677,872.11 07/15/98 Payment to KEL (34,365,398.96) 07/22/98 Repayment of FICA (81,175.90) 07/22/98 Payment--Shares (1,601,703.04) 07/24/98 Properly record W/T 23,428,696.00 07/31/98 Misc Adjustment 0.27 09/30/98 Balance 0.00 0.00 0.00 10/22/98 Vesting 10/22/98 Stock Sale 10/22/98 Vesting 10/22/98 Payment--Share Equivalent (1,538,914.26) 10/22/98 Loan-Vesting 895,285.53 10/22/98 Payment--Share Equivalent (895,285.53) 10/22/98 Loan--Refund Overpayment 1,538,914.26 04/13/99 Loan 4,300,000.00 04/19/99 Loan--Highland Beach 625,000.00 28 KEL ACCOUNT MARK H. SWARTZ OCTOBER 1, 1997 - JULY 18, 2002 DATE DESCRIPTION PROGRAM NON-PROGRAM BALANCES ---- ----------- ------- ----------- -------- 05/01/99 Loan-Fleet FBO GTMI 500,000.00 07/02/99 Loan-Siros Cap Ptrs. 1,000,000.00 07/19/99 Loan--MLPFS 10,000,000.00 07/19/99 Loan--KMS Family Trust 1999 500,000.00 08/01/99 R/C Salary/Fringe alloc K. McRae 10,318.74 08/01/99 Addison Construction--Highland Beach 50,000.00 08/17/99 GTMI LLC 500,000.00 08/23/99 Loan--Terrace Food Group 150,000.00 08/25/99 Loan--Terrace Food Group 100,000.00 08/31/99 Payment--Bonus (12,500,000.00) 09/03/99 Loan--Salary alloc. K. McRae 5,159.37 09/20/99 Loan 200,000.00 09/29/99 Payment (5,440,478.11) 09/30/99 GTMI LLC 500,000.00 09/30/99 Reclass to BOCA RELOC (500,000.00) 09/30/99 Balance 0.00 (0.00) (0.00) 10/01/99 Mandell, Weisman & Kirschner 285,000.00 11/01/99 Reclass to Note A (285,000.00) 01/31/00 Loan--loss aprea mare 109,405.85 01/31/00 Loan--KDM Salary 8,284.37 01/31/00 Loan 1,000,000.00 01/31/00 Payment--share equivalent (1,000,000.00) 01/31/00 Reclass (8,284.37) 09/11/00 Payment--wire (109,405.85) 09/30/00 Balance 0.00 (0.00) (0.00) 10/24/00 Vesting 4,629,612.97 11/01/00 Vesting 1,233,745.32 11/02/00 Payment--Share Repurchase (4,629,612.97) 11/02/00 Payment--Share Repurchase (1,233,745.32) 04/12/01 Loan 6,500,000.00 08/08/01 Payment--wire (4,109,825.00) 08/13/01 Payment--wire (146,087.50) 09/27/01 Payment--wire (2,244,087.50) 09/30/01 Balance 0.00 0.00 (0.00) 11/02/01 Vesting 1,368,072.57 11/02/01 Payment--wire (1,368,072.57) 11/07/01 Loan--Chase Manhattan 6,500,000.00 11/29/01 Loan 6,000,000.00 12/06/01 Payment--wire (6,000,000.00) 12/26/01 Loan 500,000.00 01/07/02 Vesting 1,617,559.80 01/09/02 Payment--wire (1,617,559.80) 06/10/02 Payment (includes interest) (7,000,000.00) 07/18/02 JE to correct 8/99 entry 12,500,000.00 07/18/02 JE to reverse 5/6/02 purchase of 30 E 85 St. (9,646,975.00) 07/18/02 Balance 2,853,025.00
29
RECAP OF ALL ACTIVITY --------------------- DATE DESCRIPTION PROGRAM NON-PROGRAM TOTAL ---- ----------- ------- ----------- ----- 10/01/97 Beginning Balance 0.00 $81,175.00 $81,175.00 Loans and reclassifications from other accounts $12,884,893.49 86,208,567.29 99,093,460.78 Payments and reclassifications to other accounts (12,884,893.49) (83,436,718.19) (96,321,611.68) 07/18/02 Final Balance 0.00 2,853,025.00 2,853,025.00
Mr. Swartz also generally abandoned his investment in the Company by selling substantially all of his restricted shares when they vested or shortly thereafter - thus violating both the spirit and the letter of the KEL program. As described above, Mr. Swartz was indicted on September 12, 2002 for conspiring with Mr. Kozlowski to use the KEL loan program as a vehicle for misappropriating millions of dollars from Tyco. Mr. Swartz's total principal outstanding balance under the KEL program (including adjustments for improperly classified loans), as of July 18, 2002 was approximately $2,853,025, plus accrued interest. OTHER EXECUTIVE OFFICERS. Following is a summary of KEL borrowing by other executive officers during the Relevant Period. MARK A. BELNICK. Mark Belnick borrowed a total of $8,603,218 under the KEL program during the Relevant Period. None of Mr. Belnick's KEL loans is outstanding. JERRY R. BOGGESS. Mr. Boggess borrowed a total of $4,461,645 under the KEL program during the Relevant Period. None of Mr. Boggess's outstanding loans is outstanding. NEIL R. GARVEY. Mr. Garvey borrowed a total of $1,342,572 under the KEL program during the Relevant Period. None of Mr. Garvey's KEL loans is outstanding. STEPHEN B. MCDONOUGH. Mr. McDonough borrowed a total of $675,767 under the KEL program during the Relevant Period, all of which was for authorized purposes. His current outstanding loan balance as of June 30, 2002 was $113,767. ROBERT MEAD. Mr. Mead borrowed various amounts under the KEL program during the Relevant Period, for authorized purposes. None of Mr. Mead's KEL loans is outstanding. RICHARD J. MEELIA. Mr. Meelia borrowed various amounts under the KEL program during the Relevant Period, all of which were for authorized purposes. None of Mr. Meelia's KEL loans is outstanding. The civil action against Mr. Kozlowski, noted above, seeks to recover the unpaid balances owed by Mr. Kozlowski, plus interest and costs, and all other expenses and costs incurred by the Company as a result of his approval of unauthorized loans. The Company is taking steps to recover any other unauthorized loan amounts, including 30 interest. Tyco is also currently evaluating the KEL program in light of the recent enactment of a prohibition upon loans by public companies to directors and executive officers. E. ATTEMPTED UNAUTHORIZED CREDITS TO KEY EMPLOYEE LOAN ACCOUNTS In August 1999, at Mr. Kozlowski's and Mr. Swartz's direction, entries were made in Tyco's KEL records that purported to reduce $25,000,000 of Mr. Kozlowski's outstanding KEL indebtedness, $12,500,000 of Mr. Swartz's KEL indebtedness, and $1,000,000 of the KEL indebtedness of another employee. This was done without the knowledge or approval of the Compensation Committee. Mr. Kozlowski, through his attorneys, has acknowledged to Tyco that he sought no approvals for these credits and that, if they were entered as a credit to his KEL account, it was done so improperly. Mr. Swartz was advised that the credit was unauthorized and has also agreed to repay his forgiven indebtedness with interest. Thus Tyco has reversed these unauthorized entries, after notice to investigating authorities. Tyco's civil action against Mr. Kozlowski includes claims to recover these amounts based upon these unapproved credits, with interest, and all related costs and expenses of these unauthorized transactions. Mr. Swartz has repaid most of his indebtedness and reduced his KEL balance to approximately $3 million. F. EXECUTIVE COMPENSATION Mark A. Belnick was hired as Tyco's Chief Corporate Counsel in August 1998. Mr. Kozlowski sent Mr. Belnick a letter confirming their agreement concerning employment and compensation. The letter described Mr. Belnick's cash compensation as "a base salary of $700,000 per year; a sign-on bonus of $300,000; a guarantee cash bonus of $1,500,000 the first year; $1,000,000 the second year; and $1,000,000 the third year, with his first bonus payable with the fiscal year end September 30, 1999." The letter also gave Mr. Belnick 100,000 restricted Tyco shares, vesting over three years, and 500,000 options, also vesting over three years. Mr. Kozlowski submitted this letter to Tyco's Human Resources department as the actual agreement of the parties. In fact, Messrs. Kozlowski and Belnick had secretly agreed to additional terms that tied Mr. Belnick's compensation to Mr. Kozlowski's compensation, thereby giving Mr. Belnick an undisclosed incentive to aid and facilitate Mr. Kozlowski's improper diversion of Company funds to Mr. Kozlowski's personal benefit. The undisclosed terms of Messrs. Kozlowski's and Belnick's agreement were incorporated in a letter - also dated August 19, 1998 and signed by Mr. Kozlowski - which Mr. Kozlowski did not disclose to the Tyco Board, the Board's Compensation Committee, or the Tyco Human Resources department. Mr. Belnick did, however, keep a copy of the undisclosed agreement in his personal office. The undisclosed version of Mr. Belnick's agreement with Mr. Kozlowski included a provision that Mr. Belnick's bonus would not be less than 31 1/3 of Mr. Kozlowski's bonus. The second version also included two additional paragraphs, which provided: You will also be entitled to participate in and benefit from (proportionate to your position) all existing and future benefit plans and programs that are available for senior executive officers of the Company. Accordingly, among other benefits, you will be entitled to participation in Tyco's relocation program to New York City, participation in the Company's 401(k) Plan, the use of a car and either a Company loan or a re-load of restricted shares in connection with your tax liability on the same of previously restricted shares. If for any reason the relationship does not work out to your or the Company's satisfaction and you leave the Company prior to September 30, 2001, the Company will pay you until then your base salary and guaranteed cash bonuses, less the sign-on bonus, (regardless of your income or earnings from other employment). You would also retain in full the sign-on bonus, restricted shares (whether or not still restricted) and your stock options. In April 2000, Mr. Kozlowski awarded Mr. Belnick 100,000 restricted shares of stock, with 50,000 shares vesting on September 30, 2000 and 50,000 shares vesting on September 30, 2001. In July 2000, Mr. Kozlowski awarded Mr. Belnick an additional cash bonus of $2 million, separate from and in addition to his agreed upon bonus (which Mr. Belnick now claimed was $2 million); along with an additional grant of 200,000 shares of restricted stock - all vesting one year later. None of this additional compensation was reported to, or approved by, the Board or its Compensation Committee. Adding the $4 million in bonuses to Mr. Belnick's base compensation made Mr. Belnick one of Tyco's four highest paid executive officers other than the chief executive officer. In fact, adding just the $2 million guaranteed bonus to Mr. Belnick's other compensation would have put him in that category. Tyco's proxy statement for fiscal 2000 did not disclose Mr. Belnick's compensation. In order to avoid disclosing his compensation, Mr. Belnick caused $1 million of the $2 million guaranteed bonus to be characterized as a special bonus, purportedly relating to a transaction with TyCom. As a result of this reclassification, $3 million of Mr. Belnick's bonuses was considered non-recurring and was thus excluded from the computation of Tyco's four highest paid executives, dropping Mr. Belnick out of that category. Mr. Belnick's actual compensation in 1999, 2000 and 2001 was as follows: 1999: $700,000 base salary; $1,500,000 guaranteed bonus; $179,990 in loan interest forgiveness; $3,388,258 in restricted stock vesting; and $1,906,799 in proceeds from the exercise of stock options (of a total of 1,000,000 options granted); total compensation (after adjustments for deferred compensation and other matters, but excluding unexercised stock options): $6,916,004 32 2000: $750,000 base salary; $2,000,000 guaranteed bonus (though $1,000,000 was re-classified as a "special bonus"); $2,000,000 in another "special bonus"; $231,445 in loan interest forgiveness; $197,485 in gross-up payments to compensate for taxes on the imputed income from his loan interest forgiveness; $6,035,803 in restricted stock vesting, and new options to purchase 200,000 shares of stock; total compensation (after adjustments for deferred compensation and other matters, but excluding unexercised stock options): $10,442,331 2001: $762,500 base salary; $50,000 in an undefined "special bonus"; $300,010 in loan interest forgiveness; $255,420 in gross-up payments to compensate for taxes on the imputed income from his loan interest forgiveness; $15,592,042 in restricted stock vesting; and more options to purchase 200,000 shares of stock; total compensation (after adjustments for deferred compensation and other matters, but excluding unexercised options): $16,973,344 Upon learning of the facts regarding Mr. Belnick's income, and his additional borrowing of over $14.4 million in zero-interest "relocation loans" for which he did not qualify (described above in Relocation Programs) and which were not approved by the Compensation Committee, and other misconduct, Tyco on June 17, 2002 filed a civil action against Mr. Belnick in the United States District Court for the Southern District of New York, TYCO INTERNATIONAL LTD. V. MARK A. BELNICK, No. 02-CV-4644 (SWK). That action asserts claims for breach of fiduciary duty and other wrongful conduct, and seeks damages in the form of recovery of unauthorized compensation, forfeiture of all compensation, consequential damages, a constructive trust, an accounting, and punitive damages. G. PERQUISITES During the Relevant Period, both Mr. Kozlowski and Mr. Swartz each received auto and aircraft perquisites from Tyco that, in the aggregate, exceeded $50,000 per year. The annual amounts for those years were as follows:
1998 1999 2000 2001 -------- -------- -------- -------- Kozlowski $52,667 $79,509 $113,822 $203,333 Swartz $59,977 $87,971 $83,913 $162,900
These perquisites were reported on their W-2s and required to be reported in a proxy to the extent they exceeded $50,000. However, these amounts were not reported in the proxy because Mr. Kozlowski and Mr. Swartz represented that they would reimburse the Company for amounts in excess of $50,000. However, in most cases Messrs. Kozlowski and Swartz failed to reimburse the Company for all perquisites in excess of $50,000. 33 In addition, Mr. Kozlowski caused Tyco to make available to him various properties that the Company owned for his purported business use. Tyco has now discovered that Mr. Kozlowski periodically made personal use of the following properties at the following times: 10 Runnymede, North Hampton, NH (post July 6, 2000); 471 East Alexander Palm Rd., Boca Raton, FL (from 1997 to 2001); 817 Fifth Avenue, NY, NY (from 1996 to 2001); 950 Fifth Avenue, NY, NY (from 2001 to 2002); 167 Little Harbor Rd., New Castle, NH (from 1995 to 2002). The value of these personal uses that had no colorable benefit to the Company was also not reported. In its civil action against Mr. Kozlowski, Tyco seeks to recover for all personal use of business properties. H. SELF-DEALING TRANSACTIONS AND OTHER MISUSES OF CORPORATE TRUST KOZLOWSKI EVIDENCE TAMPERING. At least for the last five years, Mr. Kozlowski has systematically abused his position and caused Tyco to expend funds for his personal benefit, which did not advance the Company's interest in any colorable way. For example, after his violation of the sales tax rules led to the service of a subpoena on the Company, he caused Tyco not to comply with a subpoena. Concerned only with protecting his wrongdoing from discovery, he tampered with evidence subject to a subpoena, and risked exposing the Company to an obstruction of justice claim. KOZLOWSKI BARGAIN SALE. Upon Mr. Kozlowski's instructions, a Tyco subsidiary purchased a cooperative apartment in New York City in November 1998 for $5,547,248 and made subsequent improvements to it. Without authorization from, or approval by, the Board or its Compensation Committee, Mr. Kozlowski purchased this property from the Tyco subsidiary in May 2000 at the depreciated book value of $7,011,669, rather than its then current market value. In its civil action against Mr. Kozlowski, Tyco seeks to recover for this bargain sale. OVERPAYMENT TO KOZLOWSKI. Without disclosure to, or approval by, the Board or its Compensation Committee, Mr. Kozlowski and others caused a Tyco subsidiary to purchase property in Rye, New Hampshire from Mr. Kozlowski on July 6, 2000 for approximately $4,500,000. After an appraisal in March 2002 valued the property at $1,500,000, Tyco wrote down the carrying value of the property to the appraised value and charged Mr. Kozlowski's $3,049,576 overpayment to expense. In its civil action against Mr. Kozlowski, Tyco seeks to recover this overpayment. KOZLOWSKI NON-LEGITIMATE BUSINESS EXPENSES. Mr. Kozlowski also used millions of dollars of Company funds to pay for his other personal interests and activities during the Relevant Period, including a $700,000 investment in the film "Endurance"; more than $1 million for an extravagant birthday party celebration for his wife in Sardinia; over $1 million in undocumented business expenses, including a private venture (West Indies Management - $134,113); jewelry ($72,042); clothing ($155,067); flowers ($96,943); club membership dues ($60,427); wine ($52,334); and an undocumented $110,000 charge for the purported corporate use of Mr. Kozlowski's personal yacht, "Endeavour." In its civil action against Mr. Kozlowski, Tyco seeks to recover for these improperly expensed reimbursements. 34 KOZLOWSKI CHARITABLE CONTRIBUTIONS FOR PERSONAL BENEFIT. Also during the Relevant Period, Mr. Kozlowski caused Tyco to make donations or pledges to charitable organizations totaling over $106 million. Of this total, at least $43 million in donations were represented in transmittal letters or otherwise as Mr. Kozlowski's personal donations, or were made using the Company's funds for Mr. Kozlowski's personal benefit. Mr. Kozlowski's letters accompanying these donations or pledges often indicated that they were made "on behalf of L. Dennis Kozlowski," such as a 1997 pledge to Seton Hall University that enclosed a $1 million Tyco check with a letter signed by Mr. Kozlowski that referred to "my pledge to Seton Hall University." Mr. Kozlowski made two other million-dollar pledges to schools under his own name but using Tyco funds, and made several other pledges that were publicly announced as being from Mr. Kozlowski, or in which a facility was named after him or his family, even though he had used Tyco's money to make the pledge. Most egregiously, in 2001 Mr. Kozlowski donated to the Nantucket Conservation Foundation, Inc. a total of $1,300,000 in Company money. The donation was used partially to purchase 60 acres of property called "Squam Swamp" adjacent to Mr. Kozlowski's own Nantucket estate on Squam Road. The effect of this gift was to preclude future development of the land and thereby increase the value of Mr. Kozlowski's home. In its civil action against Mr. Kozlowski, Tyco seeks to recover from Mr. Kozlowski for the personal benefit he received from these contributions. WALSH PAYMENT. In early 2001, Frank E. Walsh, Jr., Tyco's Lead Director and the former Chairman of its Compensation Committee, recommended to the Board that Tyco acquire a financial services company, and later proposed that he introduce Mr. Kozlowski to the Chairman and CEO of The CIT Group, a large financial services company. Subsequent negotiations led to an agreement for Tyco to acquire CIT, which closed in June 2001. After the terms of the CIT transaction had been agreed to, Mr. Kozlowski caused Tyco to pay to and for the benefit of Mr. Walsh a $20 million fee for his role in the transaction. Mr. Kozlowski told Mr. Walsh, and Mr. Walsh agreed, that they should conceal this payment from the Board. None of Tyco's directors (other than Messrs. Kozlowski, Swartz and Walsh) was aware of the Mr. Walsh payment until early January 2002, at which time they confronted Mr. Kozlowski and Mr. Walsh and demanded that the money be returned immediately. Mr. Walsh refused, was not renominated for election to the Board, and his term expired as of the 2002 annual meeting. The Board never ratified the Walsh payment, then or later. Rather, it began a review of executive compensation and Kozlowski's conduct that culminated in the retention of the Boies Firm as special counsel for the Company to bring claims against Mr. Walsh seeking to recover the improper fee. SWARTZ BREACH OF NOMINEE AGREEMENT. Since April 2000, Mr. Swartz has lived in a Tyco-owned apartment at 30 E. 85th Street, New York. On May 6, 2002, he caused the 35 Company to enter a notation in its books and records purporting to transfer title to that apartment, including fixtures and furniture, to himself at its depreciated book value of $9,646,975, which Swartz paid in cash. No appraisal was performed in connection with this transfer. The transaction was not authorized, and on July 18, 2002 Mr. Swartz agreed to reverse that transaction. Title to the apartment was never conveyed to Mr. Swartz, and Tyco continues to hold title to the apartment. Swartz's KEL account has been credited $9,646,975 to reflect this reversal. SWARTZ PERSONAL EXPENSE REIMBURSEMENT. On March 1, 2002, without approval by the Compensation Committee or the Board, Mr. Swartz caused Tyco to pay him a reimbursement of $1.2 million to cover lost deposits on personal real estate transactions involving apartments in Trump Tower on 5th Avenue in New York. Tyco will seek to recover this improper reimbursement in arbitration. COMPENSATION COMMITTEE DECEPTIONS. On June 22, 2001, Tyco acquired 15 million shares of Flag, a telecom company for $11,421,810 cash and 5,580,647 TyCom shares. The Company reported a $79,364,700 gain associated with the swap of TyCom shares for the Flag equity. As a result of the gain, purportedly as another bonus, accelerated vestings of restricted shares were made to various key individuals.(1) Each of the executives involved in the grant of restricted shares sold the shares back to the Company's Newington subsidiary on June 20, 2001 and received wire transfers to their personal accounts in the amounts indicated in the note below, justified on the basis that the transaction resulted in a $79 million gain to TyCom. The Compensation Committee approved and certified the vesting of 290,000 shares for Messrs. Kozlowski and Swartz only on October 1, 2001 "in conjunction with the gain . . ." on the Flag transaction. The total cost to the Company related to the award of these shares was $15,378,700. However, by the end of the quarter (September 30, 2001) and prior to the October 1, 2001 certification by the Compensation Committee, the value of the Flag stock decreased substantially, to the point that it was impaired, thus undermining the basis on which the special bonus vesting was approved. Neither Messrs. Kozlowski nor Swartz, who were both members of the Board of Directors during this time period, ever disclosed this impairment or the full circumstances of the Flag transaction to the Compensation Committee. Their entitlement to these bonuses was predicated upon a failure to disclose relevant facts for their own personal benefit. Other examples of self-dealing and serious breaches of fiduciary duties owed to Tyco by Mr. Kozlowski, in particular his deceptions to the Compensation Committee resulting in the accelerated vesting of his own and other executives' shares of restricted stock and his entitlement to executive benefits, are the subject of litigation in Tyco's civil suit against Mr. Kozlowski and are detailed in that complaint. TYCO INTERNATIONAL LTD. AND - ------------- (1) Kozlowski (155,000 shares with a vesting value of $8,219,650); Swartz (77,500 shares with a vesting value of $4,109,825); Foley, Prue, Robinson, and Stevenson (each received 13,500 shares with vesting values of $715,905 each); and MacKay (3,500 shares with a vesting value of $185,605) for an aggregate cost of $15,378,700. 36 TYCO INTERNATIONAL (US) INC. V. L. DENNIS KOZLOWSKI, No. 02-CV-7317 (TPG), attached as Exhibit 99.8 to this report. Messrs. Kozlowski's and Swartz's failure to inform the Board of their own, or each other's, acts of self dealing was a breach of their fiduciary duties both as members of the Board and executives of the Company. I. INFORMATION CONCERNING OTHER TRANSACTIONS BETWEEN TYCO AND ITS DIRECTORS In August 1999, Tyco sold assets from its flow control products division to DLJ Merchant Banking Partners II, an investment partnership in which John F. Fort III, a Tyco director, was an equity investor. Mr. Fort disclosed his interest in the prospective purchaser at the time, recused himself and did not participate in the negotiation of this transaction, and abstained from voting on the transaction when Tyco's Board of Directors approved it. Mr. Fort's equity interest in the investment partnership was considerably less than ten per cent. Following the Tyco/ADT merger in 1997, Lord Ashcroft KCMG, a Tyco director and the former Chief Executive Officer of ADT, offered for sale his residential property in Boca Raton, Florida. Mr. Kozlowski, who was then contemplating a move to Boca Raton negotiated to buy Lord Ashcroft's property. A sale of the property was consummated on October 24, 1997 for $2.5 million. Lord Ashcroft has advised the Company that he understood at the time that he was selling the property to Mr. Kozlowski, and did not know until more than two years later that the purchaser of the property was a Tyco subsidiary, ADT. Upon learning of the true identity of the purchaser, Lord Ashcroft inquired of Tyco's management, CFO Mark Swartz, whether the transaction should be disclosed in the Company's proxy and Mr. Swartz informed him that because Tyco explored competitive alternatives prior to purchasing his property, it did not consider the transaction reportable. Tax records confirm that the property was sold for at or near fair market value. In April 1996, John F. Fort III sold to Mr. Kozlowski a property at 59 Harbor Road, Rye, New Hampshire where Mr. Fort had resided while CEO of Tyco. Immediately prior to the closing in April 1996, Mr. Fort was notified that the actual purchaser would be the GV Realty Trust, which Mr. Kozlowski represented as his own realty trust in which he was the sole beneficiary. Although GV Realty Trust was owned by Mr. Kozlowski, he caused Tyco to book the purchase to a general ledger Tyco account. However, before the end of the year, the entry was reversed and transferred to Mr. Kozlowski's personal KEL loan account, thereby becoming a transaction that did not involve the Company. During the Relevant Period, Stockwood, Inc., in which Frank E. Walsh, Jr., a Tyco director until February 2002, has a controlling interest, leased an aircraft to the Company during the period 1996 to 2002. Stockwood, Inc. submitted and was paid for invoices totaling $2,490,319 for that lease. Stockwood VII, Inc., in which Mr. Walsh also has a controlling interest, provided pilot services to the Company. For the period 1996 to 2002, Stockwood VII, Inc. submitted and was paid for invoices totaling $1,077,071. The 37 Company entered into each of these arrangements after seeking competitive bids. The agreement was renewed annually to October 31, 2000. A second lease arrangement was entered into from January 2001 and terminated February 2002. In May 2001, after seeking competitive bids, Tyco entered into a two-year lease agreement with Stephen Foss, a Tyco director, to lease a Cessna Citation aircraft for a minimum monthly lease payment of $38,000 for 20 hours of flight time. For the period May 2001 to May 2002, Tyco paid Mr. Foss a total of $570,000. N.H. Helicopters, Inc., of which Mr. Foss is the president, also provided pilot services to Tyco pursuant to a two-year agreement commencing on the same date. For the period May 2001 to May 2002, Tyco paid N. H. Helicopters a total of $181,101.24. On July 5, 2002, both agreements were amended to terminate on September 30, 2002. As set forth in Exhibit 10.4 to Tyco's Quarterly Report Form 10-Q for the period ended June 30, 2002, Joshua M. Berman, a non-independent Tyco director, had until February 29, 2000 been affiliated with a law firm that served as outside counsel to Tyco. From March 1, 2000 to July 31, 2002 Mr. Berman was employed directly by Tyco to render legal, regulatory and other professional services. His compensation was at a rate of $360,000 per year, without benefits (other than health benefits), and was in addition to normal director's fees. Although the Company did not provide a Form W-2 to Mr. Berman or the Internal Revenue Service, during this period Mr. Berman was an employee of Tyco, as defined by Internal Revenue Code, Section 31.3121(d)-1. As set forth in Exhibit 10.3 to Tyco's Quarterly Report Form 10-Q for the period ended June 30, 2002, John F. Fort III, a non-independent Tyco director, acted as Tyco's Primary Executive Officer with all the power of a chief executive officer from June 1, 2002 until the appointment of the new Chief Executive Officer, Edward D. Breen, on July 25, 2002. During this period, Mr. Fort's compensation was $150,000 per month, without benefits, and he will continue to receive this amount until the new Chief Executive Officer determines that a transition is complete. This compensation includes transportation expenses and other normal and customary expenses, as well as reimbursement for New York taxes. Mr. Fort's compensation does not include any fringe benefits. ITEM 7. FINANCIAL STATEMENT AND EXHIBITS (c) Exhibits 99.1 Press Release of Tyco International Ltd., dated August 6, 2002. The appointment of John A. Krol, former Chairman and CEO of E. I. DuPont, to the Board of Directors. 99.2 Press Release of Tyco International Ltd., dated August 6, 2002. The appointment of Eric M. Pillmore as Senior Vice President of Corporate Governance. 38 99.3 Press Release of Tyco International Ltd., dated September 11, 2002. The appointment of David J. FitzPatrick as Executive Vice President and Chief Financial Officer. 99.4 Press Release of Tyco International Ltd., dated September 12, 2002. The appointment of William B. Lytton as Executive Vice President and General Counsel. 99.5 Press Release of Tyco International Ltd., dated September 12, 2002. The nomination of Jerome B. York, Mackey J. McDonald, George W. Buckley, Bruce S. Gordon, and Sandra Wijnberg to fill expected vacancies. 99.6 Tyco's Complaint in Tyco International Ltd. v. Frank E. Walsh, Jr., No. 02-CV-4633 (DLC). 99.7 Tyco's Complaint in Tyco International Ltd. v. Mark A. Belnick, No. 02-CV-4644 (SWK). 99.8 Tyco's Complaint in TYCO INTERNATIONAL LTD. AND TYCO INTERNATIONAL (US) INC. V. L. DENNIS KOZLOWSKI, No. 01-CV-7317 (TPG). SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. TYCO INTERNATIONAL LTD. By: /s/ Edward D. Breen --------------------------------- Edward D. Breen President and Chief Executive Officer Dated: September 17, 2002 39 EXHIBIT INDEX EXHIBIT NUMBER DESCRIPTION - ------- ------------------- 99.1 Press Release of Tyco International Ltd., dated August 6, 2002. The appointment of John A. Krol, former Chairman and CEO of E. I. DuPont, to the Board of Directors. 99.2 Press Release of Tyco International Ltd., dated August 6, 2002. The appointment of Eric M. Pillmore as Senior Vice President of Corporate Governance. 99.3 Press Release of Tyco International Ltd., dated September 11, 2002. The appointment of David J. FitzPatrick as Executive Vice President and Chief Financial Officer. 99.4 Press Release of Tyco International Ltd., dated September 12, 2002. The appointment of William B. Lytton as Executive Vice President and General Counsel. 99.5 Press Release of Tyco International Ltd., dated September 12, 2002. The nomination of Jerome B. York, Mackey J. McDonald, George W. Buckley, Bruce S. Gordon, and Sandra Wijnberg to fill expected vacancies. 99.6 Tyco's Complaint in TYCO INTERNATIONAL LTD. V. FRANK E. WALSH, JR., No. 02-CV-4633)(DLC). 99.7 Tyco's Complaint in TYCO INTERNATIONAL LTD. V. MARK A. BELNICK, No. 02-CV-4644 (SWK). 99.8 Tyco's Complaint in Tyco International Ltd. and Tyco International (US) Inc. v. L. Dennis Kozlowski, No. 02-CV-7317 (TPG). EX-99.1 3 a2089398zex-99_1.txt EXHIBIT 99.1 EXHIBIT 99.1 FOR IMMEDIATE RELEASE TYCO APPOINTS JOHN A. KROL, FORMER CHAIRMAN AND CEO OF E.I. DUPONT, TO BOARD OF DIRECTORS PEMBROKE, BERMUDA - AUGUST 6, 2002 - Tyco International Ltd. (NYSE - TYC, BSX-TYC, LSE-TYI) today announced that the Company has appointed John A. Krol, the former Chairman and Chief Executive of E.I. du Pont de Nemours & Company, to Tyco's Board of Directors. Ed Breen, the newly appointed Chairman and CEO of Tyco, said, "Jack Krol personifies the highest standards of corporate leadership. He has an international reputation not only for his intellect and business skills but also for his honesty and integrity. I have committed Tyco to establishing the best corporate governance practices, while also building our businesses for our shareholders, employees and customers. As a new member of our Board of Directors and a valued advisor to me and our management team, Jack Krol will be a key figure in helping achieve both of those goals. I have the greatest respect and admiration for Jack's many accomplishments over the years and welcome him to the Board." Mr. Krol, 65, joined E.I. du Pont de Nemours & Company in 1963 as a chemist, working his way up through the company to senior management positions, and was appointed Vice Chairman of the company in 1992 and Chairman and CEO in 1998. E.I. du Pont Nemours is a global research and technology-based company serving worldwide markets, including food and nutrition, health care, agriculture, fashion and apparel, home and construction, electronics and transportation. Mr. Krol also serves on the Board of Directors for Ace Ltd., Armstrong Holdings, Inc., MeadWestvaco Corporation, Milliken & Company and Molecular Circuitry, Inc. ABOUT TYCO INTERNATIONAL LTD. Tyco International Ltd. is a diversified manufacturing and service company. Tyco is the world's largest manufacturer and servicer of electrical and electronic components; the world's largest designer, manufacturer, installer and servicer of undersea telecommunications systems; the world's largest manufacturer, installer and provider of fire protection systems and electronic security services; and the world's largest manufacturer of specialty valves. Tyco also holds strong leadership positions in disposable medical products and plastics and adhesives. Tyco operates in more than 100 countries and had fiscal 2001 revenues from continuing operations of approximately $34 billion. FORWARD LOOKING STATEMENTS This release contains certain "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to risks, uncertainty and changes in circumstances, which may cause actual results, performance or achievements to differ materially 99.1-1 from anticipated results, performance or achievements. All statements contained herein that are not clearly historical in nature are forward looking and the words "anticipate," "believe," "expect," "estimate," "plan," and similar expressions are generally intended to identify forward-looking statements. The forward-looking statements in this release include statements addressing the following subjects: future financial condition and operating results. Economic, business, competitive and/or regulatory factors affecting Tyco's businesses are examples of factors, among others, that could cause actual results to differ materially from those described in the forward-looking statements. More detailed information about these and other factors is set forth in Tyco's Annual Report on Form 10-K for the fiscal year ended September 30, 2001, and in Tyco's Quarterly Report on Form 10-Q, as amended, for the quarter ended March 31, 2002. Tyco is under no obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise. # # # Contact: Walter Montgomery (Media) 212-424-1314 Kathy Manning (Investors) 603-778-9700 99.1-2 EX-99.2 4 a2089398zex-99_2.txt EXHIBIT 99.2 EXHIBIT 99.2 FOR IMMEDIATE RELEASE TYCO APPOINTS ERIC M. PILLMORE SENIOR VICE PRESIDENT OF CORPORATE GOVERNANCE PILLMORE HAD CLOSE WORKING TIES WITH CEO BREEN AT GENERAL INSTRUMENT AND 17 YEARS EXPERIENCE IN FINANCE AND AUDIT AT GENERAL ELECTRIC PEMBROKE, BERMUDA - AUGUST 6, 2002 - Tyco International Ltd. (NYSE - TYC, BSX-TYC, LSE-TYI) today announced that the Company has appointed Eric M. Pillmore to the newly created position of Senior Vice President of Corporate Governance, effective immediately. Mr. Pillmore has been serving as the Senior Vice President, CFO and Secretary of Multilink Technology Corporation. Ed Breen, newly appointed Chairman and Chief Executive Officer of Tyco, said, "I have made an absolute commitment to establishing the highest standards of corporate governance in every aspect of this company's financial reporting, operations and management. The appointment of Eric to the new position of Senior Vice President of Corporate Governance underscores that commitment. His two decades of experience in key financial and audit positions, primarily with General Electric and General Instrument, have provided him with a very sophisticated understanding of a wide variety of governance, financial and management issues. Eric's credentials for the job are impeccable and he has a well-earned reputation for integrity, precision and diligence in all that he does." Mr. Breen continued, "I worked closely with Eric at General Instrument, where he was my CFO. From my own personal experience with his uncompromising professionalism, I know Eric is the ideal person to be Tyco's senior corporate governance officer and an integral member of the team that will lead this Company forward." Mr. Pillmore said, "I am thrilled to be joining the Tyco leadership team. This company has a solid foundation of operating businesses, and my new job presents a tremendous opportunity to work with Ed and all the people of Tyco to build on its many strengths and realize its true potential. In particular, I am very excited about the opportunity to help Tyco establish the highest standards of corporate governance and ethics." Mr. Pillmore added, "In the coming weeks, I will be working closely with Ed and the rest of his team to develop a specific action plan to address Tyco's top priorities: restoring confidence in the Company with our employees, suppliers, customers and the financial community; enhancing and strengthening the core businesses; ensuring that we have the highest standards of corporate governance in place; and creating value for shareholders." Mr. Pillmore has been serving as the Senior Vice President, Chief Financial Officer and Secretary of Multilink Technology Corporation since July 2000. Multilink is a leading provider of advanced semiconductor based components, modules and higher-level assemblies for use in 99.2-1 high-speed optical networks. Mr. Pillmore also has been Chief Financial Officer and Vice President of Finance and Administration for McData Corporation and Senior Vice President of Finance and Director for the Broadband Communications Sector of Motorola Corporation, the successor by acquisition to General Instrument Corporation, or GI. Mr. Pillmore worked for GI from 1996 to 2000, ultimately holding the position of Senior Vice President of Finance and Chief Financial Officer. From January 1994 to February 1996, he was Manager of Finance for the Plastics Americas Division of General Electric Company. Prior to that, he served as Manager of Finance for GE Medical Systems Asia, Ltd., as well as Director of Finance for GE/Yokogawa Medical Systems, Ltd. He had worked in various financial positions for GE since 1979, including six years as GE Corporate Auditor from 1981 to 1987. Pillmore is a 1975 graduate of the University of New Mexico, Albuquerque, NM, with a BBA from the Andersen School of Business. He has been married to his wife Pamela for 23 years and they have five children. Mr. Pillmore currently resides in Doylestown, PA. ABOUT TYCO INTERNATIONAL LTD. Tyco International Ltd. is a diversified manufacturing and service company. Tyco is the world's largest manufacturer and servicer of electrical and electronic components; the world's largest designer, manufacturer, installer and servicer of undersea telecommunications systems; the world's largest manufacturer, installer and provider of fire protection systems and electronic security services; and the world's largest manufacturer of specialty valves. Tyco also holds strong leadership positions in disposable medical products and plastics and adhesives. Tyco operates in more than 100 countries and had fiscal 2001 revenues from continuing operations of approximately $34 billion. FORWARD LOOKING STATEMENTS This release contains certain "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to risks, uncertainty and changes in circumstances, which may cause actual results, performance or achievements to differ materially from anticipated results, performance or achievements. All statements contained herein that are not clearly historical in nature are forward looking and the words "anticipate," "believe," "expect," "estimate," "plan," and similar expressions are generally intended to identify forward-looking statements. The forward-looking statements in this release include statements addressing the following subjects: future financial condition and operating results. Economic, business, competitive and/or regulatory factors affecting Tyco's businesses are examples of factors, among others, that could cause actual results to differ materially from those described in the forward-looking statements. 99.2-2 More detailed information about these and other factors is set forth in Tyco's Annual Report on Form 10-K for the fiscal year ended September 30, 2001, and in Tyco's Quarterly Report on Form 10-Q, as amended, for the quarter ended March 31, 2002. Tyco is under no obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise. Contact: Walter Montgomery 212-424-1314 Kathy Manning (Investors) 603-778-9700 99.2-3 EX-99.3 5 a2089398zex-99_3.txt EXHIBIT 99.3 EXHIBIT 99.3 TYCO APPOINTS DAVID J. FITZPATRICK AS EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER FORMER CFO OF UNITED TECHNOLOGIES OFFERS MORE THAN TWO DECADES OF FINANCIAL EXPERIENCE AT LEADING COMPANIES PEMBROKE, BERMUDA - SEPTEMBER 11, 2002 - Tyco International Ltd. (NYSE - TYC, BSX-TYC, LSE-TYI) today announced that David J. FitzPatrick has been appointed Executive Vice President and Chief Financial Officer for the company. Mr. FitzPatrick joins Tyco from United Technologies Corporation, where he has been Senior Vice President and Chief Financial Officer since 1998. Edward D. Breen, Chairman and Chief Executive Officer of Tyco, said, "One of my highest priorities is building an exceptionally capable management team that will bring top talent and experience to the challenges and opportunities we face at Tyco. Dave FitzPatrick is a world-class executive with exceptional credibility in the financial community and I am extremely pleased that he is joining the new team at Tyco. His experience and accomplishments at United Technologies and earlier at Kodak and General Motors are right on target for the needs here. Dave's respect and reputation among the financial community for uncompromising integrity, and his overall grasp of financial and business issues, are strengths that I value highly. He is a perfect fit for Tyco." Mr. FitzPatrick said, "Tyco represents a tremendous opportunity for me. The company's operating businesses are familiar to me and playing a role in maximizing value with Ed Breen and his management team is a great professional challenge. Ed's commitment to building a strong management team dedicated to the highest standards of corporate governance was a prerequisite. Tyco faces significant challenges, yet I am confident we will meet them while serving the interests of investors, customers and employees." Mr. FitzPatrick's appointment is effective immediately. He succeeds Mark Swartz, who, as previously reported, has resigned from the company. Mr. FitzPatrick has served as Senior Vice President and Chief Financial Officer for United Technologies Corp. since June 1998. United Technologies Corp. (UTC) is a global leader of building systems and aerospace products. Carrier, Otis, Pratt & Whitney, Hamilton Sundstrand, and Sikorsky are among its well-known subsidiaries. Earlier, Mr. FitzPatrick was Vice President and Corporate Controller for Eastman Kodak Company. He also enjoyed an 18-year career with the General Motors Corporation, culminating with his responsibilities as Chief Financial Officer, Cadillac Luxury Car Division. 99.3-1 Mr. FitzPatrick graduated from the J.L. Kellogg School at Northwestern University with a master's degree in management. He also holds a bachelor's degree in accounting from the University of Illinois, where he graduated with high honors. ABOUT TYCO INTERNATIONAL LTD. Tyco International Ltd. is a diversified manufacturing and service company. Tyco is the world's largest manufacturer and servicer of electrical and electronic components; the world's largest designer, manufacturer, installer and servicer of undersea telecommunications systems; the world's largest manufacturer, installer and provider of fire protection systems and electronic security services and the world's largest manufacturer of specialty valves. Tyco also holds strong leadership positions in medical device products, and plastics and adhesives. Tyco operates in more than 100 countries and had fiscal 2001 revenues from continuing operations of approximately $34 billion. FORWARD LOOKING STATEMENTS This release may contain certain "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to risks, uncertainty and changes in circumstances, which may cause actual results, performance or achievements to differ materially from anticipated results, performance or achievements. All statements contained herein that are not clearly historical in nature are forward looking and the words "anticipate," "believe," "expect," "estimate," "plan," and similar expressions are generally intended to identify forward-looking statements. The forward-looking statements in this release include statements addressing the following subjects: future financial condition and operating results. Economic, business, competitive and/or regulatory factors affecting Tyco's businesses are examples of factors, among others, that could cause actual results to differ materially from those described in the forward-looking statements. More detailed information about these and other factors is set forth in Tyco's Annual Report on Form 10-K for the fiscal year ended September 30, 2001, and in Tyco's Quarterly Report on Form 10-Q, for the quarter ended June 30, 2002. Tyco is under no obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise. # # # Contact: Gary Holmes (Media) 212-424-1314 Kathy Manning (Investors) 603-778-9700 99.3-2 EX-99.4 6 a2089398zex-99_4.txt EXHIBIT 99.4 EXHIBIT 99.4 FOR IMMEDIATE RELEASE TYCO APPOINTS WILLIAM B. LYTTON EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL FORMER SVP AND GENERAL COUNSEL AT INTERNATIONAL PAPER BRINGS TO TYCO WIDE RANGE CORPORATE AND GOVERNMENT EXPERIENCE PEMBROKE, BERMUDA - SEPTEMBER 12, 2002 - Tyco International Ltd. (NYSE - TYC, BSX - TYC, LSE - TYI) today announced that William B. Lytton has been appointed Executive Vice President and General Counsel for the company. Mr. Lytton has a wide range of experience as a corporate counsel at major industrial companies and most recently served as Senior Vice President and General Counsel for International Paper Company. Mr. Lytton is also a former federal prosecutor who served eight and a half years in Chicago and Philadelphia. Tyco's Chairman and Chief Executive Officer, Edward D. Breen, said, "To fulfill its potential as a great company, Tyco must have the best possible management team. In choosing a General Counsel for Tyco, I wanted a person with outstanding credentials as a corporate counsel and an impeccable reputation for personal integrity. Bill clearly fulfills both criteria. He is a man who can be trusted to make the right decisions on the challenges and opportunities facing the company, and he will play a vital role in helping us to establish and maintain the best practices of corporate governance. I'm very pleased that he is now part of the team we are building for the future." Mr. Lytton said, "I'm very excited to be joining Ed Breen and his new team at this critical juncture in Tyco's history. I share Ed's commitment to establishing the highest standards of corporate governance and integrity at Tyco. This is a company with many strengths and opportunities. I look forward to working with the people throughout the organization to help Tyco realize its full potential." Mr. Lytton succeeds Irving Gutin, who had been asked to assume the role of General Counsel in June on a temporary basis. Mr. Gutin is retiring after more than 28 years of service to Tyco. Mr. Lytton has served as Senior Vice President and General Counsel for International Paper, the world's largest forest-products company, since 1999. Mr. Lytton began his tenure with the company in 1996, as vice president and general counsel. Previously, Mr. Lytton held general counsel positions at operating divisions of Lockheed Martin and Martin Marietta, as well as at GE Aerospace. He has worked throughout federal government, including an assignment as deputy special counselor to President Ronald Reagan in 1987. 99.4-1 Mr. Lytton received his undergraduate degree from Georgetown University in 1970 and a law degree from American University in 1973. He is chair of the American Corporate Counsel Association's board of directors and a member of the Washington, DC, and Pennsylvania Bars. ABOUT TYCO INTERNATIONAL LTD. Tyco International Ltd. is a diversified manufacturing and service company. Tyco is the world's largest manufacturer and servicer of electrical and electronic components; the world's largest designer, manufacturer, installer and servicer of undersea telecommunications systems; the world's largest manufacturer, installer and provider of fire protection systems and electronic security services and the world's largest manufacturer of specialty valves. Tyco also holds strong leadership positions in medical device products, and plastics and adhesives. Tyco operates in more than 100 countries and had fiscal 2001 revenues from continuing operations of approximately $34 billion. FORWARD LOOKING STATEMENTS This release may contain certain "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to risks, uncertainty and changes in circumstances, which may cause actual results, performance or achievements to differ materially from anticipated results, performance or achievements. All statements contained herein that are not clearly historical in nature are forward looking and the words "anticipate," "believe," "expect," "estimate," "plan," and similar expressions are generally intended to identify forward-looking statements. The forward-looking statements in this release include statements addressing the following subjects: future financial condition and operating results. Economic, business, competitive and/or regulatory factors affecting Tyco's businesses are examples of factors, among others, that could cause actual results to differ materially from those described in the forward-looking statements. More detailed information about these and other factors is set forth in Tyco's Annual Report on Form 10-K for the fiscal year ended September 30, 2001, and in Tyco's Quarterly Report on Form 10-Q, for the quarter ended June 30, 2002. Tyco is under no obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise. # # # Contact: Gary Holmes (Media) 212-424-1314 Kathy Manning (Investors) 603-778-9700 99.4-2 EX-99.5 7 a2089398zex-99_5.txt EXHIBIT 99.5 EXHIBIT 99.5 FOR IMMEDIATE RELEASE TYCO BOARD NOMINATES FIVE BUSINESS LEADERS TO FILL EXPECTED VACANCIES NEW NOMINEES ARE JEROME B. YORK, MACKEY J. MCDONALD, GEORGE W. BUCKLEY, BRUCE S. GORDON, SANDRA WIJNBERG PEMBROKE, BERMUDA - SEPTEMBER 12, 2002 - Tyco International Ltd. (NYSE - TYC, BSX - TYC, LSE - TYI) announced that its Board of Directors today passed a resolution nominating five leading figures in the business community to fill expected vacancies on the Board. The Board also voted not to nominate or support for re-election at the Company's 2003 annual meeting any of the nine current members of the Board who were members of the Board prior to July of this year. The Board also elected a new lead outside director. The company said it expects some vacancies to occur on the Board through resignations before the next annual meeting. As vacancies occur before and at the annual meeting, the nominees announced today will be among those to fill such vacancies. Of the current directors, only Chairman and CEO Ed Breen and Jack Krol will be nominated and supported for re-election. The company also announced that Mr. Krol, the former Chairman and Chief Executive of E.I. du Pont de Nemours & Company, who was appointed to the Board as an independent director in August, has also been elected Chairman of the Board's Corporate Governance and Nominating Committee and the Company's lead outside director. "The Board recognizes the need for new independent directors who will bring a wide range of perspectives to Tyco, and today's action is a significant step toward meeting that goal," said Mr. Breen. "The five individuals nominated today are highly respected and experienced business leaders who will help set the strategic vision for this company and ensure that we adhere to the highest standards of corporate governance. They are people of extraordinary wisdom, integrity and judgment, and I look forward to working closely with them. The fact that Tyco was able to attract such outstanding leaders in the business community is solid testimony to the underlying strength and potential of this company." Mr. Breen added, "I appreciate Jack Krol taking on the leadership of the Board's Corporate Governance and Nominating Committee. In the brief period he has been a director, he has played a very active and constructive role in helping us to address governance issues and identify candidates for the Board." Mr. Breen also stated: "I want to thank the current members of the Board for their service to the company and their support for the actions I have been taking since coming to Tyco. During a 99.5-1 very difficult time, they have acted quickly and diligently to address the issues facing the company." Michael Useem, Director of the Wharton School Center for Leadership and Change Management and an advisor to Tyco on corporate governance and leadership issues, said: "I believe Tyco has done an impressive job of selecting new nominees for its Board. They represent many years of high-level business experience in diverse industries. They have demonstrated the ability to lead through good times and bad and have strong reputations for independence and integrity." The nominees and the order in which they are to be appointed to the Board are: - Jerome York - Mr. York is the Chairman, President and CEO of Micro Warehouse, Inc., a seller of computer products through catalogs, the Internet, and telemarketers. Micro Warehouse offers more than 30,000 items and distributes more than 120 million catalogs worldwide each year. Before Mr. York joined Micro Warehouse he was the Vice Chairman of Tracinda Corporation from 1995 to 1999, Chief Financial Officer of IBM Corporation from 1993 to 1995 and held various positions at Chrysler Corporations from 1979 to 1993. Mr. York graduated from the United States Military Academy, and received an M.S. from the Massachusetts Institute of Technology and an M.B.A. from the University of Michigan. - Mackey McDonald - Mr. McDonald serves as the Chairman, President and CEO of VF Corporation. A designer, manufacturer and marketer of jeanswear, intimate apparel, playwear, workwear and daypacks. VF has a number of principal brands including Lee, Wrangler, Riders, Rustler, Vanity Fair, Bestform, Lily of France, Healthtex, Jansport and The North Face. Mr. McDonald began his tenure at VF Corporation in 1982 and was named Chairman, President and CEO in 1998. He also was a Director, Operations at Hanes Corporation. Mr. McDonald graduated from Davidson College and received his M.B.A. in Marketing from Georgia State University. And then in alphabetical order: - George Buckley - Mr. Buckley is the Chairman and CEO of Brunswick Corporation, the world's largest manufacturer of recreational boats and marine engines. It is also a major manufacturer of fitness, bowling and billiards equipment, as well as operating a chain of retail bowling centers. Formerly serving as the Chief Technology Officer and President of two divisions throughout his career at Emerson Electric Company from 1993 to 1997, Mr. Buckley joined Brunswick in 1997 and has held the role of Chairman and CEO for over two years. Mr. Buckley did combined postgraduate work at Huddersfield and Southampton Universities and received a Ph.D. at the University of Huddersfield in 1977. - Bruce Gordon - Mr. Gordon is the President of Retail Markets at Verizon Communications, Inc., a provider of wireline and wireless communications in the United States that has a presence in 40 countries. Previous to the merger of Bell Atlantic Corporation and GTE, which formed Verizon in July of 2000, Mr. Gordon fulfilled a variety of positions at Bell Atlantic Corporation, including Group President, VP 99.5-2 Marketing and Sales and VP Sales. Mr. Gordon graduated from Gettysburg College and received a Masters of Science from Massachusetts Institute of Technology (MIT). - Sandra Wijnberg - Ms. Wijnberg is a Senior Vice President and Chief Financial Officer at Marsh & McLennan Companies, Inc., a professional services firm with insurance and reinsurance broking, consulting and investment management businesses. Before joining Marsh & McLennan Companies, Inc. in January 2000, Ms. Wijnberg served as a Senior Vice President and Treasurer of Tricon Global Restaurants, Inc. and held various positions at PepsiCo, Inc., Morgan Stanley Group, Inc. and American Express Company. Ms. Wijnberg is a graduate of the University of California, Los Angeles and received an M.B.A. from the University of Southern California. ABOUT TYCO INTERNATIONAL LTD. Tyco International Ltd. is a diversified manufacturing and service company. Tyco is the world's largest manufacturer and servicer of electrical and electronic components; the world's largest designer, manufacturer, installer and servicer of undersea telecommunications systems; the world's largest manufacturer, installer and provider of fire protection systems and electronic security services and the world's largest manufacturer of specialty valves. Tyco also holds strong leadership positions in medical device products, and plastics and adhesives. Tyco operates in more than 100 countries and had fiscal 2001 revenues from continuing operations of approximately $34 billion. FORWARD LOOKING STATEMENTS This release may contain certain "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to risks, uncertainty and changes in circumstances, which may cause actual results, performance or achievements to differ materially from anticipated results, performance or achievements. All statements contained herein that are not clearly historical in nature are forward looking and the words "anticipate," "believe," "expect," "estimate," "plan," and similar expressions are generally intended to identify forward-looking statements. The forward-looking statements in this release include statements addressing the following subjects: future financial condition and operating results. Economic, business, competitive and/or regulatory factors affecting Tyco's businesses are examples of factors, among others, that could cause actual results to differ materially from those described in the forward-looking statements. More detailed information about these and other factors is set forth in Tyco's Annual Report on Form 10-K for the fiscal year ended September 30, 2001, and in Tyco's Quarterly Report on Form 10-Q, for the quarter ended June 30, 2002. Tyco is under no obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise. # # # 99.5-3 Contact: Gary Holmes (Media) 212-424-1314 Kathy Manning (Investors) 603-775-2159 (Note: Updated on September 13, 2002 to include revised biographical information) 99.5-4 EX-99.6 8 a2089398zex-99_6.txt EXHIBIT 99.6 EXHIBIT 99.6 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK - ---------------------------------------- TYCO INTERNATIONAL LTD., A BERMUDA CORPORATION, NO. 02-CV-4633 PLAINTIFF, V. COMPLAINT FRANK E. WALSH, JR., DEFENDANT. - ---------------------------------------- Plaintiff Tyco International Ltd. ("Tyco"), by its undersigned counsel Boies, Schiller & Flexner LLP, as and for its Complaint against Frank E. Walsh, Jr. ("Walsh"), alleges as follows, with knowledge of its own actions and upon information and belief as to all others matters: NATURE OF THE ACTION 1. Tyco brings this action against its former Lead Director for restitution, an accounting, unjust enrichment, and damages resulting from Walsh's breaches of his own duties to Tyco and from Walsh's inducing breaches of the duties of other Tyco fiduciaries. 2. As Tyco's designated "Lead Director", Walsh served as the primary liaison between Tyco's management and the Company's independent directors. Walsh also served as a member of the Board's Corporate Governance and Nominating Committee, and previously served on the Compensation Committee, responsible for determining the compensation and benefits of Tyco's management. 99.6-1 3. As a result of his positions, Walsh owed Tyco fiduciary duties and was obligated to use the power of his positions to advance the interests of the Company and its shareholders, and not for person gain. 4. Walsh's breaches of duty include promoting the acquisition of CIT by Tyco without informing the Board of Directors that he intended to profit personally from that acquisition through a fee; soliciting and receiving from L. Dennis Kozlowski, Tyco's former Chairman and CEO, $20 million as a purported fee, in violation of applicable law and the Company's Bye-Laws, without Board approval; and refusing to return those funds when his unauthorized receipt of them was disclosed to the Board. THE PARTIES 5. Plaintiff Tyco International Ltd. is a Bermuda corporation whose principal United States subsidiary has its principal place of business in Exeter, New Hampshire and offices in New York City and Boca Raton, Florida. 6. Defendant Frank E. Walsh, Jr., is a citizen and resident of New Jersey and was at the time of the events set forth herein a member of the Board of Directors of Tyco. Walsh attended meetings regarding Tyco's business in New York. JURISDICTION AND VENUE 7. The Court has jurisdiction over this action pursuant to its general diversity jurisdiction, 28 U.S.C. Section 1332(a)(2). The amount in controversy, exclusive of interest and costs, exceeds $75,000. 8. Venue is proper in the Southern District of New York pursuant to 28 U.S.C. Section 1391(a)(2) because a substantial part of the events giving rise to the claims 99.6-2 asserted occurred in this District, including in Tyco's offices in this District and at other locations in Manhattan. FACTUAL ALLEGATIONS 9. Walsh served as a member of Tyco's Board of Directors from 1997 through February 2002, and as a Director of a predecessor of Tyco from 1992 to 1997. In 2001, Walsh was a member of the Corporate Governance and Nominating Committee, and had been designated Tyco's "Lead Director" - i.e., the main liaison between Tyco's outside directors and management. Prior to assuming those positions, Walsh had served on and been Chairman of the Board's Compensation Committee. 10. Walsh knew that Tyco's Bye-Laws (which are the legal equivalent of an American company's articles of incorporation) expressly require Board approval for any compensation paid to any director (Bye-Law 65), and require a director to make full disclosure of his or her interest in any transaction or proposed transaction with the Company. For example, Tyco's Bye-Laws provide: A director who to his knowledge is in any way, whether directly or indirectly, interested in a contract or arrangement or proposed contract or arrangement with the Company shall declare the nature of his interest at the meeting of the Directors at which the question of entering into the contract or arrangement is first taken into consideration, if he knows his interest then exists, or in any other case at the first meeting of the Directors after he knows that he is or has become so interested. (Bye-Law 64(7)) 11. Walsh also knew that his duties to the Company forbid any self-dealing, including soliciting or receiving any compensation other than his disclosed compensation as a member of the Board without explicit Board approval based on a finding that such compensation was arms'-length and in the best interests of the Company. 99.6-3 12. Walsh also knew that because of his position, self-dealing or other misconduct by him would materially impair Tyco's reputation and credibility. 13. In late 2000, Walsh responded to a suggestion that Tyco acquire a financial services company by proposing that Tyco acquire the CIT Group, Inc. ("CIT"), and indicated that he would be able to introduce L. Dennis Kozlowski, then Tyco's Chairman and CEO, to CIT's Chairman and CEO. 14. Walsh thereafter introduced Kozlowski to CIT's CEO, and promoted the CIT acquisition to Kozlowski and to the Tyco Board. At no time prior to the negotiation of the terms agreed to by CIT and Tyco for the acquisition did Walsh ask for a fee or indicate in any way to the Board that he expected to profit personally from the acquisition. 15. After the terms of the CIT transaction had been agreed to, Walsh asked Kozlowski for a finder's fee to compensate him for his role in the transaction. Walsh ultimately induced Kozlowski to agree to pay him a $20 million "fee" in connection with the CIT acquisition, of which half would be given to a charitable fund designated by Walsh and over which Walsh would exercise control, without Board approval and without informing the Board either of Walsh's intent to receive such compensation or of Kozlowski's agreement to make the payment. 16. Walsh knew that he was obligated to disclose to the Board his interest in receiving a fee as part of the transaction and that the Tyco Bye-Laws required that any such payment to a director had to be approved by the Board. Walsh violated his duties to the Company and acted unlawfully in not informing the Tyco Board that he intended to 99.6-4 seek, and was seeking, a substantial finder's fee, and in not seeking the Board's approval for such a fee. 17. As the Company's Lead Director and a member and former member of a number of Board Committees, Walsh knew that it would be improper for Kozlowski to agree to the payments Walsh was requesting, that Kozlowski had a clear duty to notify the Board of Walsh's request, and that Walsh himself had a clear duty to notify the Board of his request and of the payment he received in July, 2001. Kozlowski and Walsh knew, intended, and agreed that the payments would be concealed from the Board in violation of Kozlowski's duties and Walsh's own duties. 18. Based in part on Walsh's promotion of the transaction, the Tyco Board approved the CIT acquisition. At no time did Walsh recuse himself from the Board's consideration of the transaction. 19. The CIT acquisition closed on or about June 1, 2001. On or about July 31, 2001, Walsh received payments from Plaintiff totaling $20 million: $10 million to Walsh personally and $10 million to a charitable fund that Walsh designated and controlled. Although part of the "fee" was sent directly to the charitable fund, Walsh represented at the time, and has subsequently repeated, that he understood his "fee" to be $20 million, and that the payment to the charitable fund was being made at his direction. 20. The Tyco Board was not informed, and did not know, of these payments prior to the time they were made, or at any time prior to January, 2002. The Tyco Board never authorized these payments, nor any other compensation of any kind to Walsh beyond his regular, disclosed compensation as a director. 99.6-5 21. Walsh owed Tyco strict fiduciary duties, including the duties of loyalty and honesty. Walsh was already compensated for any work performed in connection with the CIT acquisition by the cash payments and stock options paid to each of the Company's directors, as disclosed in the Company's proxy statements. By demanding a fee in addition to his normal compensation as a director, by not seeking Board approval for that fee, and by promoting and actively participating in the discussion of the CIT acquisition without disclosing to the Board that he had a substantial, personal interest in the transaction, Walsh breached his fiduciary duties to Tyco and induced Kozlowski to breach his duties to the Board. 22. The non-executive members of Tyco's Board first learned of the payments to Walsh in early January 2002, as part of the preparation of Tyco's proxy statement for its 2002 annual general meeting. Walsh was informed that certain non-executive directors believed the payments were improper, and had instructed Kozlowski to get Walsh to return the money. Walsh refused. 23. Thereafter all the directors discussed the matter of Walsh's payments in person on January 16, 2002. After hearing Walsh's defense of his actions, he was excused from the room while the directors discussed the matter. Walsh was then called back and informed that it was the unanimous view of the directors that his "fee" had not been authorized, was improper, and had to be returned. Walsh again refused, gathered his papers, and left the meeting. In the Company's January 28, 2002 proxy statement for its February 21, 2002 annual general meeting, the Board did not nominate Walsh for re-election as a director, and his term of office expired at the annual general meeting. 99.6-6 24. Not later than January 16, 2002, Walsh knew that Tyco was obligated to disclose his payments in its proxy statement that was being prepared and was to be released in two weeks. Walsh also knew, and had been advised, that the disclosure of the payments, particularly if Walsh had not agreed to return them, would cause significant damage to Tyco. 25. Walsh's wrongful refusal to return the payments when asked to do so, knowing that the Company would shortly have to disclose the payments, was a separate and independent tort, which was reasonably likely to, and did, cause substantial damage to the Company. 26. On January 28, 2002, Tyco filed its proxy statement for its upcoming annual general meeting with the Securities and Exchange Commission, and the contents of that proxy, including the disclosure of the payments to Walsh, became public. Following this disclosure, which was immediately picked up and publicized in the national financial press, the share price of Tyco's stock fell from $42 to $33.65, reducing the Company's market capitalization by $16.7 billion, in one day. 27. Tyco has continued to seek the return of the funds received by Walsh in ways short of litigation, but has been unsuccessful. FIRST CAUSE OF ACTION (RESTITUTION) 28. Plaintiff realleges paragraphs 1 through 28 as if fully set forth herein. 29. Under Tyco's Bye-Laws and Bermuda law (the jurisdiction of Tyco's incorporation), the Company's Board of Directors must approve any payment of compensation to any director. Absent authorization by the Board, no agreement to pay 99.6-7 any form of compensation to a director can be entered into by the corporation, and any purported agreement to pay such compensation is null and void. 30. The Tyco Board of Directors never authorized the payment to Walsh of any compensation beyond his regular, disclosed compensation as a director. Thus any purported agreement to pay Walsh any fee relating to the CIT transaction is void. 31. Walsh was and is therefore required to return the $20 million "fee" to Tyco, with applicable interest as permitted by law. SECOND CAUSE OF ACTION (BREACH OF FIDUCIARY DUTY) 32. Plaintiff realleges paragraphs 1 through 28 as if fully set forth herein. 33. At all relevant times, Walsh owed the strictest fiduciary duties to Tyco, including duties of loyalty, honesty, and disclosure, and he was required to act in Tyco's best interests, and not for his personal benefit. 34. Walsh breached his fiduciary duties in various ways, including particularly by (a) not disclosing his intent to receive substantial compensation if Tyco's acquisition of CIT was accomplished; (b) demanding substantial compensation for making an introduction between Tyco and CIT, and performing other actions within the scope of his duties as a director of Tyco; (c) not disclosing to the Board his purported agreement to receive a substantial fee, based on the purchase price Tyco was paying for CIT, and not recusing himself from the Board's deliberations on the transaction; (d) not returning the funds when asked to do so, first by individual directors and then by all the directors on January 16, 2002, even though he knew that the payments would be disclosed, and had been advised that the disclosure of the payments would likely cause harm to Tyco; and 99.6-8 (e) failing properly to fulfill his duties as Lead Director and a member of the Board, including by failing to properly monitor and review the performance and conduct of management. 35. In fact, Walsh's position at the time as Tyco's Lead Director and member of the Corporate Governance and Nominating Committee made it overwhelmingly likely that the disclosure of his payments would cause substantial harm to the Company's reputation and credibility in the marketplace, which it did. 36. Walsh is therefore liable to Tyco for all the loss suffered by the Company as a result of Walsh's conduct, including his refusal in January 2002 to return the funds in question. 37. Because of the intentional nature of Walsh's wrongful conduct, and Walsh's abuse of his position of trust, Tyco is entitled to punitive as well as compensatory damages. THIRD CAUSE OF ACTION (CONVERSION) 38. Plaintiff realleges paragraphs 1 through 28 and 30-31 as if fully set forth herein. 39. In violation of the Tyco Bye-Laws, without the knowledge of the Tyco Board of Directors, and without seeking the Board's approval, Walsh wrongfully demanded and received $20 million of Tyco's corporate funds as a purported finder's fee for introducing Tyco to CIT. 40. Tyco was at all times entitled to possession of the $20 million in corporate funds wrongfully received by Walsh. Moreover, when the Tyco Board of 99.6-9 Directors learned that Walsh had received the payment, the Board demanded that Walsh return the $20 million of corporate funds to Tyco. 41. By wrongfully obtaining the $20 million of corporate funds, by converting such funds to his own use without right or legitimate title thereto, and by wrongfully refusing to return the $20 million of corporate funds to Tyco upon demand, Walsh wrongfully converted the corporate funds to his own use. 42. As a result of Walsh's conversion and retention of Tyco corporate funds, Tyco has been damaged in an amount in excess of $20 million plus interest. 43. Because of the intentional nature of Walsh's wrongful conduct, and Walsh's abuse of his position of trust, Tyco is entitled to punitive as well as compensatory damages. FOURTH CAUSE OF ACTION (MONEY HAD AND RECEIVED/UNJUST ENRICHMENT) 44. Plaintiff realleges paragraphs 1 through 28, 30-31, and 41 as if fully set forth herein. 45. Walsh has been unjustly enriched by his receipt and retention of $20 million of Tyco corporate funds. 46. Under principles of equity and good conscience, Walsh should not be permitted to keep the $20 million of Tyco corporate funds that he wrongfully received. 47. As a result of Walsh's money had and received, Walsh is indebted to Tyco in the amount of $20 million plus interest. 99.6-10 FIFTH CAUSE OF ACTION (CONSTRUCTIVE TRUST) 48. Plaintiff realleges paragraphs 1 through 28, 30-31, and 41 as if fully set forth herein. 49. Because $20 million in Tyco corporate funds received by Walsh at all times belonged to Tyco, Walsh received the corporate funds subject to a constructive trust and Tyco is entitled to the imposition of a constructive trust on the corporate funds received by Walsh. SIXTH CAUSE OF ACTION (INDUCING BREACH OF FIDUCIARY DUTY) 50. Plaintiff realleges paragraphs 1 through 28, 30-31, and 41 as if fully set forth herein. 51. Walsh used his position as Lead Director and a member of the Board's Corporate Governance and Nominating Committee to induce the Company's officers to make the improper $20 million payments to and for the benefit of Walsh, to then conceal such payments from the Board, and to delay and obstruct efforts to recover such payments from Walsh. 52. Walsh's conduct has damaged, and foreseeably could be expected to damage, Tyco; and Walsh is liable to Tyco for the amount of such damage. 53. Because of the intentional nature of Walsh's misconduct, and his abuse of his position of trust, Tyco is entitled to an award of punitive damages. WHEREFORE, Tyco respectfully requests that the Court enter judgment in Plaintiff Tyco's favor, and against Defendant Walsh, as follows: 99.6-11 A. Ordering Walsh to disgorge the $20 million in funds to Tyco, with interest as allowed by law, and imposing a constructive trust on such funds and on any proceeds Walsh has received from his use of the $20 million and on any benefit he obtained by the use of said funds; B. Awarding Tyco damages for the damage it has suffered as a result of Walsh's breaches of fiduciary duty alleged herein, including the damage suffered as a result of Walsh's refusal to return the wrongfully-held funds when asked to do so by the Board in January 2002; C. Awarding Tyco punitive damages; and D. Awarding Tyco such other and further relief, including interest, costs, disbursements and attorneys' fees incurred herein, as permitted by law. June 17, 2002 BOIES, SCHILLER & FLEXNER LLP By: /s/ Paul R. Verkuil ------------------------ Paul R. Verkuil (PV-5978) Nicholas J. Gravante, Jr. Harlan Levy 570 Lexington Avenue, 16th Floor New York, New York 10022 (212) 446-2300 Ann M. Galvani Andrew W. Hayes Marilyn Kunstler 80 Business Park Drive, Suite 110 Armonk, New York 10504 (914) 273-9800 ATTORNEYS FOR PLAINTIFF TYCO INTERNATIONAL LTD. 99.6-12 EX-99.7 9 a2089398zex-99_7.txt EXHIBIT 99.7 EXHIBIT 99.7 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK - --------------------------------------------- TYCO INTERNATIONAL LTD., NO. 02-CV-4644 A BERMUDA CORPORATION, PLAINTIFF, V. COMPLAINT MARK A. BELNICK, DEFENDANT. - --------------------------------------------- Plaintiff Tyco International Ltd. ("Tyco" or "the Company"), by its undersigned counsel Boies, Schiller & Flexner LLP, as and for its Complaint against Defendant Mark A. Belnick ("Belnick"), alleges as follows upon knowledge as to its own acts and status and upon information and belief as to all other matters: NATURE OF THE ACTION 1. From September 1998 until June 10, 2002, Mark Belnick was Tyco's Chief Corporate Counsel. As one of Tyco's three executive officers, Belnick owed the Company fiduciary duties of honesty, good faith, care, and loyalty. As Tyco's chief legal officer, and as a member of the Bar, Belnick owed especially high and strict duties to the Company, and the Company and its shareholders were entitled to rely on and expect the highest standard of conduct from Belnick. More than any other person, Belnick was obligated to ensure that the Company and its personnel fulfilled their legal and ethical duties, and to ensure that any conflict of interest, self-dealing, or other potentially serious legal or ethical problem was promptly brought to the attention of the Company's Board of Directors. 99.7-1 2. Belnick was obligated to pursue and protect the interests of the Company and its shareholders to the exclusion of his own interests or the interests of any other person. Belnick was obligated to advise the Company's Board promptly of any instance in which his interests (or the interests of any other officer or director) might conflict with those of the Company, and to ensure in such case that the Company received appropriate independent advice. Belnick knew that payments, stock grants, loans, and other benefits to or for the benefit of senior executives, including himself, were to be disclosed to, and approved by, the Board and/or its Compensation Committee. 3. Belnick was also obligated to ensure that the Company strictly fulfilled its disclosure obligations to shareholders and the Securities and Exchange Commission ("SEC"), and promptly remedied any failure to disclose that was discovered. As a knowledgeable professional, Belnick was aware of the very large liability and damage to which the Company would be potentially exposed if it failed to fulfill its disclosure obligations. 4. As a result of Belnick's position, and as a result of Belnick's experience, reputation, and accomplishments, Belnick knew that Tyco's Board of Directors reposed great trust and confidence in him. Unfortunately, Belnick abused that confidence and betrayed that trust, repeatedly breaching his duties of care and loyalty to the Company. Belnick's breaches of duty included: a. soliciting and accepting large cash and restricted stock bonuses from the Company's Chief Executive Officer Dennis Kozlowski ("Kozlowski") (valued at approximately $20 million in calendar year 2000 alone) without the approval or knowledge of the Board or its Compensation Committee in violation of what he knew to be his obligation to reveal such compensation to the Board and to have it approved by the Board or its Compensation Committee; 99.7-2 b. taking interest-free "loans" in excess of $10 million under the Company's "Relocation Loan" program to acquire a resort home in Park City, Utah - without the prior approval or knowledge of the Board or its Compensation Committee, and despite the fact that the relocation loan program was limited to loans for personnel who were being moved from one Company facility to another and there is no Tyco corporate facility in Utah; c. drafting a "Retention Agreement" for himself which purported to pay him millions of dollars in additional compensation even if he were terminated for violating his duties to the Company; failing to seek prior Board or Compensation Committee approval for the agreement; asking the Compensation Committee to approve the agreement after its execution without disclosing to the Board or the Compensation Committee the nature and extent of his existing compensation, the nature and extent of his prior breaches of duty, the fact that a signed agreement had already been executed, or the fact that the executed agreement entitled him to millions of dollars of bonus payments even if he were terminated for breaching his duties to the Company; d. failing to disclose his compensation in required SEC filings, and fabricating documents after the fact to re-characterize components of his compensation so that he could argue that he was not one of the four highest paid officers other than the Company's CEO, each of whose compensation is required to be disclosed in proxy statements by SEC Regulation S-K Item 402; e. failing to disclose his large interest-free loans in required filings as loans to executive officers in excess of $60,000 required to be disclosed in the Company's proxy statements by SEC Regulation S-K Item 404; f. failing to secure, or to recommend that the Company obtain, independent counsel concerning the proposals for his compensation that he had drafted - with the result that Belnick was representing his own interests in conflict with the interests of his client, the Company, while his client was without counsel representing its interests; g. failing to advise the Board that $20 million in payments to Frank Walsh, the Company's Lead Director, made without Board approval, were improper, and that the Company had a right to recover such payments; conspiring with Kozlowski to try to induce the Board to approve such payments after the fact or to decline to seek to recover them; and participating in making inaccurate assertions to the public concerning such payments; h. failing to advise the Board of the improper conduct of Kozlowski of which Belnick was aware, and failing to take any action to remedy or even stop 99.7-3 the continuation of such conduct, thereby facilitating, aiding, and abetting Kozlowski's breach of his own duties to Tyco; i. failing to advise the Board on May 3, 2002, when the Company received a subpoena in connection with a criminal investigation of CEO Kozlowski and when Belnick retained counsel to represent the Company in connection with that investigation; concealing the fact of the investigation from the Board until Friday May 31, 2002 (when Kozlowski, advised that a public announcement of the investigation would be made on the following Monday by the prosecutors, began informing the Board), the Company's receipt of a subpoena in connection with it, and facts that showed that Kozlowski had in fact engaged in improper conduct; j. failing to disclose publicly or to the SEC that the Company's Chief Executive Officer had allegedly violated the law and was under criminal investigation; k. refusing to cooperate with the Company's outside counsel Boies, Schiller & Flexner in its investigation of issues raised concerning Kozlowski, Belnick, and other Company personnel - and, in fact, obstructing that investigation despite repeated instructions from the Company to cooperate and repeated promises by him that he would cooperate; and l. deleting electronic records and attempting to remove paper records from the Company's offices on June 10, 2002, immediately prior to his termination as the Company's chief legal officer. 5. The Chief Corporate Counsel must be the principal protector of the Board and the Company against the kind of misconduct engaged in by the Company's former Chief Executive Officer. For a lawyer of Belnick's position and reputation to facilitate and conceal such conduct, and to engage in such conduct himself for personal gain, is inexplicable and inexcusable. Belnick failed in his duties to the Board and to the Company. 6. Immediately following his departure on June 10, Belnick personally and through his lawyer embarked on a campaign of attacks on the Company. These attacks have included assertions of improper conduct on the part of other officers and directors of the Company during Belnick's tenure as Chief Corporate Counsel - assertions which if 99.7-4 true Belnick had an obligation to report, but did not report, to the Board or to shareholders and which Belnick took no action to remedy despite his obligation to do so. 7. Belnick has also continued to refuse to cooperate with the Boies firm's investigation, has failed to repay millions of dollars that he acknowledges he owes to the Company, has demanded that the Company delete certain computer records and turn over without copying paper records from Belnick's office (and threatened legal action against the Company and its counsel if this is not done immediately), and has demanded payment of amounts that he claims are due under his so-called Retention Agreement. 8. Belnick also continues to deny that he has done anything improper. He takes the position that he has no liability to the Company for any of his conduct, and that except for his acknowledged loans he owes nothing to the Company. 9. The Company is, of course, reluctant to sue its former Chief Corporate Counsel - particularly given the turmoil for the Company that the conduct of Kozlowski and Belnick has already created. Unfortunately, Belnick has left the Company with no alternative, as it must protect the rights of its shareholders. Tyco therefore brings this action against Belnick for damages, forfeiture, restitution, an accounting, and a declaratory judgment. PARTIES AND JURISDICTION 10. Plaintiff Tyco is a Bermuda corporation with its principal place of business at The Zurich Centre, 90 Pitts Bay Road, Pembroke HM 08, Bermuda. Tyco's principal United States subsidiary has its office in One Tyco Park, Exeter, New Hampshire 03833. 99.7-5 11. Defendant Belnick is a citizen of the State of New York, residing at 300 Central Park West, New York, N.Y. From September 1998 until June 10, 2002, Belnick maintained offices at Tyco's offices in New York City and Boca Raton, Florida. 12. The Court has jurisdiction over this action based on diversity of citizenship pursuant to 28 U.S.C. Section 1332(a)(2). The amount in controversy, exclusive of interest and costs, exceeds $75,000. FACTS COMMON TO ALL CLAIMS BELNICK'S UNDISCLOSED AND UNAPPROVED COMPENSATION AGREEMENT WITH KOZLOWSKI 13. Belnick knew full well that as the chief legal officer of a multinational public corporation, he would be, and was, entrusted with the duty of ensuring that the Board was properly informed of all information that it reasonably needed to know, including the payments, other benefits, and loans solicited by, or made to, senior executives like himself and Kozlowski; that he and other members of senior management in dealing with the Company should avoid self-dealing and conflicts of interest, and disclose any potential self-dealing or conflicts of interest that did arise; that he, as the Company's chief legal officer was particularly responsible for bringing to the Board's attention any conflict of interest, self-dealing, or improper conduct by him or other executives. Belnick knew that, as the Company's chief legal officer, he bore a particular obligation to bring to the attention of the Board and its Compensation Committee any undisclosed compensation arrangements or loans to or for senior executives, including himself. 99.7-6 14. From the inception of his employment, Belnick failed in his responsibilities and betrayed the Board's trust, choosing instead to conspire with Kozlowski to evade the Board's policies regarding compensation and conceal the extent of Belnick's compensation and benefits, as secretly agreed to by Belnick and Kozlowski, from the Company and the Board. 15. On August 19, 1998 (a month before Belnick began working at Tyco), Kozlowski sent Belnick a letter describing Belnick's proposed compensation. The version of that letter given to the Company's personnel department, and represented to be the agreement with Belnick, described Belnick's cash compensation as: "- a base salary of $700,000 per year; - a sign-on bonus of $300,000; - a guarantee cash bonus of $1,500,000 the first year; $1,000,000 the second year; and $1,000,000 the third year, with your first bonus payable with our fiscal year end September 30, 1999." The letter also gave Belnick 100,000 restricted Tyco shares (with a then-market value of over $5 million), vesting over three years, and 500,000 options (with a fair market value in the millions), also vesting over three years. 16. Belnick's files, however, contain a different version of that letter - also dated August 19, 1998 and also signed by Kozlowski. The version of Belnick's compensation agreement kept in Belnick's private files, in a file entitled "Tyco Compensation", describes Belnick's cash compensation differently (with an additional provision underscored and bolded) as: "- a base salary of $700,000 per year; - a sign-on bonus of $300,000; - a guaranteeD cash bonus of $1,500,000 the first year; $1,000,000 the second year; and $1,000,000 the third year, 99.7-7 with your first bonus payable with our fiscal year end September 30, 1999. IN ANY EVENT, YOUR ANNUAL CASH BONUS WILL NOT BE LESS THAN 1/3 OF MINE." 17. Belnick's version of the Kozlowski letter also included two additional paragraphs not in the version of the letter represented to the personnel department to be the agreement with Belnick. Those paragraphs provided: "You will also be entitled to participate in and benefit from (proportionate to your position) all existing and future benefit plans and programs that are available for senior executive officers of the Company. Accordingly, among other benefits, you will be entitled to participation in Tyco's relocation program to New York City, participation in the Company's 401(k) Plan, the use of a car and either a Company loan or a re-load of restricted shares in connection with your tax liability on the same of previously restricted shares." "If for any reason the relationship does not work out to your or the Company's satisfaction and you leave the Company prior to September 30, 2001, the Company will pay you until then your base salary and guaranteed cash bonuses, less the sign-on bonus, (regardless of your income or earnings from other employment). You would also retain in full the sign-on bonus, restricted shares (whether or not still restricted) and your stock options." 18. The undisclosed version of the August 19, 1998 letter increased Belnick's compensation substantially: it tied Belnick's compensation to Kozlowski's, gave him access to millions in zero-interest loans, and guaranteed Belnick's compensation (including cash bonuses and stock) regardless of whether Belnick worked for three years or three months, and regardless of the circumstances under which he might leave. 19. Belnick and Kozlowski's subsequent conduct shows (1) that Belnick's undisclosed version of the letter agreement was their true agreement, and (2) that they intended to conceal that agreement from the Board: a. when the Company's Human Resources Director learned that Belnick had been hired and asked Kozlowski for a copy of Belnick's agreement, Kozlowski gave her a copy of the first version of the letter, never mentioning a second or other version that he had executed; 99.7-8 b. on September 24, 1998, shortly after he started, Belnick faxed his version of the letter to his personal accountant, showing his belief that this was the operative version of his compensation agreement; and c. in early 2002, discussing Belnick's new retention agreement with the Compensation Committee, Kozlowski slipped and referred to Belnick's entitlement to a bonus one-third of Kozlowski's own - but when asked why he was referring to a one-third ratio, Kozlowski falsely claimed that he was confusing Belnick with someone else. 20. The undisclosed version of Belnick's agreement with Kozlowski was never presented to, or approved by, the Tyco Board or its Compensation Committee. Nor was it disclosed to the Company's personnel department or in any public filing. Throughout his tenure at Tyco, Belnick's fortunes were, quite literally, linked to Kozlowski's in a way that neither the Board, the Compensation Committee, the Company's personnel department, nor the public, ever knew. And, as both Belnick and Kozlowski knew, tying Belnick's compensation to Kozlowski's (and Belnick's future success to Kozlowski's future success) gave Belnick a powerful, and undisclosed, incentive to protect Kozlowski and to aid Kozlowski in his efforts to benefit at the Company's expense. 21. Belnick also did not properly disclose the full details of his agreements with Kozlowski to the Company's auditors, as he was required to do by Bermuda law. Section 97 of the Bermuda Companies Act of 1981 codifies an officer's duty of honesty and good faith, and subsection (4) of that provides that "an officer of a company shall be deemed not to be acting honestly and in good faith if - (a) he fails on request to make known to the auditors of the company full details of - (i) any emolument, pension or other benefit that he has received or it is agreed that he should receive from the company or any of the company's subsidiaries." 99.7-9 BELNICK'S FAILURE TO REVEAL TO THE BOARD KOZLOWSKI'S IMPROPER USE OF COMPANY FUNDS 22. In addition to Belnick's fiduciary duties as a Tyco officer, his position as Chief Corporate Counsel made Belnick responsible for ensuring that other officers complied with the policies and rules of Tyco's Board and Board Committees. This was particularly true with respect to self-dealing and policies and programs that gave employees lucrative benefits (such as low- or no-interest loans), and which were therefore likely subjects for abuse and self-dealing. 23. Belnick failed to prevent the making of improper loans to, and the improper use of Company funds by, Kozlowski, and failed to advise the Board of such loans and use of funds when Belnick became aware of them. BELNICK'S INITIAL ABUSE OF TYCO'S RELOCATION LOAN PROGRAM 24. Instead of policing self-dealing, Belnick himself solicited and accepted millions in interest-free loans from Tyco without the approval or knowledge of the Board or the Compensation Committee. These loans to Belnick were characterized as purported "relocation loans", although Belnick knew he did not qualify for any loans under the program rules approved by Tyco's Compensation Committee. 25. Tyco's Relocation Program was, as stated in the written program description, authorized by the Compensation Committee in 1995 to assist employees who were then relocating from Tyco's headquarters in New Hampshire to its then-new offices in New York. In about 1997, the Compensation Committee authorized a second relocation loan program for employees who were asked to relocate to Tyco's facilities in Boca Raton, Florida. In each case, the program was to be available to all employees who 99.7-10 were being asked to relocate, and tracked IRS rules regarding tax-exempt employee relocation loan programs (IRC1.7872-5T(c)(1)(i)). (A program available only to senior executives would not qualify under the IRS rules. The IRS rules also require that the taxpayer's new principal place of work be "at least 50 miles farther from his former residence than was his former principal place of work." (IRC Section 217).) 26. However, Belnick did not begin working at Tyco until September 1998, three years after Tyco had relocated certain headquarters personnel from New Hampshire to New York, and he never had an office in New Hampshire. Moreover, Belnick already worked in New York - at the Paul, Weiss law firm, a short walk from Tyco's New York offices, and he already lived in the Westchester County suburb of Harrison. Belnick therefore did not qualify for Tyco's New York relocation loan program. 27. Nevertheless, Belnick, in clear violation of the policies of the loan program, solicited and accepted a "relocation loan", and used that loan, plus another Company loan, to pay $2.75 million for an apartment on Central Park West. After buying the apartment, Belnick signed various promissory notes over the next two and one-half years for additional loans, totaling over $1.5 million. 28. None of Belnick's promissory notes on his "relocation loans" were countersigned by anyone at the Company. Rather, Belnick appears to have printed off a note, signed it, and sent it to Tyco's offices for processing and the issuance of a wire transfer to his personal account. 29. Belnick's total improper borrowing for his New York apartment now exceeds $4 million, all of which he still owes to Tyco. 99.7-11 BELNICK'S FURTHER ABUSE OF THE RELOCATION LOAN PROGRAM IN 2001 30. A second improper use of the Relocation Program by Belnick occurred in 2001 when he solicited and accepted over $10 million in interest-free loans from Tyco to finance a new resort home in Park City, Utah. 31. Although Belnick again misrepresented this loan as a "relocation loan", it clearly was not, for several reasons. First, and itself dispositive, Tyco never adopted a relocation program to Utah. Second, Tyco has no offices in Utah to which Belnick could be said to be relocating. Third, Belnick did not even execute the various documents called for by the Company's legitimate relocation plans, and there is no corporate document that even arguably purports to authorize Belnick's Utah loan. In fact, the only documentation of the loan is a series of promissory notes, signed only by Belnick, which total over $10 million. 32. To date Belnick has not repaid any of the more than $10 million of Tyco funds he used to finance his Utah property. 33. In addition to his unauthorized, no-interest $10 million loan, Belnick also improperly used over $1600 a month in Company funds for expenses incurred in maintaining his Utah home. BELNICK'S ADDITIONAL UNDISCLOSED COMPENSATION IN 2000 AND 2001 34. In 2000, Belnick, in another breach of his fiduciary and other duties, induced Kozlowksi to substantially increase Belnick's compensation without the knowledge or approval of the Board or the Compensation Committee. 35. Specifically: 99.7-12 a. in April 2000, Belnick induced Kozlowski to give him 100,000 restricted shares of stock, with 50,000 shares vesting on September 30, 2000 and 50,000 shares vesting on September 30, 2001 (with a total market value of over $5 million); b. In July, Belnick induced Kozlowski to give him an additional cash bonus of $2 million, separate from and in addition to his bonus; along with c. an additional grant of 200,000 shares of restricted stock - all vesting one year later (with a total market value of over $10 million). 36. This compensation, in addition to his "guaranteed" annual bonus (which Belnick claimed was now a minimum of $2 million), brought the total value of Belnick's undisclosed 2000 compensation to about $20 million. None of this additional compensation was reported to, or approved by, the Board or its Compensation Committee. 37. Belnick described his additional $2,000,000 cash bonus and grant of 200,000 additional restricted shares (worth more than $10 million) as "based on the results in a number of matters since I came to Tyco in 1998, including the termination of the SEC inquiry". 38. Belnick had regularly briefed Tyco's Board on the SEC investigation while it was pending, but never told the Board or the Compensation Committee that he (or any other Tyco counsel) expected to receive, or deserved to receive, any bonus for the successful conclusion of that investigation, let alone a bonus worth more than $12 million. 39. Although the original and subsequent grants of stock and options to Belnick were to enable him to have "the ability to build significant equity in Tyco over the years to come", Belnick regularly abandoned his investment in the Company and sold his 99.7-13 shares (or converted options and sold the underlying shares) within days after they vested, earning him millions of dollars. BELNICK'S 2002 "RETENTION AGREEMENT" 40. Belnick again failed to act honestly and in good faith in late 2001 and early 2002 with regard to his proposed new "Retention Agreement." This new agreement provided for Belnick to receive a further payment (in addition to all of his other compensation and stock, and his existing options) by October 1, 2003 of approximately $20 million ($10.6 million plus a "gross-up" for taxes). 41. The agreement was drafted by Belnick himself, and executed without the approval or knowledge of the Board or the Compensation Committee, and without any independent legal advice or consultation as to the reasonableness of its terms. Belnick, as the Company's chief lawyer, drafted an agreement with himself - - a hopeless conflict of interest that Belnick neither disclosed nor sought to cure (by, for example, hiring independent counsel or even consultants to advise the Company on reasonable terms for a new contract). 42. In February 2002, weeks AFTER Belnick's new Retention Agreement had been agreed to and executed, a proposal for such an agreement was reported for the first time to the Compensation Committee, at a meeting attended by the head of Tyco's Human Resources department. During the course of the meeting, a "Term Sheet" was presented to the Committee purporting to summarize the principal terms of Belnick's new agreement. 43. The Term Sheet was important for what it did not state. Neither in the Term Sheet nor at any other time was the Compensation Committee informed that the 99.7-14 Retention Agreement had already been executed and that it purported to provide for multi-million dollar payments to Belnick even if he were fired for an intentional breach of his duties to the Company. 44. What was included in the Term Sheet was also misleading to the Committee whose approval was sought. For example, the Term Sheet represented that the retention "payment is in lieu of bonuses", without revealing the huge undisclosed bonuses Belnick had just received in 2000. 45. As Tyco's Chief Corporate Counsel, Belnick was aware that the Compensation Committee had defined among its roles the review of compensation, "including salary, bonus, equity plan awards, and prerequisites" for all executives and those senior officers reporting directly to Kozlowski. Especially for these reasons, Belnick had a duty to inform the Compensation Committee of the magnitude of his undisclosed prior compensation. 46. After review by Tyco's outside counsel on benefits and employment matters, Belnick's executed Retention Agreement was revised to add some basic terms for that type of agreement, but the basic economic terms were never changed and neither the Board or Compensation Committee ever received any independent advice as to the reasonableness of such terms. 47. As Chief Corporate Counsel, it was Belnick's duty to ensure compliance with the Compensation Committee's policies regarding approval of executive compensation, including his own. Because of Belnick's failure to have his compensation presented to (much less approved by) the Board or the Compensation Committee, his compensation was unauthorized. Moreover, when Belnick's 2002 Retention Agreement 99.7-15 was presented to the Committee, it was done as an obligation that Kozlowski had already entered into and Belnick had been relying on, without proper disclosure of Belnick's compensation up to that point, and without disclosure of his astonishing definition of "cause" in the agreement, and without disclosure of Belnick's prior and ongoing improper conduct. The Retention Agreement was consequently unauthorized and was fraudulently induced. As such, it is void or voidable. BELNICK AND KOZLOWSKI CAUSE TYCO TO FAIL TO DISCLOSE HIS COMPENSATION AND LOANS 48. As the Company's chief legal officer, Belnick was responsible for approving its SEC filings and for making careful and diligent efforts to ensure that they were true, complete, and accurate. Instead of fulfilling that duty in good faith, Belnick a. worked with Kozlowski to manipulate the way in which Belnick's compensation was described to avoid disclosing it in reports filed with the Securities and Exchange Commission, b. approved SEC filings that failed to disclose his millions of dollars of executive officer indebtedness to Tyco, and c. approved SEC filings that failed to disclose Kozlowski's own abuse of Tyco's "Key Employee Loan Program", which Belnick either knew or should have known of in the fulfillment of his duties as the Company's chief legal officer. 49. SEC rules require companies to disclose in their proxy statements the compensation of their CEOs and their four highest-paid executive officers. The determination of who are the four highest-paid executive officers is made by reference to total annual salary and bonus, and not other forms of remuneration. For this purpose SEC rules allow a company in limited circumstances not to count the distribution or 99.7-16 accrual of a large amount of cash compensation (such as a bonus) that is not part of a recurring arrangement and is unlikely to continue. 50. In Belnick's case, he claimed in July 2000 that he was entitled to receive, in addition to a $2 million "special bonus" for the conclusion of an SEC investigation, a guaranteed minimum annual bonus of $2 million (for a total of $4 million). The $2 million guaranteed minimum annual bonus, alone, would have made Belnick one of Tyco's four highest paid executives other than its CEO. However, Belnick subsequently caused Tyco's HR department to record Belnick's 2000 bonuses as comprising $3 million in special bonuses, and only a $1 million guaranteed bonus. The purpose and effect of this rewriting of history was to improperly omit Belnick's huge compensation from Tyco's proxy statement disclosures. 51. Separate and apart from his compensation, Belnick also caused Tyco to file SEC reports that failed to disclose his millions of dollars of indebtedness in "relocation loans", even though SEC rules require that the Company disclose loans to senior executives that amount, in aggregate, to over $60,000. 52. In addition, instead of disclosing Kozlowski's loans, Belnick also approved language in Tyco's SEC filings that gave varying descriptions of how the Key Employee Loan Program was being used by Kozlowski, and which helped to conceal Kozlowski's abuse of that program. During the week of June 3-7, 2002, Belnick agreed that it was wrong for Kozlowski to use the Company's Key Employee Loan Program for purposes other than the purchase of stock. However, Belnick falsely advised a member of Tyco's Board that Kozlowski's conduct was not significant because Kozlowski repaid the loans. 99.7-17 BELNICK'S WRONGFUL CONDUCT REGARDING THE WALSH PAYMENTS 53. As Chief Corporate Counsel of a company that was required by SEC rules to file public reports, one of Belnick's most important duties was to ensure that the Company properly and fully disclosed information that was required to be disclosed in those reports. In addition to Belnick's failure to discharge that duty diligently and in good faith regarding himself and Kozlowski. Belnick also breached his duties and acted in bad faith with regard to Kozlowski's unapproved $20 million payment to Walsh in July 2001. 54. The context of the Walsh payment is as follows: In late 2000, Walsh recommended to the Board the idea that Tyco acquire a financial services company. Walsh later proposed that Tyco specifically acquire The CIT Group, Inc. ("CIT"), and introduced Kozlowski to CIT's Chairman and CEO. Subsequent negotiations led to an agreement for Tyco to acquire CIT, which closed in June 2001. 55. After the terms of the CIT transaction had been agreed to, Walsh asked Kozlowski for a finder's fee to compensate him for his role in the transaction, and induced Kozlowski to agree to pay him $20 million, of which half would be given to a charitable fund designated by Walsh and over which Walsh would exercise control. Kozlowski agreed to make these payments without informing or obtaining approval from the Board or any committee. 56. Belnick has claimed that he was unaware of the payments at the time, and only learned of them in January 2002. Nevertheless, Belnick then breached his duties by failing to advise the Board that the $20 million payments, having been made without Board approval, were improper, and that the Company had a right to recover such 99.7-18 payments. Instead, Belnick conspired with Kozlowski and Walsh to try to induce the Board to approve such payments six months after the fact; failed to disclose either that scheme or the fact that the Board refused to approve the payments after the fact; and participated in making inaccurate assertions to the public concerning the payments. BELNICK WRONGLY CONCEALS THE KOZLOWSKI CRIMINAL INVESTIGATION FROM THE BOARD 57. Belnick was entrusted by the Board with responsibility for managing the Company's legal affairs. Implicit in that grant of authority was the understanding that Belnick would discharge his duties fairly and with undivided loyalty to his client, the Company. Both as a matter of law and as a matter of the ethical code to which he was bound as a member of the Bar, Belnick had affirmative duties to disclose any potential conflict or self-interest of any executive, including himself, in any pending legal matter, and to recuse himself from any matter where his own interests were at issue so that the Company could have independent and unbiased advice on which it could rely. 58. Belnick's conduct since early May constitutes a clear and deliberate breach of those duties through a pattern of non-disclosure, concealment, and obstruction, which has caused substantial harm to the Company. 59. On May 3, 2002, Belnick received a copy of a subpoena from the New York County District Attorney in connection with a criminal investigation of Kozlowski requesting documents relating to (a) Kozlowski's compensation and (b) Kozlowski's recent art purchases. Belnick was immediately aware of the seriousness of this investigation and the danger it posed to the Company, and in that same day he retained criminal counsel for both Kozlowski and Tyco. Because Belnick recognized that the 99.7-19 interests of Kozlowski and Tyco were in conflict, different law firms were retained to represent each. 60. Nevertheless, Belnick failed to inform the Board or its Corporate Governance Committee, or its Lead Director either of the criminal investigation of the Company's CEO or of the subpoena to the Company. 61. Belnick also knew that the Board had stepped up its oversight of Kozlowski in early 2002, after it learned that Kozlowski had agreed to pay Frank Walsh, then a Tyco director, $20 million in 2001 in relation to Tyco's acquisition of The CIT Group without the required Board approval. Nonetheless Belnick continued to protect the interests of himself and his patron Kozlowski at the expense of the interests of his client, the Company. 62. Indeed on May 23, 2002 Belnick met and conferred with the members of the Board in New York (with eight directors present in person and three by phone). Neither Kozlowski nor Belnick mentioned (on or off the record) the pending criminal investigation or the subpoena to the Company. 63. Belnick did not inform the Board, the Corporate Governance Committee, or the Lead Director of the criminal investigation or of the subpoenas until the evening of Friday May 31, after he had been told that Kozlowski was about to be indicted, and Kozlowski himself had begun to call directors to inform them of his impending indictment. 64. As the nature of Belnick's relationship with Kozlowski, and his own lack of disclosures regarding his compensation indicate, Belnick chose to conceal the criminal investigation of Tyco's CEO from the Board for weeks, and until he had no choice but to 99.7-20 do so, because Belnick was seeking to protect Kozlowski, and Belnick's own position with the Company, rather than acting in good faith with regard to Tyco's interests. 65. May 31 was a Friday; on the evening of Sunday, June 2, the Tyco Board met by phone and requested Kozlowski's resignation as Chairman, CEO and director, and Kozlowski tendered his resignation. On Monday, June 3, the District Attorney held a press conference to announce its investigation and on Tuesday June 4, Kozlowski was indicted. Tyco's stock dropped from a closing price of $21.95 on May 31, 2002, to $16.45 on Tuesday, June 4 (a drop of approximately 25%) after the announcement of Kozlowski's indictment. BELNICK RENEGES ON HIS PROMISE TO COOPERATE WITH THE CORPORATE GOVERNANCE COMMITTEE'S INVESTIGATION 66. As Tyco's Chief Corporate Counsel Belnick was bound, under his professional duty as a lawyer and his duties of honesty and good faith as an officer of the Company, to act honestly and in good faith in the Company's best interest. To the extent that outside counsel were retained to investigate the conduct of the Company's officers or directors, Belnick owed the Company his fidelity to act honestly and in good faith to facilitate that investigation. 67. In the first week of May 2002, Tyco's Corporate Governance Committee contacted David Boies of Boies, Schiller & Flexner concerning Kozlowski's payment of $20 million to then-director Frank Walsh in connection with Tyco's acquisition of The CIT Group in 2001. On May 17, 2002, the Boies firm was formally retained to represent the Company "in connection with the Committee's review and analysis of transactions between and among Tyco and its subsidiaries and certain of Tyco's directors and officers, 99.7-21 and any litigation arising from or relating to that review and analysis." Belnick was aware of this retention and did not dispute the Committee's authority to retain the Boies firm, and did not demand control over the investigation. 68. On June 2, 2002, with Belnick on the phone, the Company's Lead Director, John F. Fort III, and members of the Corporate Governance Committee asked the Boies firm to represent the Company in conducting an internal investigation of issues raised by, or related to, the District Attorney's investigation. 69. On the following Monday, June 3, without any discussion with Messrs. Boies, Fort, or the Board, Belnick unilaterally requested that another outside law firm immediately attempt to interview personnel and collect documents before the Boies firm could do so. 70. When Belnick's instructions to other Tyco counsel were discovered later during the day of June 3, Belnick promised that other Tyco counsel's work product and information would be freely available to the Boies firm and that the Boies firm could participate in any interviews conducted by other Tyco counsel in which the Boies firm wished to participate. At no time on June 3 in any of the discussions that Belnick had with lawyers from the Boies firm and with other personnel of the Company about the work of the Boies firm, did Belnick ever suggest that the Boies firm had not been retained to represent the Company or that such retention was in any way unauthorized. 71. Tuesday, Wednesday, Thursday, and Friday, June 4-7, Belnick promised Fort and others that he and other Tyco counsel would cooperate fully with the Boies firm's investigation, that all documents and information that Belnick had or that other 99.7-22 Tyco counsel obtained would be shared with the Boies firm, and that the Boies firm was free to participate in any interviews conducted by other Tyco counsel. a. Although Belnick failed to implement his promises of support and cooperation, at no time did Belnick suggest that the Boies firm had not been retained to represent the Company, or that such retention was in any way unauthorized, or that he objected to such retention. b. Indeed, during this period Fort personally met with Belnick and urged Belnick to begin implementing his promised cooperation with the Boies firm's investigation. At no time during those conversations did Belnick question whether the Boies firm had been properly retained to conduct such an investigation or raise any objection to such retention. 72. Belnick was aware that the press was informed in response to questions on Wednesday and Thursday, June 5-6, that the Boies firm had been retained by the Company to do a broad internal investigation, and Belnick listened to Fort's presentation to analysts on Friday, June 7, in which Fort said that the Boies firm had been retained by the Company for such purposes. Again, at no time did Belnick question whether the Boies firm had, in fact, been properly retained by the Company to do an internal investigation or raise any objection to such retention. 73. On Friday, June 7, Belnick was again told that Boies, Schiller & Flexner had been retained by the Company to do an internal investigation, and that despite numerous promises from Belnick that he and other Tyco counsel would cooperate in that investigation, the Boies firm had still not begun to receive information from Belnick or other Tyco counsel, and that the Boies firm was not being informed when and where other Tyco counsel interviews were being conducted so that the Boies firm would have an opportunity to participate. a. Belnick reiterated that he and other Tyco counsel would cooperate. Indeed, Belnick said he and other Tyco counsel would be at the Company's Boca Raton offices on the following Monday (June 10) and 99.7-23 that lawyers for the Boies firm were free to join them to participate in interviewing Company personnel and reviewing Company documents. It was agreed that lawyers from the Boies firm would meet Belnick and other Tyco counsel at 10:00 a.m. Monday at the Company's Boca Raton offices to begin joint work. b. Belnick also agreed that a conference call with other Tyco counsel would be set up over the weekend during which the other Tyco counsel would brief Boies and others concerning what Tyco's other counsel had discovered. (The following day, June 8, it was agreed that such conference call would take place late afternoon or early evening on Sunday, June 9.) 74. On Sunday, June 9, Belnick cancelled the conference call on which other Tyco counsel was supposed to brief the Boies firm as to what other Tyco counsel had discovered. Belnick also instructed other Tyco counsel not to share their information with the Boies firm or permit the Boies firm to participate in other Tyco counsel interviews except as Belnick might agree on a case-by-case basis. 75. On Monday, June 10, when attorneys from the Boies firm arrived at the Company's Boca Raton offices they were informed Belnick had given instructions that they were not to be permitted to participate in the interviews that were scheduled and that other Tyco counsel had been instructed not to share information with them. The Boies firm attorneys also discovered that Belnick had not come to Boca Raton as promised, but was in his New York City office packing up boxes. 76. Belnick's efforts to frustrate the Committee's investigation, and his repudiation of his promise to cooperate, evince his conflict of interest between his personal agenda and his obligations to Tyco, and constitute a breach of his professional duties as a lawyer, and his fiduciary duties as a Tyco officer. 99.7-24 BELNICK'S EFFORT TO REMOVE FILES AND TO DELETE COMPUTER FILES 77. Early on the morning of Monday June 10, 2002, Belnick entered the New York offices of Tyco and directed Tyco and other personnel to commence packing boxes with numerous files maintained in the vicinity of his office. 78. On information and belief, most of those files were the property of Tyco. 79. Belnick also deleted folders, files and numerous documents from his computer relating to his compensation and employment matters, memoranda to Kozlowski, and other confidential Tyco documents. 80. Belnick was aware that the electronic files that he deleted were Tyco property, since a Tyco policy, effective as of October 1, 2000, approved by Belnick for dissemination to Tyco employees generally in a handbook entitled "Standards of Conduct" provides in pertinent part: "E-mail and other electronic data created, sent or stored on Company property (including data accessed, copied or printed from the Internet) is Company property." 81. Belnick's conduct in deleting electronic information on June 10, 2002 was a breach of his fiduciary duties to the Company and constituted attempted theft or destruction of Company property that breached his ethical obligations to this client. WITH A CRIMINAL INVESTIGATION PENDING, BELNICK'S COUNSEL DEMANDS THAT TYCO DESTROY DOCUMENTS 82. On June 10, 2002, Belnick's Counsel, the law firm of Arkin Kaplan & Cohen ("the Arkin firm"), demanded that Tyco return 20 boxes of files packed by Belnick's assistant earlier that morning and that no copies be made of those files. In response, Tyco's counsel advised the Arkin firm that it was conducting a review of the 99.7-25 relevant documents to determine whether they were business or personal files and that Tyco reserved the right to copy documents as appropriate. 83. On June 12, 2002, the Arkin firm reiterated its demand that the files be returned without copying and further demanded that Tyco's counsel "delete the Quicken program and all of Belnick's financial data on the computer in his office." 84. At the time that it made that demand, Belnick and the Arkin firm knew that both the New York County District Attorney's Office and the Securities and Exchange Commission were conducting inquiries and had issued subpoenas demanding documents from Tyco. 85. On June 13, 2002, Tyco's counsel advised the Arkin firm that "[in] the circumstances, it would be highly inappropriate to release Belnick's files," noting that an internal investigation by Tyco's counsel "requires a careful review" of the files and that "the files are obviously of potential interest to various investigative agencies." Tyco's counsel further advised the Arkin firm that it was "astonished" at the suggestion that financial data be deleted under these circumstances. 86. On June 14, 2002, the Arkin firm reiterated its request that Tyco's counsel delete the Quicken file. 87. True and correct copies of the above-referenced correspondence between the Arkin firm and Tyco's counsel is annexed hereto as Ex. A-_ and are incorporated by reference into this Complaint. FIRST CAUSE OF ACTION (BREACH OF FIDUCIARY DUTY) 88. Plaintiff realleges paragraphs 1 through 87 as if fully set forth herein. 99.7-26 89. As an officer of the Company, Belnick owed Tyco strict fiduciary duties. Belnick was required to act honestly and in good faith with a view to the best interests of the Company and to exercise the care, diligence, and skill that a reasonably prudent person would exercise in comparable circumstances. Belnick's position as Tyco's Chief Corporate Counsel imposed on him further professional and ethical obligations and duties. Belnick knew that the Board was trusting and relying on him to exercise the highest level of care regarding his professional duties. 90. As set forth in more detail above, Belnick failed to fulfill his obligations to the Company, failed to faithfully execute service, and breached his duties to Tyco in various ways, including by a. soliciting and receiving unreasonable compensation; b. failing to inform, and concealing from, the Board the true facts concerning the amount of his own compensation; c. failing to obtain Board approval for his compensation and agreements related thereto; d. improperly appropriating Company funds to his own use through more than $14 million in improper "loans", none of which has been repaid; e. improperly appropriating Company funds to his own use for personal expenses, including more than $1600 per month of expenses for his Utah resort home; f. failing to inform the Board of the true facts concerning the payments to Walsh and interfering with efforts to recover such payments; g. failing to take steps to ensure that the Company recovered the improper payments to Walsh and attempting to prevent the Company from doing so; h. failing to inform the Board of the true facts concerning loans granted to Kozlowski; 99.7-27 i. failing to inform the Board about the criminal investigation of Kozlowski and the hiring of criminal defense counsel for Kozlowski and the Company; j. failing to ensure that the Company's SEC filings contained accurate disclosures; and k. failing to cooperate with and actively impeding the Board's efforts to investigate these matters. 91. As a direct and proximate result of Belnick's breaches of his fiduciary duties, the Company has been damaged in an amount to be determined at trial. 92. Because of the willful, wanton, and intentional nature of Belnick's conduct, and his abuse of his position of trust, Belnick is also liable for punitive damages in an amount to be determined at trial. SECOND CAUSE OF ACTION (INDUCING BREACH OF FIDUCIARY DUTY) 93. Plaintiff realleges Paragraphs 1 through 87 as if fully set forth herein. 94. As an officer of the Company, Belnick owed Tyco strict fiduciary duties. Belnick was required to act honestly and in good faith with a view to the best interests of the Company and to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. As the Company's chief legal counsel, Belnick also owed particular duties to the Company, and knew that the Board was trusting and relying on him to exercise the highest level of care regarding his professional duties. 95. Belnick was well aware of his duties to the Board and chose not to fulfill them. Rather, he used his position as Chief Corporate Counsel to induce others within 99.7-28 the Company, including Kozlowski, to breach their fiduciary duties to Tyco, and to fail to faithfully execute service to their fiduciary, Tyco. 96. Like Belnick, the other senior officers and directors of the Company, including Kozlowski, owed Tyco strict fiduciary duties to act honestly and in good faith with a view to the best interests of the Company and to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. 97. Belnick breached his duties to the Company and failed to faithfully execute service by knowingly using his position as Chief Corporate Counsel to induce others within the Company, including Kozlowski, to breach their fiduciary duties to Tyco. Belnick and Kozlowski combined to jointly take improper advantage of the Company, with each acting to protect the interests of the other at the expense of the interests of the Company. 98. Belnick induced Kozlowski to breach his duties to the Company in various ways, including: a. not advising the Board of the details concerning the amount of Belnick's compensation; b. twice permitting Belnick to participate improperly in the Company's relocation loan program, borrowing over $14 million to which he was not entitled, none of which has been repaid; c. providing Belnick with unreasonable compensation and concealing that compensation from the Board. 99. As a direct and proximate result of these breaches of fiduciary duty by others, the Company has been damaged in various ways. Belnick is therefore liable to Tyco for all damages proximately caused by the breaches of fiduciary duty he induced. 99.7-29 100. Because of the willful, wanton, and intentional nature of Belnick's conduct, and his abuse of his position of trust, Belnick is also liable for punitive damages in an amount to be determined at trial. THIRD CAUSE OF ACTION (CONSPIRACY TO BREACH FIDUCIARY DUTY) 101. Plaintiff realleges paragraphs 1 through 87 as if fully set forth herein. 102. As two of the most senior officers of the Company, Belnick and Kozlowski owed Tyco strict fiduciary duties. Belnick and Kozlowski were required to act honestly and in good faith with a view to the best interests of the Company and to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. Each of Belnick and Kozlowski knew that the Board was trusting and relying on them to faithfully and diligently execute their respective tasks with the highest level of professional skill. 103. Rather than fulfill their duties to the Company, Belnick and Kozlowski agreed and conspired to work together to breach their duties to the Company and fail to faithfully execute service to their fiduciary, Tyco. Kozlowski would not have been able to breach his own fiduciary duties to the Company if Belnick had not been willing to go along. 104. Belnick and Kozlowski acted in furtherance of their conspiracy by a. failing to inform the Board of the true facts concerning the amount of Belnick's compensation; b. failing to obtain Board approval for Belnick's compensation and agreements related thereto; 99.7-30 c. allowing Belnick to participate improperly twice in the Company's relocation loan program, borrowing over $14 million to which he was not entitled, none of which has been repaid; d. failing to inform the Board of the true facts concerning improper compensation paid to Walsh; e. failing to take steps to ensure that the Company recovered the improper compensation to Walsh and attempting to prevent the Company from doing so; f. failing to inform the Board of the true facts concerning Kozlowski's compensation and loans made to Kozlowski; g. failing to inform the Board about the criminal investigation of Kozlowski and the hiring of criminal defense counsel for Kozlowski and the Company; h. failing to ensure that the Company's SEC filings contained accurate disclosures; and i. failing to cooperate with and actively impeding the Board's efforts to investigate these matters. 105. As a direct and proximate result of the conspiracy between Belnick and Kozlowski to breach their fiduciary duties, the Company has been damaged. Belnick is therefore liable to Tyco for all damages proximately caused by the breaches of fiduciary duty by Belnick and Kozlowski. 106. Belnick is therefore liable to Tyco for all damages proximately caused by his agreement and conspiracy with Kozlowski to breach their fiduciary duties to Tyco. 107. Because of the willful, wanton, and intentional nature of Belnick's conduct, and his abuse of his position of trust, Belnick is also liable for punitive damages in an amount to be determined at trial. 99.7-31 FOURTH CAUSE OF ACTION (ACCOUNTING) 108. Plaintiff realleges paragraphs 1 through 87, 89-91, 94-99, and 102-105 as if fully set forth herein. 109. As an officer of the Company, Belnick owed Tyco strict fiduciary duties. Belnick was required to act honestly with full disclosure and in good faith with a view to the best interests of the Company, and to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. As the Company's chief legal counsel, Belnick also owed particular duties to the Company, and knew that the Board was trusting and relying on him to exercise the highest level of care regarding his professional duties. 110. Belnick breached his fiduciary and other duties to the Company, and failed to faithfully execute service, in various ways, and profited from his breach of duty through the receipt of unauthorized and undisclosed compensation, interest-free use of millions of dollars of Tyco's funds for unauthorized "relocation loans", and unauthorized grants of hundreds of thousands of shares of Company stock, which Belnick promptly sold and on which he earned millions. 111. Belnick commingled the funds he received in breach of his fiduciary duties, and the proceeds obtained on his use of those funds, with his own funds. 112. As a fiduciary, Belnick must account to his principal, Tyco, for the funds that he received during the course of his employment, including over $14 million he has received as so-called "relocation loans," none of which has been repaid, as well as any damage caused to the Company by virtue of his self dealing. 99.7-32 113. Belnick must therefore account to Tyco for the funds that he received during the course of his employment, including an accounting for the interest on the funds he obtained and benefits he obtained as a result of his wrongful use of the Company's funds. FIFTH CAUSE OF ACTION (CONSTRUCTIVE TRUST) 114. Plaintiff realleges paragraphs 1 through 87, 89-91, 94-99, and 102-105 as if set forth fully herein. 115. From the inception of his employment with Tyco, Belnick was a disloyal fiduciary: he used his position as Chief Corporate Counsel to breach his own duties to the Company, induce Kozlowski to breach the latter's duties to the Company, and agreed and conspired with Kozlowski to breach their respective duties to the Company. 116. Belnick profited and was enriched by his various breaches of duty, including through his unauthorized grants of stock and by his wrongful use of over $14 million of Tyco's money through interest-free "Relocation Program" loans to which he was not entitled. 117. As a disloyal fiduciary who profited as a result of his disloyalty, Belnick is deemed to hold the funds and benefits he has received, and the interest and proceeds obtained on the use of the funds he wrongfully received, in constructive trust for the benefit of Tyco. SIXTH CAUSE OF ACTION (DECLARATORY JUDGMENT) 118. Plaintiff realleges paragraphs 1 through 87, 89-91, 94-99, and 102-105 as if fully set forth herein. 99.7-33 119. Belnick's 2002 "Retention Agreement" was, as noted above, procured by Belnick from Kozlowski without providing independent counsel to represent the Company. 120. Belnick has claimed, through his counsel, that he is entitled to the funds and benefits set forth in his 2002 Retention Agreement. Tyco has taken the position that Belnick's Retention Agreement is not valid or enforceable, and that Belnick owes the Company a substantial amount of money. 121. There is an actual and ripe controversy between the parties, and the interests of justice would be served by an adjudication of the parties' respective rights and obligations in this proceeding. 122. Plaintiff therefore asks for a declaratory judgment that the 2002 Retention Agreement is void and not effective and that the Company owes Belnick no obligation thereunder. SEVENTH CAUSE OF ACTION (FRAUD) 123. Tyco realleges paragraphs 1 through 87, 89-91, 94-99, and 102-105 as more fully set forth herein. 124. On or about the dates listed below, Belnick purported to make, execute and deliver Notes to Tyco in the following amounts, with the following interest rates:
Date Amount Interest Rate ---- ------ ------------- September 4, 1998 $ 275,000.00 Long term annual rate under IRC Section 1274(d) November 6, 1998 2,610,000.00 0% January 19, 1999 120,000.00 0% March 16, 1999 200,000.00 0% April 13, 1999 60,000.00 0%
99.7-34 May 5, 1999 250,000.00 0% June 18, 1999 141,000.00 0% July 13, 1999 106,000.00 0% August 5, 1999 200,000.00 0% August 25, 1999 105,000.00 0% October 14, 1999 150,000.00 0% February 16, 2000 75,000.00 0% July 12, 2000 50,000.00 0% August 21, 2000 50,000.00 0% April 6, 2001 50,000.00 0% May 22, 2001 50,000.00 0% September 4, 2001 10,056,767.84 0% October 30, 2001 240,370.85 0% December 3, 2001 46,359.09 0% January 3, 2002 14,843.08 0% January 28, 2002 10,000.00 0% March 13, 2002 50,258.49 0% ----------------- $ 14,910,599.35
True and correct copies of the Notes, except the note dated August 21, 2000, which is hereby demanded from Belnick, are attached hereto as Exhibit I and by this reference incorporated herein. 125. Belnick obtained these loans purportedly pursuant to the Company's relocation program and knew that the program was intended to assist employees whom Tyco transferred from one office to another, requiring a change of residence. 126. Belnick knew or should have known that because the Company never transferred him from one Company office to another, his former principal place of business was only a few blocks from the office of Tyco, and his residence in the Westchester suburb of Harrison was less than 50 miles from his new residence in Manhattan, he did not qualify to participate in the Company's relocation loan program. 99.7-35 127. Belnick knew or should have known that his intended move to Manhattan was not a valid relocation, either under the Relocation Loan Program adopted by Tyco or under the rules of the Internal Revenue Service. 128. Belnick also knew or should have know that his decision to move his residence to Utah, where Tyco had no office, also did not qualify as a valid relocation under the Tyco program. 129. Belnick misrepresented his entitlement to the program loans and, in reliance thereon Tyco loaned monies to him at a zero percent interest. 130. Because Belnick procured the so-called "relocation loans" under false pretenses and used the loan proceeds for unauthorized purposes, the Notes are fraudulently procured and voidable. 131. Tyco is therefore entitled to rescission of the Notes and immediate repayment from Belnick of the full amount due on the Notes plus interest at the maximum rate allowed by law. WHEREFORE, Tyco respectfully requests that the Court enter judgment in Plaintiff Tyco's favor, and against Defendant Belnick, as follows: A. Ordering Belnick to disgorge all of his compensation and profits received as a result of his employment at Tyco, with interest as allowed by law; B. imposing a constructive trust on all funds and remuneration wrongfully received by Belnick, and any proceeds obtained by Belnick as a result of his use of said funds and remuneration; C. Ordering Belnick to repay immediately all funds he has improperly borrowed from the Company; D. Ordering Belnick to compensate Tyco for all damage suffered as a result of Belnick's breaches of duty and wrongful conduct alleged herein; 99.7-36 E. Awarding Tyco exemplary and punitive damages; and F. Such other and further relief, including interest, costs, disbursements and attorneys' fees incurred herein, as permitted by law. New York, New York June 17, 2002 BOIES, SCHILLER & FLEXNER LLP By: /s/ Paul R.Verkuil ------------------------ Paul R. Verkuil (PV-5978) Harlan Levy Nicholas J. Gravante, Jr. 570 Lexington Avenue, 16th Floor New York, New York 10022 (212) 446-2300 Ann M. Galvani Andrew W. Hayes BOIES, SCHILLER & FLEXNER LLP 80 Business Park Drive, Suite 110 Armonk, New York 10504 (914) 273-9800 ATTORNEYS FOR PLAINTIFF TYCO INTERNATIONAL LTD. 99.7-37 [EXHIBITS TO BELNICK COMPLAINT] 99.7-38 EXHIBIT A 99.7-39 [LETTERHEAD OF ARKIN KAPLAN & COHEN LLP] June 10, 2002 VIA FACSIMILE Irving Gutin, Esq. Tyco International Inc. 9 West 57th Street, 43rd Flr. New York, NY 10019 Dear Mr. Gutin: We represent Mark Belnick: It is our understanding that Mr. Belnick's assistant has packed 20 boxes containing personal documents. These documents do not relate to Tyco, and many of them are highly confidential, such as tax returns. We understand that someone has requested on behalf of Tyco copies of some or all of these documents. While we have allowed attorneys from Boies & Schiller to review the boxes and index them to ensure that the documents therein are all personal, we will not allow any copies to be made. Tyco's request is an invasion of privacy and is unreasonable. Mr. Belnick needs some of these documents promptly. Please notify us as to when we can pick them up. Sincerely, /s/ Howard J. Kaplan Howard J. Kaplan 99.7-40 EXHIBIT B 99.7-41 [LETTERHEAD OF BOIES, SCHILLER & FLEXNER LLP] June 11, 2002 VIA FACSIMILE AND MAIL Howard J. Kaplan, Esq. Arkin Kaplan & Cohen LLP 590 Madison Avenue New York, New York 10022 Dear Mr. Kaplan: This letter responds to your letter of June 10, 2002 to Irving Gutin of Tyco International. We are conducting a review of the relevant documents to determine which are business and which are personal. We reserve the right to copy documents as appropriate. Very truly yours, /s/ Harlan A. Levy Harlan A. Levy 99.7-42 EXHIBIT C 99.7-43 [ARKIN KAPLAN & COHEN LLP LETTERHEAD] June 12, 2002 VIA FACSIMILE AND REGULAR MAIL Harlan A. Levy, Esq. Boies, Schiller & Flexner LLP 570 Lexington Avenue New York, NY 10022 Dear Mr. Levy: Further to my letter of this morning, please delete the Quicken program and all of Mr. Belnick's financial data on the computer in his office. These files are entirely personal and all reside on the computer's local hard drive. We instruct you not to review or copy this information. Any such action would be a serious invasion of Mr. Belnick's privacy. In addition, please provide a copy of all of Mr. Belnick's emails. These emails are located in Mr. Belnick's Microsoft Outlook and include individual email file folders. Many of these emails are personal in nature and should not be reviewed or read by your firm or anyone else. If you have any questions about whether particular emails are personal in nature you can send us a list and we can identify them. Finally, please forward any mail that Mr. Belnick has received to my office. We will be providing you shortly with a new email address to which you can forward all of his emails. Sincerely, /s/ Howard J. Kaplan Howard J. Kaplan 99.7-44 EXHIBIT D 99.7-45 [LETTERHEAD OF ARKIN KAPLAN & COHEN LLP] June 13, 2002 VIA FACSIMILE AND REGULAR MAIL Harlan A. Levy, Esq. Boies, Schiller & Flexner LLP 570 Lexington Avenue New York, NY 10022 Dear Mr. Levy: Please advise me promptly as to when we can pick up Mr. Belnick's files. Please also confirm that you have compiled with our requests and instructions set forth in my letters dated June 10 and June 12, 2002, including but not limited to making a copy of all of Mr. Belnick's emails for us (including personal and Tyco related), and not copying or reviewing any personal documents or emails. Sincerely /s/ Howard J. Kaplan Howard J. Kaplan 99.7-46 EXHIBIT E 99.7-47 [LETTERHEAD OF BOIES, SCHILLER & FLEXNER LLP] June 13, 2002 VIA FACSIMILE & US MAIL Howard J. Kaplan, Esq. Arkin, Kaplan & Cohen, LLP 590 Madison Avenue, 35th Floor New York, NY 10022 Re: MARK BELNICK Dear Mr. Kaplan: I have your three letters of June 12 and June 13, 2002. My previous letter to your stands. Your requests are misplaced, to say the very least. In the circumstances, it would be highly inappropriate for me to release. Mr. Belnick's files to you. In addition to our internal investigation, which requires a careful review of which files are personal and which are not, the files are obviously of potential interest to various investigative agencies. I can hardly release them to you given that fact. Moreover, I am astonished that you would suggest that I "delete" financial data. I need not elaborate on the inappropriateness of that request in the circumstances. Very truly yours, /s/ Harlan A. Levy Harlan A. Levy 99.7-48 EXHIBIT F 99.7-49 [LETTERHEAD OF ARKIN KAPLAN & COHEN LLP] June 14, 2002 VIA FEDERAL EXPRESS AND FACSIMILE Harlan A. Levy, Esq. Boies, Schiller & Flexner LLP 570 Lexington Avenue New York, NY 10022 Dear Mr. Levy: I am requesting that you provide us with copies of all Tyco-related files which are in Mark Belnick's Boca Raton office as well as those near the desk of his Executive Assistant, Mary Cherry. Please also return to Mr. Belnick any and all personal files, information and items which he kept at his Boca office. Very truly yours, /s/ Hyman L. Schaffer Hyman L. Schaffer cc: Irving Gutin, Esq. 99.7-50 EXHIBIT G 99.7-51 [LETTERHEAD OF ARKIN KAPLAN & COHEN LLP] June 14, 2002 VIA FACSIMILE AND REGULAR MAIL Harlan A. Levy, Esq. Boies, Schiller & Flexner LLP 570 Lexington Avenue New York, NY 10022 Dear Mr. Levy: You have had control over and full access to Mr. Belnick's files since Tyco fired him on Monday and have had more than ample opportunity to index them since then. As you well know, we are not asking you to return or destroy any files that pertain to Tyco or its business, and your insinuation that we are asking you to do anything illegal or improper is both wrong and offensive. There is and has been no one more eager than Mr. Belnick to ensure that all appropriate authorities have full access to Tyco's files at the earliest possible time. That was his view at Tyco and remains his view now, and he will do everything appropriate to facilitate that. To be perfectly clear, we are asking you to return (or delete in the case of the Quicken file, which has only Mr. Belnick's personal financial materials) information that is highly personal and private to Mr. Belnick. Obviously, you will need to review the information to some limited degree to determine whether that is so. Once you do that, your continued holding of Mr. Belnick's personal files is illegal, not to mention indecent, and, particularly with respect to Mr. Belnick's financial information, is causing him continuing damage. If Mr. Belnick's personal files and information are not returned by Monday, or if any of that information finds its way into hands other than Mr. Belnick's, you can rest assured that we will hold you, your firm and your client fully accountable in all ways. Very truly yours, /s/ Hyman L. Schaffer Hyman L. Schaffer cc: Irving Gutin, Esq. 99.7-52 EXHIBIT H 99.7-53 [LETTERHEAD OF BOIES, SCHILLER & FLEXNER LLP] June 16, 2002 VIA FASCIMILE (212)333-2350 Hyman L. Schaffer, Esq. Arkin Kaplan & Cohen 590 Madison Avenue New York, NY 10022 Dear Mr. Schaffer: Your letter of June 14, 2002 asserts that Mr. Belnick's lack of certain personal financial information is causing him "continuing damage." Should you wish to identify specific personal materials that you would like to have copied and supplied to Mr. Belnick, you should clearly identify those materials with specificity, so that we can evaluate your request as expeditiously as possible. In the meantime, in response to your other points, I once again refer you to my earlier letters. Very truly yours, /s/ Harlan A. Levy Harlan A. Levy 99.7-54 EXHIBIT I 99.7-55 $275,000 New York, NY September 4, 1998 PROMISSORY NOTE FOR VALUE RECEIVED, the undersigned, MARK A. BELNICK ("Borrower"), hereby promises to pay to the order of TME Management Corp., a Delaware corporation ("Lender"), in lawful money of the United States of America, at its offices at 15 Hampshire Street, Mansfield, MA 02048, on September 4, 1998, the principal sum of Two Hundred Seventy Five Thousand Dollars ($275,000). This Note will bear interest at the rate of the long term annual applicable federal rate under Section 1274(d) of the Internal Revenue Code of 1954, as amended, adjusted annually, to the date of maturity, but thereafter will bear interest at the rate of one (1) percent per annum over the prime rate as announced by Morgan Guaranty Trust Company in effect on the maturity date and from time to time thereafter, or at the legal rate, whichever is greater, as allowed by and determined in accordance with applicable law, until fully paid. In the event that Borrower shall fail to make full and timely payment of the principal payment hereunder when due, then the entire unpaid principal amount of this Note shall automatically become immediately due and payable without demand or notice, and Borrower shall pay such further amount as shall be sufficient to cover all costs and expenses (including reasonable attorneys' fees) directly or indirectly incurred by Lender in connection with the collection of this Note. Borrower hereby waives notice of default, notice of acceleration, notice of prepayment, presentment, protest or notice of dishonor. /s/ Mark A. Belnick ------------------- MARK A. BELNICK 99.7-56 NOTE $2,610,000 New York, NY November 6, 1998 FOR VALUE RECEIVED, the undersigned, MARK A. BELNICK ("Borrower"), hereby promises to pay to the order of TME MANAGEMENT CORP., a Delaware corporation ("Lender"), in lawful money of the United States of America, at its offices at 15 Hampshire Street, Mansfield, MA 02048 on November 6, 2013, the principal sum of Two Million Six Hundred Ten Thousand Dollars ($2,610,000). This Note will bear no interest to the date of maturity but thereafter will bear interest at the rate of one (1) percent per annum over the prime rate as announced by Morgan Guaranty Trust Company in effect on the maturity date and from time to time thereafter, or at the legal rate, whichever is greater, as allowed by and determined in accordance with applicable law, until fully paid. This Note is made pursuant to and shall be repaid in accordance with the provisions of that certain Loan Agreement, dated September 4, 1998, by and between Lender and Borrower. In the event that Borrower shall fail to make full and timely payment of the principal payment hereunder when due, then the entire unpaid principal amount of this Note shall automatically become immediately due and payable without demand or notice and Borrower shall pay such further amount as shall be sufficient to cover all costs and expenses (including reasonable attorneys' fees) directly or indirectly incurred by Lender in connection with the collection of this Note. Borrower hereby waives notice of default, notice of acceleration, notice of prepayment, presentment, protest or notice of dishonor. /s/ Mark A. Belnick ------------------- MARK A. BELNICK 99.7-57 NOTE $120,000 New York, NY January 19, 1999 FOR VALUE RECEIVED, the undersigned, MARK A. BELNICK ("Borrower"), hereby promises to pay to the order of TME MANAGEMENT CORP., a Delaware corporation ("Lender"), in lawful money of the United States of America, at its offices at 15 Hampshire Street, Mansfield, MA 02048 on January 19, 2014, the principal sum of One Hundred Twenty Thousand Dollars ($120,000). This Note will bear no interest to the date of maturity but thereafter will bear interest at the rate of one (1) percent per annum over the prime rate as announced by Morgan Guaranty Trust Company in effect on the maturity date and from time to time thereafter, or at the legal rate, whichever is greater, as allowed by and determined in accordance with applicable law, until fully paid. This Note is made pursuant to and shall be repaid in accordance with the provisions of that certain Loan Agreement, dated September 4, 1998, by and between Lender and Borrower. In the event that Borrower shall fail to make full and timely payment of the principal payment hereunder when due, then the entire unpaid principal amount of this Note shall automatically become immediately due and payable without demand or notice and Borrower shall pay such further amount as shall be sufficient to cover all costs and expenses (including reasonable attorneys' fees) directly or indirectly incurred by Lender in connection with the collection of this Note. Borrower hereby waives notice of default, notice of acceleration, notice of prepayment, presentment, protest or notice of dishonor. /s/ Mark A. Belnick ------------------- MARK A. BELNICK 99.7-58 NOTE $200,000 New York, NY March 16, 1999 FOR VALUE RECEIVED, the undersigned, MARK A. BELNICK ("Borrower"), hereby promises to pay to the order of TME MANAGEMENT CORP., a Delaware corporation ("Lender"), in lawful money of the United States of America, at its offices at 15 Hampshire Street, Mansfield, MA 02048 on March 16, 2014, the principal sum of Two Hundred Thousand Dollars ($200,000). This Note will bear no interest to the date of maturity but thereafter will bear interest at the rate of one (1) percent per annum over the prime rate as announced by Morgan Guaranty Trust Company in effect on the maturity date and from time to time thereafter, or at the legal rate, whichever is greater, as allowed by and determined in accordance with applicable law, until fully paid. This Note is made pursuant to and shall be repaid in accordance with the provisions of that certain Loan Agreement, dated September 4, 1998, by and between Lender and Borrower. In the event that Borrower shall fail to make full and timely payment of the principal payment hereunder when due, then the entire unpaid principal amount of this Note shall automatically become immediately due and payable without demand or notice and Borrower shall pay such further amount as shall be sufficient to cover all costs and expenses (including reasonable attorneys' fees) directly or indirectly incurred by Lender in connection with the collection of this Note. Borrower hereby waives notice of default, notice of acceleration, notice of prepayment, presentment, protest or notice of dishonor. /s/ Mark A. Belnick ------------------- MARK A. BELNICK 99.7-59 NOTE $60,000 New York, NY April 13, 1999 FOR VALUE RECEIVED, the undersigned, MARK A. BELNICK ("Borrower"), hereby promises to pay to the order of TME MANAGEMENT CORP., a Delaware corporation ("Lender"), in lawful money of the United States of America, at its offices at 15 Hampshire Street, Mansfield, MA 02048 on April 13, 2014, the principal sum of SIXTY THOUSAND DOLLARS ($60,000). This Note will bear no interest to the date of maturity but thereafter will bear interest at the rate of one (1) percent per annum over the prime rate as announced by Morgan Guaranty Trust Company in effect on the maturity date and from time to time thereafter, or at the legal rate, whichever is greater, as allowed by and determined in accordance with applicable law, until fully paid. This Note is made pursuant to and shall be repaid in accordance with the provisions of that certain Loan Agreement, dated September 4, 1998, by and between Lender and Borrower. In the event that Borrower shall fail to make full and timely payment of the principal payment hereunder when due, then the entire unpaid principal amount of this Note shall automatically become immediately due and payable without demand or notice and Borrower shall pay such further amount as shall be sufficient to cover all costs and expenses (including reasonable attorneys' fees) directly or indirectly incurred by Lender in connection with the collection of this Note. Borrower hereby waives notice of default, notice of acceleration, notice of prepayment, presentment, protest or notice of dishonor. /s/ Mark A. Belnick ------------------- MARK A. BELNICK 99.7-60 NOTE $250,000 New York, NY May 5, 1999 FOR VALUE RECEIVED, the undersigned, MARK A. BELNICK ("Borrower"), hereby promises to pay to the order of TME MANAGEMENT CORP., a Delaware corporation ("Lender"), in lawful money of the United States of America, at its offices at 15 Hampshire Street, Mansfield, MA 02048 on May 5, 2014, the principal sum of TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000). This Note will bear no interest to the date of maturity but thereafter will bear interest at the rate of one (1) percent per annum over the prime rate as announced by Morgan Guaranty Trust Company in effect on the maturity date and from time to time thereafter, or at the legal rate, whichever is greater, as allowed by and determined in accordance with applicable law, until fully paid. This Note is made pursuant to and shall be repaid in accordance with the provisions of that certain Loan Agreement, dated September 4, 1998, by and between Lender and Borrower. In the event that Borrower shall fail to make full and timely payment of the principal payment hereunder when due, then the entire unpaid principal amount of this Note shall automatically become immediately due and payable without demand or notice and Borrower shall pay such further amount as shall be sufficient to cover all costs and expenses (including reasonable attorneys' fees) directly or indirectly incurred by Lender in connection with the collection of this Note. Borrower hereby waives notice of default, notice of acceleration, notice of prepayment, presentment, protest or notice of dishonor. /s/ Mark A. Belnick ------------------- MARK A. BELNICK 99.7-61 NOTE $ 141,000 New York, NY June 18, 1999 FOR VALUE RECEIVED, the undersigned, MARK A. BELNICK ("Borrower"), hereby promises to pay to the order of TME MANAGEMENT CORP., a Delaware corporation ("Lender"), in lawful money of the United States of America, at its offices at 15 Hampshire Street, Mansfield, MA 02048 on June 18, 2014, the principal sum of Two Hundred Forty One Thousand Dollars ($241,000). This Note will bear no interest to the date of maturity but thereafter will bear interest at the rate of one (1) percent per annum over the prime rate as announced by Morgan Guaranty Trust Company in effect on the maturity date and from time to time thereafter, or at the legal rate, whichever is greater, as allowed by and determined in accordance with applicable law, until fully paid. This Note is made pursuant to and shall be repaid in accordance with the provisions of that certain Loan Agreement, dated September 4, 1998, by and between Lender and Borrower. In the event that Borrower shall fail to make full and timely payment of the principal payment hereunder when due, then the entire unpaid principal amount of this Note shall automatically become immediately due and payable without demand or notice and Borrower shall pay such further amount as shall be sufficient to cover all costs and expenses (including reasonable attorneys' fees) directly or indirectly incurred by Lender in connection with the collection of this Note. Borrower hereby waives notice of default, notice of acceleration, notice of prepayment, presentment, protest or notice of dishonor. /s/ Mark A. Belnick ------------------- MARK A. BELNICK 99.7-62 NOTE $106,000 New York, NY July 13, 1999 FOR VALUE RECEIVED, the undersigned, MARK A. BELNICK ("Borrower"), hereby promises to pay to the order of TME MANAGEMENT CORP., a Delaware corporation ("Lender"), in lawful money of the United States of America, at its offices at 15 Hampshire Street, Mansfield, MA 02048 on July 13, 2014, the principal sum of One Hundred Six Thousand Dollars ($106,000). This Note will bear no interest to the date of maturity but thereafter will bear interest at the rate of one (1) percent per annum over the prime rate as announced by Morgan Guaranty Trust Company in effect on the maturity date and from time to time thereafter, or at the legal rate, whichever is greater, as allowed by and determined in accordance with applicable law, until fully paid. This Note is made pursuant to and shall be repaid in accordance with the provisions of that certain Loan Agreement, dated September 4, 1998, by and between Lender and Borrower. In the event that Borrower shall fail to make full and timely payment of the principal payment hereunder when due, then the entire unpaid principal amount of this Note shall automatically become immediately due and payable without demand or notice and Borrower shall pay such further amount as shall be sufficient to cover all costs and expenses (including reasonable attorneys' fees) directly or indirectly incurred by Lender in connection with the collection of this Note. Borrower hereby waives notice of default, notice of acceleration, notice of prepayment, presentment, protest or notice of dishonor. /s/ Mark A. Belnick ------------------- MARK A. BELNICK 99.7-63 NOTE $200,000 New York, NY August 5, 1999 FOR VALUE RECEIVED, the undersigned, MARK A. BELNICK ("Borrower"), hereby promises to pay to the order of TME MANAGEMENT CORP., a Delaware corporation ("Lender"), in lawful money of the United States of America, at its offices at 15 Hampshire Street, Mansfield, MA 02048 on August 5, 2014, the principal sum of Two Hundred Thousand Dollars ($200,000). This Note will bear no interest to the date of maturity but thereafter will bear interest at the rate of one (1) percent per annum over the prime rate as announced by Morgan Guaranty Trust Company in effect on the maturity date and from time to time thereafter, or at the legal rate, whichever is greater, as allowed by and determined in accordance with applicable law, until fully paid. This Note is made pursuant to and shall be repaid in accordance with the provisions of that certain Loan Agreement, dated September 4, 1998, by and between Lender and Borrower. In the event that Borrower shall fail to make full and timely payment of the principal payment hereunder when due, then the entire unpaid principal amount of this Note shall automatically become immediately due and payable without demand or notice and Borrower shall pay such further amount as shall be sufficient to cover all costs and expenses (including reasonable attorneys' fees) directly or indirectly incurred by Lender in connection with the collection of this Note. Borrower hereby waives notice of default, notice of acceleration, notice of prepayment, presentment, protest or notice of dishonor. /s/ Mark A. Belnick ------------------ MARK A. BELNICK 99.7-64 NOTE $ 105,000 New York, NY August 25, 1999 FOR VALUE RECEIVED, the undersigned, MARK A. BELNICK ("Borrower"), hereby promises to pay to the order of TME MANAGEMENT CORP., a Delaware corporation ("Lender"), in lawful money of the United States of America, at its offices at 15 Hampshire Street, Mansfield, MA 02048 on August 25, 2014, the principal sum of One Hundred Five Thousand Dollars ($105,000). This Note will bear no interest to the date of maturity but thereafter will bear interest at the rate of one (1) percent per annum over the prime rate as announced by Morgan Guaranty Trust Company in effect on the maturity date and from time to time thereafter, or at the legal rate, whichever is greater, as allowed by and determined in accordance with applicable law, until fully paid. This Note is made pursuant to and shall be repaid in accordance with the provisions of that certain Loan Agreement, dated September 4, 1998, by and between Lender and Borrower. In the event that Borrower shall fail to make full and timely payment of the principal payment hereunder when due, then the entire unpaid principal amount of this Note shall automatically become immediately due and payable without demand or notice and Borrower shall pay such further amount as shall be sufficient to cover all costs and expenses (including reasonable attorneys' fees) directly or indirectly incurred by Lender in connection with the collection of this Note. Borrower hereby waives notice of default, notice of acceleration, notice of prepayment, presentment, protest or notice of dishonor. /s/ Mark A. Belnick ------------------- MARK A. BELNICK 99.7-65 NOTE $ 150,000 New York, NY October 14, 1999 FOR VALUE RECEIVED, the undersigned, MARK A. BELNICK ("Borrower"), hereby promises to pay to the order of TME MANAGEMENT CORP., a Delaware corporation ("Lender"), in lawful money of the United States of America, as its offices at 15 Hampshire Street, Mansfield, MA 02048 on October 14, 2014 the principal sum of One Hundred Fifty Thousand Dollars ($150,000). This Note will bear no interest to the date of maturity but thereafter will bear interest at the rate of one (1) percent per annum over the prime rate as announced by Morgan Guaranty Trust Company in effect on the maturity date and from time to time thereafter, or at the legal rate, whichever is greater, as allowed by and determined in accordance with applicable law, until fully paid. This Note is made pursuant to and shall be repaid in accordance with the provisions of that certain Loan Agreement, dated September 4, 1998, by and between Lender and Borrower. In the event that Borrower shall fail to make full and timely payment of the principal payment hereunder when due, then the entire unpaid principal amount of this Note shall automatically become immediately due and payable without demand or notice and Borrower shall pay such further amount as shall be sufficient to cover all costs and expenses (including reasonable attorneys' fees) directly or indirectly incurred by Lender in connection with the collection of this Note. Borrower hereby waives notice of default, notice of acceleration, notice of prepayment, presentment, protest or notice of dishonor. /s/ Mark A. Belnick ------------------- MARK A. BELNICK 99.7-66 NOTE $ 75,000 New York, NY February 16, 2000 FOR VALUE RECEIVED, the undersigned, MARK A. BELNICK ("Borrower"), hereby promises to pay to the order of TME MANAGEMENT CORP., a Delaware corporation ("Lender"), in lawful money of the United States of America, at its offices at 15 Hampshire Street, Mansfield, MA 02048 on February 16, 2015 the principal sum of Seventy Five Thousand Dollars ($75,000). This Note will bear no interest to the date of maturity but thereafter will bear interest at the rate of one (1) percent per annum over the prime rate as announced by Morgan Guaranty Trust Company in effect on the maturity date and from time to time thereafter, or at the legal rate, whichever is greater, as allowed by and determined in accordance with applicable law, until fully paid. This Note is made pursuant to and shall be repaid in accordance with the provisions of that certain Loan Agreement, dated September 4, 1998, by and between Lender and Borrower. In the event that Borrower shall fail to make full and timely payment of the principal payment hereunder when due, then the entire unpaid principal amount of this Note shall automatically become immediately due and payable without demand or notice and Borrower shall pay such further amount as shall be sufficient to cover all costs and expenses (including reasonable attorneys' fees) directly or indirectly incurred by Lender in connection with the collection of this Note. Borrower hereby waives notice of default, notice of acceleration, notice of prepayment, presentment, protest or notice of dishonor. /s/ Mark A. Belnick ------------------- MARK A. BELNICK 99.7-67 NOTE $ 50,000 New York, NY July 12, 2000 FOR VALUE RECEIVED, the undersigned, MARK A. BELNICK ("Borrower"), hereby promises to pay to the order of TME MANAGEMENT CORP., a Delaware corporation ("Lender"), in lawful money of the United States of America, at its offices at 15 Hampshire Street, Mansfield, MA 02048 on July 12, 2015 the principal sum of Fifty Thousand Dollars ($50,000). This Note will bear no interest to the date of maturity but thereafter will bear interest at the rate of one (1) percent per annum over the prime rate as announced by Morgan Guaranty Trust Company in effect on the maturity date and from time to time thereafter, or at the legal rate, whichever is greater, as allowed by and determined in accordance with applicable law, until fully paid. This Note is made pursuant to and shall be repaid in accordance with the provisions of that certain Loan Agreement, dated September 4, 1998, by and between Lender and Borrower. In the event that Borrower shall fail to make full and timely payment of the principal payment hereunder when due, then the entire unpaid principal amount of this Note shall automatically become immediately due and payable without demand or notice and Borrower shall pay such further amount as shall be sufficient to cover all costs and expenses (including reasonable attorneys' fees) directly or indirectly incurred by Lender in connection with the collection of this Note. Borrower hereby waives notice of default, notice of acceleration, notice of prepayment, presentment, protest or notice of dishonor. /s/ Mark A. Belnick ------------------- MARK A. BELNICK 99.7-68 NOTE $ 50,000 New York, NY April 6, 2001 FOR VALUE RECEIVED, the undersigned, MARK A. BELNICK ("Borrower"), hereby promises to pay to the order of TME MANAGEMENT CORP., a Delaware corporation ("Lender"), in lawful money of the United States of America, at its offices at 15 Hampshire Street, Mansfield, MA 02048 on April 6, 2016, the principal sum of Fifty Thousand Dollars ($50,000). This Note will bear no interest to the date of maturity, but thereafter will bear interest at the rate of one (1) percent per annum over the prime rate as announced by The Chase Manhattan Bank in effect on the maturity date and from time to time thereafter, or at the legal rate, whichever is greater, as allowed by and determined in accordance with applicable law, until fully paid. This Note is made pursuant to and shall be repaid in accordance with the provisions of that certain Loan Agreement, dated September 4, 1998, by and between Lender and Borrower. In the event that Borrower shall fail to make full and timely payment of the principal payment hereunder when due, then the entire unpaid principal amount of this Note shall automatically become immediately due and payable without demand or notice and Borrower shall pay such further amount as shall be sufficient to cover all costs and expenses (including reasonable attorneys' fees) directly or indirectly incurred by Lender in connection with the collection of this Note. Borrower hereby waives notice of default, notice of acceleration, notice of prepayment, presentment, protest or notice of dishonor. /s/ Mark A. Belnick ------------------- MARK A. BELNICK 99.7-69 NOTE $ 50,000 New York, NY May 22, 2001 FOR VALUE RECEIVED, the undersigned, MARK A. BELNICK ("Borrower"), hereby promises to pay to the order of TME MANAGEMENT CORP., a Delaware corporation ("Lender"), in lawful money of the United States of America, at its offices at 15 Hampshire Street, Mansfield, MA 02048 on May 22, 2016 the principal sum of Fifty Thousand Dollars ($50,000). This Note will bear no interest to the date of maturity, but thereafter will bear interest at the rate of one (1) percent per annum over the prime rate as announced by The Chase Manhattan Bank in effect on the maturity date and from time to time thereafter, or at the legal rate, whichever is greater, as allowed by and determined in accordance with applicable law, until fully paid. This Note is made pursuant to and shall be repaid in accordance with the provisions of that certain Loan Agreement, dated September 4, 1998, by and between Lender and Borrower. In the event that Borrower shall fail to make full and timely payment of the principal payment hereunder when due, then the entire unpaid principal amount of this Note shall automatically become immediately due and payable without demand or notice and Borrower shall pay such further amount as shall be sufficient to cover all costs and expenses (including reasonable attorneys' fees) directly or indirectly incurred by Lender in connection with the collection of this Note. Borrower hereby waives notice of default, notice of acceleration, notice of prepayment, presentment, protest or notice of dishonor. /s/ Mark A. Belnick ------------------- MARK A. BELNICK 99.7-70 New York, NY September 4, 2001 PROMISSORY NOTE FOR VALUE RECEIVED, the undersigned, MARK A. BELNICK ("Borrower"), hereby promises to pay to the order of TME Management Corp., a Delaware corporation ("Lender"), in lawful money of the United States of America, at its offices at 15 Hampshire Street, Mansfield, MA 02048, on September 3, 2006, the principal sum of Ten Million Fifty-Six Thousand Seven-Hundred Sixty-Seven Dollars and Eighty-Four Cents ($10,056,767.84). This Note will bear no interest to the date of maturity but thereafter will bear interest at the rate of one (1) percent per annum over the prime rate as announced by Chase Morgan Bank in effect on the maturity date and from time to time thereafter, or at the legal rate, whichever is greater, as allowed by and determined in accordance with applicable law, until fully paid. This Promissory Note is secured by that certain Trust Deed of even date herewith, by and among Borrower and Randy Belnick, husband and wife, Equity Title Insurance Agency, as Trustee, and Lender, as Beneficiary. In the event that Borrower shall fail to make full and timely payment of the principal payment hereunder when due, then the entire unpaid principal amount of this Promissory Note shall automatically become immediately due and payable without demand or notice, and Borrower shall pay such further amount as shall be sufficient to cover all costs and expenses (including reasonable attorneys' fees) directly or indirectly incurred by Lender in connection with the collection of this Note. Borrower hereby waives notice of default, notice of acceleration, notice of prepayment, presentment, protest or notice of dishonor. /s/ Mark A. Belnick ------------------- MARK A. BELNICK 99.7-71 New York, NY October 30, 2001 PROMISSORY NOTE FOR VALUE RECEIVED, the undersigned, MARK A. BELNICK ("Borrower"), hereby promises to pay to the order of TME Management Corp., a Delaware corporation ("Lender"), in lawful money of the United States of America, at its offices at 15 Hampshire Street, Mansfield, MA 02048, on October 30, 2006, the principal sum of Two-Hundred Forty Thousand Three-Hundred Seventy Dollars and Eighty-Five Cents ($240,370.85). This Note will bear no interest to the date of maturity but thereafter will bear interest at the rate of one (1) percent per annum over the prime rate as announced by Chase Morgan Bank in effect on the maturity date and from time to time thereafter, or at the legal rate, whichever is greater, as allowed by and determined in accordance with applicable law, until fully paid. This Promissory Note is secured by that certain Trust Deed of even date herewith, by and among Borrower and Randy Belnick, husband and wife, Equity Title Insurance Agency, as Trustee, and Lender, as Beneficiary. In the event that Borrower shall fail to make full and timely payment of the principal payment hereunder when due, then the entire unpaid principal amount of this Promissory Note shall automatically become immediately due and payable without demand or notice, and Borrower shall pay such further amount as shall be sufficient to cover all costs and expenses (including reasonable attorneys' fees) directly or indirectly incurred by Lender in connection with the collection of this Note. Borrower hereby waives notice of default, notice of acceleration, notice of prepayment, presentment, protest or notice of dishonor. /s/ Mark A. Belnick ------------------- MARK A. BELNICK 99.7-72 PROMISSORY NOTE $ 46,359.09 New York, NY December 3, 2001 FOR VALUE RECEIVED, the undersigned, MARK A. BELNICK ("Borrower."), hereby promises to pay to the order of TME Management Corp., a Delaware corporation ("Lender"), in lawful money of the United States of America, at its offices at 15 Hampshire Street, Mansfield, MA 02048, on December 3, 2006, the principal sum of Forty-Six Thousand Three-Hundred Fifty-Nine Dollars and Nine Cents ($46,359.09). This Note will bear no interest to the date of maturity but thereafter will bear interest at the rate of one (1) percent per annum over the prime rate as announced by Chase Morgan Bank in effect on the maturity date and from time to time thereafter, or at the legal rate, whichever is greater, as allowed by and determined in accordance with applicable law, until fully paid. This Promissory Note is secured by that certain Trust Deed of even date herewith, by and among Borrower and Randy Belnick, husband and wife, Equity Title Insurance Agency, as Trustee, and Lender, as Beneficiary. In the event that Borrower shall fail to make full and timely payment of the principal payment hereunder when due, then the entire unpaid principal amount of this Promissory Note shall automatically become immediately due and payable without demand or notice, and Borrower shall pay such further amount as shall be sufficient to cover all costs and expenses (including reasonable attorneys' fees) directly or indirectly incurred by Lender in connection with the collection of this Note. Borrower hereby waives notice of default, notice of acceleration, notice of prepayment, presentment, protest or notice of dishonor. /s/ Mark A. Belnick ------------------- MARK A. BELNICK 99.7-73 PROMISSORY NOTE $ 14,843.08 New York, NY January 3, 2002 FOR VALUE RECEIVED, the undersigned, MARK A. BELNICK ("Borrower"), hereby promises to pay to the order of TME Management Corp., a Delaware corporation ("Lender"), in lawful money of the United States of America, at its offices at 15 Hampshire Street, Mansfield, MA 02048, on January 3, 2007, the principal sum of Fourteen-Thousand Eight-Hundred Forty-Three Dollars and eight cents ($14,843.08). This Note will bear no interest to the date of maturity but thereafter will bear interest at the rate of one (1) percent per annum over the prime rate as announced by Chase Morgan Bank in effect on the maturity date and from time to time thereafter, or at the legal rate, whichever is greater, as allowed by and determined in accordance with applicable law, until fully paid. This Promissory Note is secured by that certain Trust Deed of September 4, 2001, by and among Borrower and Randy Belnick, husband and wife, Equity Title Insurance Agency, as Trustee, and Lender, as Beneficiary. In the event that Borrower shall fail to make full and timely payment of the principal payment hereunder when due, then the entire unpaid principal amount of this Promissory Note shall automatically become immediately due and payable without demand or notice, and Borrower shall pay such further amount as shall be sufficient to cover all costs and expenses (including reasonable attorneys' fees) directly or indirectly incurred by Lender in connection with the collection of this Note. Borrower hereby waives notice of default, notice of acceleration, notice of prepayment, presentment, protest or notice of dishonor. /s/ Mark A. Belnick ------------------- MARK A. BELNICK 99.7-74 PROMISSORY NOTE New York, NY $ 10,000.00 January 28, 2002 FOR VALUE RECEIVED, the undersigned, MARK A. BELNICK ("Borrower"), hereby promises to pay to the order of TME Management Corp., a Delaware corporation ("Lender"), in lawful money of the United States of America, at its offices at 15 Hampshire Street, Mansfield, MA 02048, on January 28, 2007, the principal sum of Ten Thousand Dollars ($10,000.00). This Note will bear no interest to the date of maturity but thereafter will bear interest at the rate of one (1) percent per annum over the prime rate as announced by Chase Morgan Bank in effect on the maturity date and from time to time thereafter, or at the legal rate, whichever is greater, as allowed by and determined in accordance with applicable law, until fully paid. This Promissory Note is secured by that certain Trust Deed of September 4, 2001, by and among Borrower and Randy Belnick, husband and wife, Equity Title Insurance Agency, as Trustee, and Lender, as Beneficiary. In the event that Borrower shall fail to make full and timely payment of the principal payment hereunder when due, then the entire unpaid principal amount of this Promissory Note shall automatically become immediately due and payable without demand or notice, and Borrower shall pay such further amount as shall be sufficient to cover all costs and expenses (including reasonable attorneys' fees) directly or indirectly incurred by Lender in connection with the collection of this Note. Borrower hereby waives notice of default, notice of acceleration, notice of prepayment, presentment, protest or notice of dishonor. /s/ Mark A. Belnick ------------------- MARK A. BELNICK 99.7-75 PROMISSORY NOTE $ 50,258.49 New York, NY March 13, 2002 FOR VALUE RECEIVED, the undersigned, MARK A. BELNICK ("Borrower"), hereby promises to pay to the order of TME Management Corp., a Delaware corporation ("Lender"), in lawful money of the United States of America, at its offices at 15 Hampshire Street, Mansfield, MA 02048, on March 13, 2007, the principal sum of Fifty Thousand Two Hundred Fifty Eight Dollars and Forty Nine cents ($50,258.49). This Note will bear no interest to the date of maturity but thereafter will bear interest at the rate of one (1) percent per annum over the prime rate as announced by Chase Morgan Bank in effect on the maturity date and from time to time thereafter, or at the legal rate, whichever is greater, as allowed by and determined in accordance with applicable law, until fully paid. This Promissory Note is secured by that certain Trust Deed of September 4, 2001, by and among Borrower and Randy Belnick, husband and wife, Equity Title Insurance Agency, as Trustee, and Lender, as Beneficiary. In the event that Borrower shall fail to make full and timely payment of the principal payment hereunder when due, then the entire unpaid principal amount of this Promissory Note shall automatically become immediately due and payable without demand or notice, and Borrower shall pay such further amount as shall be sufficient to cover all costs and expenses (including reasonable attorneys' fees) directly or indirectly incurred by Lender in connection with the collection of this Note. Borrower hereby waives notice of default, notice of acceleration, notice of prepayment, presentment, protest or notice of dishonor. /s/ Mark A. Belnick ------------------- MARK A. BELNICK 99.7-76 EX-99.8 10 a2089398zex-99_8.txt EXHIBIT 99.8 EXHIBIT 99.8 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK - ----------------------------------------------------- TYCO INTERNATIONAL LTD., NO. 02-CV-7317 A BERMUDA CORPORATION, AND TYCO INTERNATIONAL (US) INC., A NEVADA CORPORATION, PLAINTIFFS, V. COMPLAINT L. DENNIS KOZLOWSKI, DEFENDANT. - ----------------------------------------------------- Plaintiffs Tyco International Ltd. and Tyco International (US) Inc. (collectively "Tyco" or "the Company"), by their undersigned counsel Boies, Schiller & Flexner LLP, as and for their Complaint against Defendant L. Dennis Kozlowski ("Kozlowski"), allege as follows upon information and belief as to all matters: NATURE OF THE ACTION 1. Kozlowski was the Chairman and Chief Executive Officer of Tyco from July 1992 through June 3, 2002 when the Board sought and received his resignation. During that time he gained a reputation as one of the best managers in Corporate America. He was also one of the highest, if not the highest, compensated executive in the country. Despite that substantial compensation, Kozlowski, beginning at least as early as 1995, contrived a scheme to abuse the trust that had been placed in him by Tyco's Board of Directors by misappropriating money and assets from the Company, and engaging in a concerted pattern of conduct to conceal his larcenous acts from the Board. 2. In addition to his own wrongful conduct, Kozlowski also induced and 99.8-1 conspired with certain other senior officers and agents of Tyco to breach their own fiduciary duties to the Company. Kozlowski did this by allowing these persons to share in his misappropriations of money and assets, also without notice to or approval by the Company's Compensation Committee of the Board of Directors, and by entering into various undisclosed agreements with these persons, including agreements that gave them excessive and undisclosed compensation, and tied their compensation to Kozlowski's, in ways that were affirmatively concealed from the Company's Board. 3. Specifically, Kozlowski concealed (and induced or conspired with others to conceal) from the Board and its relevant committees the following: a. Kozlowski transformed an approved 1995 relocation program that complied with IRS regulations and was available to all employees (SEE Ex. 3 attached hereto) into a special program for senior executives that permitted them to use millions of dollars of Company funds to purchase and speculate in New York real estate (SEE Ex. 4, attached hereto); b. Kozlowski abused the Company's Key Employee Loan ("KEL") program (SEE Ex. 6 and 7 attached hereto), which had been established for the purpose of facilitating the continued ownership of Tyco stock, from at least 1997 onward, by using it as his personal line of credit to fund myriad personal expenditures; c. Kozlowski misappropriated the Compensation Committee's approval of the 1995 relocation program, effectuating a 1998 Florida relocation that allowed select executives to acquire multiple residences (SEE Ex. 9 and 10, attached hereto); d. Kozlowski directed Tyco's CFO, Mark Swartz, in 1999 to enter unapproved credits against $25 million of Kozlowski's own KEL loans, $12.5 million of Swartz's KEL loans and $1 million of an event planner's KEL loans (SEE Ex. 8, attached hereto); e. Kozlowski awarded unauthorized "special bonuses" to himself and over 40 other Tyco employees in September of 2000 (SEE Ex. 12 attached hereto) that forgave the employees' relocation loans and paid their additional tax liabilities owed on the forgiveness (SEE Ex. 13, attached hereto); 99.8-2 f. Kozlowski fabricated another bonus program in favor of himself and two dozen select executives in November of 2000 (SEE Ex. 17-19, attached hereto); g. Kozlowski made fraudulent affirmative misrepresentations to the Compensation Committee of the Board in order to secure benefits for himself and make unauthorized awards of compensation to certain senior executives and key managers; h. Kozlowski paid an unauthorized $20 million fee to Frank Walsh, a friend and then-Tyco director, in July 2001 in connection with the acquisition of The CIT Group and specifically asked Walsh to conceal it from the Board; i. Kozlowski engaged in self-dealing transactions involving Company assets, including various real estate purchases and sales in which appraisals were not obtained, and allowed members of his extended family to use Company property; and j. Kozlowski concealed from the Board a criminal investigation into his own conduct and the service of subpoenas upon the Company. The Company now seeks to recover these monies already expended, yet misappropriated by Kozlowski, which although they are not material to a company with total current assets over $55 billion, are nevertheless substantial to any chief executive and represent an egregious violation of the trust reposed in him by the Board and its shareholders. 4. Kozlowski carried out this pattern of misconduct directly, through his own conduct - including the creation of memoranda that purported to reflect some level of Compensation Committee knowledge and approval for some of his actions, when in fact there was none - and indirectly, with the assistance of others at the Company with whom Kozlowski agreed and conspired to breach their fiduciary duties. 5. Kozlowski has damaged the Company in a variety of ways, including the following: a. Misappropriating for himself over $100 million that he was not authorized to receive; 99.8-3 b. Wrongfully diverting to others millions of dollars in cash and stock, used to induce their cooperation or buy their silence; c. Failing to provide faithful and competent services that were the consideration for his authorized compensation; d. Inducing other officers and agents to fail to provide the faithful and competent services they were obligated to provide to the Company; and e. Damaging the Company's reputation and relationships with investors, employees, lenders, customers and suppliers, public authorities and the public generally. 6. The total amount of damages proximately caused by Kozlowski's misconduct is not yet known, but as set forth herein Kozlowski's conduct caused him to be enriched, and the Company to be harmed, in at least the following amounts: a. KEY EMPLOYEE LOANS - $18,840,461 -- principal balance as of May 31, 2002, plus accrued interest from January 31, 2002 - $25,000,000 -- adjustment, plus accrued interest from August, 1999 b. UNAUTHORIZED "TYCOM BONUS" - forgiveness of Florida Relocation Loans - $32,644,338 -- Kozlowski's own unauthorized bonus - $95,962,653 -- total cost to the Company (of which $79,177,081 represent senior executives benefits Kozlowski awarded without obtaining requisite Board approvals) c. UNAUTHORIZED "ADT AUTOMOTIVE BONUS" - including loan forgiveness, cash bonus, and restricted shares: - $17,188,034 and 148,000 shares -- Kozlowski's own unauthorized bonus - $36,584,338 and 261,500 shares -- total cost to the Company (of which $34,822,412 and 259,500 shares represent senior executives benefits Kozlowski awarded without obtaining the requisite Board approvals). 99.8-4 d. UNAUTHORIZED "FLAG TELECOM BONUS" - $8,219,650 -- Kozlowski's own unauthorized amount - $15,378,700 -- total cost to the Company (including senior executives) e. UNAUTHORIZED FEE TO DIRECTOR FRANK WALSH - $20,000,000 -- unauthorized payment f. DISHONESTY AND ENGAGEMENT IN ILLEGAL ACTIVITIES IN THE COURSE OF EMPLOYMENT - An amount to be determined ("TBD") g. DISGORGEMENT OF ALL COMPENSATION - $26,454,603 -- 1997 - $70,329,840 -- 1998 - $21,074,097 -- 1999 - $137,493,424 -- 2000 - $32,551,801 -- 2001 - An amount TBD -- 2002 h. FORFEITURE OF ALL BENEFITS SINCE AT LEAST 1999 - $12,294,085 -- forfeiture of Deferred Compensation Benefits - $1,872,813 -- forfeiture of Supplemental Executive Retirement Plan, valued as of August 6, 2002 - $45,147,415 -- forfeiture of Executive Retirement Arrangement, valued under a lump sum election - $23,823,887 -- forfeiture of FY 2000 Executive Life Insurance, valued as of June 30, 2002 - $28,710,708 -- forfeiture of FY 2001 Executive Life Insurance valued as of June 30, 2002 99.8-5 - An amount TBD -- forfeiture of all entitlements under the 2001 Retention Agreement, as amended i. CHARITABLE CONTRIBUTIONS PAID BY COMPANY: - $43,000,000 -- Company contributions that enriched Kozlowski j. UNAUTHORIZED PROPERTY TRANSACTIONS: - $3,000,000 -- overpayment on sale of 10 Runnymede, North Hampton, NH property to the Company in 2000 - An amount TBD -- bargain sale on 610 Park Avenue, New York - An amount TBD -- unauthorized interest free loan of $7,011,669 for 610 Park Avenue - An amount TBD -- imputed interest on purchase of 2365 South Ocean Blvd., FL - An amount TBD -- imputed interest on purchase of 37 Squam Rd., Nantucket, MA - An amount TBD -- imputed interest on purchase of Old North Wharf (cottages and boat slip), Nantucket, MA k. PERSONAL USE OF COMPANY PROPERTY OR ASSETS: - An amount TBD -- personal use of the following real estate: (10 Runnymede, North Hampton, NH -- post July 6, 2000; 471 East Alexander Palm Rd, Boca Raton, FL -- from 1997 to 2001; 817 Fifth Avenue, NY, NY -- from 1996 to 2001; 950 Fifth Avenue, NY, NY -- from 2001 to 2002; 167 Little Harbor Rd., New Castle, NH -- from 1995 to 2002) - An amount TBD -- Questionable business expenses (including at least $20,000,000 -- purchase of artwork, antiques, furnishings; $700,000 -- movie rights; $1,000,000 -- Sardinia birthday party; $110,000 -- use of Endeavour; $1,144,000 -- jewelry, clothing, florist, club memberships, wines, private ventures; $150,000 -- personal expenses at 59 Harbor Rd., Rye, NH from 1996 to 2002) 99.8-6 PARTIES 7. Plaintiff Tyco International Ltd. is a Bermuda corporation with its principal place of business at The Zurich Centre, 90 Pitts Bay Road, Pembroke HM 08, Bermuda. 8. Plaintiff Tyco International (US) Inc., a wholly owned indirect subsidiary of Tyco International Ltd., is a Nevada corporation with its principal place of business at One Tyco Park, Exeter, New Hampshire 03833. 9. Defendant Kozlowski is a citizen and resident of the State of Florida, residing at 4101 Ibis Point Circle, Boca Raton, Florida. JURISDICTION AND VENUE 10. The Court has jurisdiction over this action based on diversity of citizenship pursuant to 28 U.S.C. Section 1332(a)(2). The amount in controversy, exclusive of interest and costs, exceeds $75,000. 11. Venue is proper in this District pursuant to 28 U.S.C. Section 1391(a)(2) because Tyco maintains corporate offices in this District; Kozlowski regularly attended business meetings (including the May 23 meeting at which he concealed his criminal investigation) in this District; other meetings, communications and events relating to the events set forth herein occurred in this District; and several parcels of real estate that Kozlowski used or acquired as part of his unlawful conduct are located in this District. FACTS COMMON TO ALL CLAIMS 12. In September 1975, L. Dennis Kozlowski ("Kozlowski"), former Chairman and Chief Executive Officer of Tyco, joined one of the then-Tyco subsidiaries as an internal auditor. He rose through the ranks of the Company and, in July 1992, Kozlowski 99.8-7 became the Company's chief executive. By 2001 he was widely recognized as one of the best managers in Corporate America. 13. The level of Kozlowski's compensation increased with the successful performance of the Company. By the end of 1992, Kozlowski's regular salary was $999,666 and his total W-2 wages, inclusive of the $2.6 million stock grants he was awarded, were already over $3.6 million. 14. As Tyco's Chief Executive Officer from July 1993 until June 3, 2002 (when the Board requested his resignation - upon learning for the first time that he was to be charged by the Manhattan District Attorney), Kozlowski owed the Company fiduciary duties of honesty, good faith, care, and loyalty. Kozlowski knew that Tyco's Board of Directors reposed great trust and confidence in him. 15. Kozlowski was obligated to pursue and protect the interests of the Company and its shareholders to the exclusion of his own interests or the interests of any other person. Kozlowski was also obligated to advise the Company's Board promptly of any instance in which his interests might conflict with those of the Company. 16. Yet, through a pattern of conduct abundant with conflicts of interest, self-dealing, and other serious legal and ethical problems, Kozlowski secretly devised means to enrich himself with corporate assets outside the attention of the Company's Board, its Compensation Committee and the public's eye. 1995 - KOZLOWSKI'S INCIPIENT FRAUD AND SELF-DEALING: RELOCATION TO NEW YORK UNDER SPECIALLY TAILORED UNAPPROVED RELOCATION PLAN 17. By March of 1995, Kozlowski had accomplished approximately 25 acquisitions for the Company. The Company's earnings had increased significantly, in 99.8-8 recognition whereof, Kozlowski's salary was increased and he was granted a performance-based bonus. Part of his income qualified for a "top hat" deferred compensation plan, adopted the preceding April, for its top executives. 18. Kozlowski then decided to move his corporate suite from Exeter, New Hampshire to New York City. In anticipation of a Company-sponsored relocation plan and under Kozlowski's direction, then-Treasurer Barbara Miller requested a legal opinion, concerning the form of proxy disclosure required for relocation arrangements "tailored to each individual's circumstances" for five or six contemplated executives. (SEE Ex. 1, attached hereto). 19. After an unfavorable opinion (SEE Ex. 2, attached hereto) advising that the benefits of an individually tailored plan would likely be characterized as, and therefore should be disclosed as, compensation for Named Officers in the Company's proxy statements, a more modest, generally-circulated program (the "Modest Program") was developed. (SEE Ex. 3, attached hereto). In August of 1995, the Modest Program was proposed to, and adopted by, the Compensation Committee and reported to the Board of Directors. 20. By its very terms, the Modest Program was "intended not to discriminate in scope, terms or operation in favor of executive officers or directors of the Company and is to be available generally to all applicable salaried employees." As such, SEC Regulation S-K Item 402(a)(3) Instruction (7)(ii) authorized public companies to omit compensation associated with such a general relocation plan from compensation proxy disclosures of Named Officers. 21. Kozlowski's accounting background, the legal opinion provided to the 99.8-9 Company, and his experience as the Chief Executive signatory of the Company's proxy statements afforded him an adequate understanding about the importance of applying, and the disclosure requirements relating to, a nondiscriminatory relocation plan. 22. Nevertheless, although the Modest Program had been approved by the Compensation Committee and was generally proposed to many employees who ultimately chose not to relocate, it was never implemented. Rather, a second, more generous plan, "tailored to each individual's circumstances" - as originally contemplated - and limited to five or six executives and one assistant was in fact implemented (the "Generous Plan"). (SEE Ex. 4, attached hereto.) The Generous Plan, nearly identical in appearance to the Modest Program, differed in several significant ways, chief among which were that it was almost doubly as generous as the Modest Plan and, though it contained recitations that it had been duly approved by the Compensation Committee of the Board, had never been submitted to, much less approved by that Committee or the Board. 23. The New York relocation, effected under his direction and in conformity with the provisions of the unapproved Generous Plan, permitted Kozlowski to benefit in many ways that would not have been permitted by the Modest Plan. Among other things, Kozlowski was able to: a. Rent a lavish Fifth Avenue apartment (817 FIFTH AVENUE, NEW YORK CITY), with annual rental of $264,000, paid for by the Company, from 1997 to 2001. The Modest Program would not have permitted this benefit. b. Purchase with interest free loans in 2000 - at depreciated book value and without appraisals - a Company-owned $7 million Park Avenue apartment (610 PARK AVENUE, NEW YORK CITY), previously acquired by the Company at his behest. Kozlowski never occupied the apartment, but rather deeded it to his ex-wife a few 99.8-10 months after the purchase. (Kozlowski repaid $5,118,125 of the loan on this apartment and then simply forgave the remainder of his own loan balance ($1,893,544) within a few months of the purchase.) The Modest Program would not have permitted this benefit. c. Sell his New Hampshire home (10 RUNNYMEDE, NORTH HAMPTON, NH) to the Company without appraisals for an amount significantly in excess of its market value in 2000. Less than 24 months later, the Company wrote down the corporate asset by approximately $3 million. (SEE Ex. 5, attached hereto). The Modest Program would not have permitted this benefit. d. Purchase a second, more extravagant apartment on Fifth Avenue (950 FIFTH AVENUE, NEW YORK) in 2001 for $16.8 million and expend $3 million in improvements and $11 million in furnishings - all without disclosing to the Board or its Compensation or Audit Committees that the apartment was paid for and carried by the Company as a corporate asset. The Modest Program would not have permitted this benefit. e. "Gross-up" benefits received under the Generous Plan so as to insulate Kozlowski from all state income tax liability that he incurred after relocating to New York. Kozlowski also enjoyed the benefits for considerably more time than the Modest Program was designed to operate. The Modest Program would not have permitted this benefit. 24. At that time, Kozlowski knew that the Compensation Committee was required to "set the level of compensation and benefits for the Company's executive officers and key managers." [Definitive Proxy Statement, Form DEF 14A, filed Sept. 25, 1995]. Kozlowski also knew that the relocation program used by him and his few key executive officers circumvented the appropriate approvals required by the Compensation Committee. 1997-2000 - KOZLOWSKI'S FRAUD AND SELF-DEALING: ABUSE OF THE KEY EMPLOYEE LOAN PROGRAM AND UNAUTHORIZED 1999 CREDITS 25. Kozlowski continued to achieve successes for the Company - and for himself: 99.8-11 a. Between 1995 and 1999 he had accomplished nearly 400 acquisitions for the Company. In 1997, he negotiated a reverse merger with ADT, Ltd., a Bermuda Company, b. By the end of 1998, Kozlowski had received restricted stock grants of 1,200,000 shares (August, 1996) and an additional 760,000 shares (July, 1998). His 1998 Proxy Compensation had grown to a salary of $1,250,000, a performance-based bonus of $2,500,000, grants of restricted stock valued at $21,140,000, and options grants on 3,832,000 underlying shares. The Company's Compensation Committee had adopted two more "top hat" plans to benefit select highly paid executives: a Supplemental Executive Retirement Plan and an Executive Retirement Agreement, which would provide security and comfort for Kozlowski's retirement years. His total compensation for the year, including the value for his options, exceeded $70 million. c. By August 1999, the Company's balance sheet had grown significantly from its size when Kozlowski had taken the helm. 26. As his compensation grew, so too did his level of indebtedness to the Company under relocation loans and the Key Employee Loan ("KEL") Program adopted in 1983 by a predecessor to the current Company. The KEL program was instituted to encourage ownership of the Company's common stock by executives and other key employees. (SEE Ex. 6 and 7, attached hereto.) Through the KEL program Kozlowski and others were permitted to borrow funds to pay taxes that became due when shares granted under Tyco's restricted share ownership plan vested. The purpose of the program was to obviate the necessity for key employees to liquidate shares to satisfy tax liability - i.e. to allow key employees to retain their ownership interests in the Company and thus align their economic incentives with those of the Company. 27. By the end of 1998, Kozlowski owed the Company $23,542,000 of relocation loans and $132,310 of KEL Loans. Eight months later, his total indebtedness had grown to more than $84.4 million - $28,541,813 in interest free "relocation loans" 99.8-12 and $55,943,843 in KEL loans. By August 1999, having just signed a proxy declaring that: [t]he Compensation Committee of the Board of Directors of the Company sets the level of compensation and benefits for the Company's executive officers and key managers and oversees the administration of executive compensation programs" (Definitive Proxy Statement, Form DEF 14A, filed Feb. 20, 1998 at 12), Kozlowski's KEL indebtedness had reached a level of approximately $56 million. 28. Kozlowski achieved these extraordinary levels of indebtedness to the Company by systematically and flagrantly violating both the purpose and the specific restrictions of the KEL program, turning it into a revolving line of credit on which he borrowed money more than 200 times from 1997 to 2002. During that period, Kozlowski borrowed a resounding $274,205,452 in KEL loans, much of which has been repaid. Of that total, more than $245 million was not in accordance with the stated purpose of the program and was used instead by Kozlowski for such sundry purposes as "Busy Body Home Fitness," the funding of his art purchases, paying for his real estate maintenance fees and for construction and remodeling costs to his homes, purchasing a yacht and investment property, and paying for domestics, antiques and furniture. 29. Moreover, Kozlowski frequently abandoned his investment in the Company by selling substantially all of his restricted shares when they vested (or shortly thereafter), thus violating both the spirit and the letter of the KEL program, since its terms eliminated or substantially reduced his eligibility to borrow if he sold his stock. 30. In violation of his duty against self-dealing and in contravention of his obligation to seek Compensation Committee approval for all matters relating to his own compensation, Kozlowski devised a scheme to reduce the amount of money he owed the 99.8-13 Company by directing - with no prior Board or Compensation Committee approval - Mark Swartz, the Chief Financial Officer ("Swartz") to cause Kozlowski's KEL account to be credited in the amount of $25 million. (See Ex. 8, attached hereto.) He also advised Swartz to credit Swartz's own KEL account in the amount of $12.5 million and that of a corporate event planner another $1 million (even though doing so created a credit balance in her account). These "credits" were not disclosed to, or approved by, the Compensation Committee or the Board, and were simply Kozlowski's way of attempting to reduce his extraordinary level of indebtedness in the KEL program. (Upon discovery of these unauthorized journal entries during the course of the Company's investigation, the Board directed that they be reversed.) 31. However, even after the unauthorized credits, Kozlowski nevertheless continued to misuse his KEL privileges for non-program purposes. By the date of his resignation on June 3, 2002, Kozlowski's KEL account had climbed to an adjusted balance of $43,840,461, plus interest. 32. Under the KEL plan, when an employee's termination is for "dishonesty or engagement in illegal activities in the course of employment..." - as Kozlowski's was - the plan requires immediate repayment of all outstanding loans. (SEE Ex. 6 and 7, attached hereto.) Since his termination, Kozlowski has made no payments on these loans, all of which are immediately due and payable. 1998 -- KOZLOWSKI'S NEXT ACT OF FRAUD AND SELF-DEALING: THE UNAUTHORIZED FLORIDA RELOCATION PROGRAM 33. After Tyco's 1997 reverse merger with ADT Ltd., a Bermuda company, with U.S. operations conducted from Boca Raton, Florida, Kozlowski decided to relocate 99.8-14 more than 40 corporate employees from Tyco's headquarters in Exeter, N.H. to Boca Raton, FL. To do so, Kozlowski decided to appropriate the terms of the New York program without bothering to obtain Board or Compensation Committee approvals. 34. Kozlowski knew that the Board's Compensation Committee was required to "oversee the compensation and benefits of the executive officers and key managers of the Company ... and such other benefit plans of the Company as the Board shall determine from time to time," having only six months earlier been a party to a unanimous resolution defining this specific role for the Compensation Committee. [Unanimous Board Resolution, Minutes of the Board of Directors, July 2, 1997.] 35. Kozlowski circumvented the approval requirement for the Florida Relocation Program by creating a program somewhat similar in appearance to the New York Relocation Program. (SEE Ex. 9, attached hereto.) As with its progenitor, the Florida Relocation Program recited the same, August 1, 1995 Board approval - although the 1995 Board represented a predecessor company and, in any event, its approval had been limited to a New York relocation program. 36. Again, two versions of the program document were crafted, one for general application - administered through the Human Resources Department - and a second, more generous plan, maintained in the files of the then-Treasurer, for use by certain executives only. (SEE Ex. 10, attached hereto.) Most importantly, the special executive program did not condition participation in the program upon the sale of a principal residence. 37. While still maintaining his primary residence in Exeter, Kozlowski then used the special Florida Relocation Program in 1998 to obtain $29,756,110 in interest- 99.8-15 free loans, which he used to purchase five lots and build a home at 4101 Ibis Point Circle, Boca Raton, located in a development called "The Sanctuary." No mortgages were recorded on the Florida properties, as required by the purported program guidelines and as required to qualify for tax-exempt status for interest free loans. 38. Kozlowski knew, as a member of the Board of Directors, that neither the Board nor its Compensation Committee ever authorized any of the benefits or the loans he granted to himself. By taking benefits under the unapproved plan, he breached his fiduciary obligations to the Company and misappropriated corporate monies. 39. Kozlowski also knew that the Compensation Committee never authorized any of the benefits for his senior executive officers and key managers under the (unauthorized) Florida Relocation Program. By expending corporate funds and incurring corporate liabilities under that program, Kozlowski ensured that others who were aware of his misconduct would not report it to he Board or the Compensation Committee. 1998 - KOZLOWSKI GRANTED HIS CHIEF CORPORATE COUNSEL AND OTHERS UNAUTHORIZED COMPENSATION AND BENEFITS 40. Through repeated unauthorized grants of stock and benefits, Kozlowski bought the silence of his Chief Corporate Counsel Mark Belnick ("Belnick"), whose acquiescence to Kozlowski's nondisclosures and subsequent self-dealing was crucial to the success of Kozlowski's scheme. 41. In addition to Belnick's regular salary, Kozlowski awarded Belnick cash bonuses in the amounts of $1.5 million in 1999 and $4 million in 2000. Kozlowski also made three large awards of restricted shares to Belnick, one award of 200,000 shares in 1998 upon his arrival and two awards in the year 2000 (the first for 100,000 shares, the 99.8-16 other for 200,000 shares), for a total of 500,000 shares in less than three years. None of the bonuses or share awards was approved by the Compensation Committee. 42. The vesting of those restricted shares, and Belnick's immediate resale thereof, permitted him to realize income in the amounts of more than $7 million in 1999; $11 million in 2000; and $16 million in 2001. In addition, Kozlowski permitted Belnick to take unauthorized relocation loans that exceeded $14 million in value. As with the bonus and share awards, none of the loans were approved by the Compensation Committee. 43. Kozlowski's most significant largesse towards Belnick is coincident with the events in the year 2000, described in paragraphs 44-63 below. 2000 (SEPTEMBER) - ADDITIONAL KOZLOWSKI FRAUD AND SELF-DEALING: UNAUTHORIZED FORGIVENESS OF FLORIDA RELOCATION LOANS - THE SO-CALLED "TYCOM" BONUS 44. By the summer of 2000, Kozlowski's indebtedness had again risen to over $37 million, in large part because of his $25 million Florida Relocation interest free loans on the acquisition of his compound in "The Sanctuary." 45. Kozlowski then contrived, promoted and fraudulently executed a plan to grant himself relief from his excessive level of relocation indebtedness by granting himself benefits of a type that, if legitimate, would not need to be disclosed in the Company's proxy statement and could therefore be concealed from the Board. 46. Thus, in early September 2000, Kozlowski falsely informed Tyco's Senior VP of Human Resources that, in addition to cash and share bonuses for the successful completion of a public offering ("IPO") of some of the shares of a Company subsidiary (TyCom) the Board had decided to forgive all of the relocation loans for all of the more 99.8-17 than 40 employees who had relocated to Florida in 1998. He exacerbated his fraud even further by falsely representing that the Board agreed to "gross-up" the benefits, making each employee whole on an after-tax basis for the forgiveness of a loan. In effect, he falsely represented that the Company would both forgive the loans and pay the employee's income taxes associated therewith. 47. The Human Resources executive requested a memorandum for her files documenting the benefit. Kozlowski complied by giving her and her supervisor, Chief Financial Officer Swartz, his own memorandum indicating "a decision has been made to forgive the relocation loans for those individuals . . .whose efforts were instrumental to successfully completing the TyCom IPO." (SEE Ex. 11 and 12, attached hereto.) 48. The total cost to the Company for the September 2000 forgiveness and gross-up benefit was almost $100 million. The aggregate cost of the benefits received by Kozlowski and his officers and key managers was in excess of $76.5 million. (SEE Ex. 12 and M, attached hereto.) 49. Kozlowski knew that a "compensation program" of the magnitude of the Florida loan forgiveness for executive officers and key managers was not within the discretion of the chief executive to award and that it represented an unauthorized and ULTRA VIRES act. (Definitive Proxy Statement, Form DEF 14A, filed March 1, 2000 at 16). 50. Kozlowski also knew that neither the Compensation Committee nor the Board had approved such a relocation loan forgiveness program. (Indeed, the very next month, the Compensation Committee, unaware of Kozlowski's fraud, considered and approved other, more limited, cash bonuses and restricted share awards - but not forgiveness benefits -- for the successful completion of the TyCom IPO.) 99.8-18 51. Kozlowski then aggravated the fraud by contriving a scheme to ensure the secrecy of the program. He directed the Human Resources executive to obtain confidentiality agreements from each of the participating employees providing that the breach thereof would result in forfeiture of the award, (SEE Ex. 14, attached hereto), purportedly because morale would be diminished if information about this seemingly generous benefit were generally known. The entire program was quietly announced to each participant and fully implemented with the execution of confidentiality agreements within four days at the end of September 2000. 52. To further conceal this unapproved program and forgiveness benefits from the Board and its Audit Committee, Kozlowski authorized and approved the allocation of these costs to disparate accounts (SEE Ex. 15, attached hereto), where its impact was lost in the context of a balance sheet with net income in 2000 of over $4.5 billion. 53. The benefit to Kozlowski, alone, from the unauthorized loan forgiveness program was $32,976,067. (SEE Ex. 13 and 14, attached hereto.) He reported none of these larcenous proceeds in the proxy statement, thereby concealing the fruits of his theft and revealing to the Board and the public only his authorized compensation of: salary $1,350,000; performance bonus $2,800,000; restricted stock $21,207,540; options on 5,357,798 underlying shares; and deferred compensation of $143,652. NOVEMBER 2000 - KOZLOWSKI'S FRAUD AND SELF-DEALING: UNAUTHORIZED, SO-CALLED "ADT AUTOMOTIVE" BONUS 54. The net benefit to Kozlowski under the unauthorized forgiveness was still insufficient to fully repay his Sanctuary loans and, only a few short weeks later, in November 2000, Kozlowski contrived another special bonus program, also containing 99.8-19 purported relocation benefits. This time, however, he awarded ALL elements (cash bonus, restricted share awards, and forgiveness) of this special bonus without Compensation Committee approval. 55. On November 7, 2000 Kozlowski advised eight of his executive officers and key managers that they had "vested in shares of restricted stock in conjunction with work related to the sale of ADT Automotive." (SEE Ex..16, attached hereto.) 56. One week later, Kozlowski sent a letter to 15 of the Company's executive officers and key managers (and two of his personal assistants) thanking them for their many contributions towards the successful divestiture of Tyco's ADT Automotive business and describing cash bonuses and "relocation" payments they would receive in recognition of their contribution. (SEE Ex. 17, attached hereto.) 57. However, all of the intended recipients of the purported relocation benefits (SEE Ex. 18, attached hereto) had already recovered all of the grossed-up costs associated with their recent relocations under the just completed unauthorized "TyCom Forgiveness Bonus." (CF. Ex. 13, attached hereto.) 58. The total cost to the Company of the so-called ADT Automotive bonus was nearly $56 million. The benefit received by Kozlowski alone was approximately $25.6 million, of which approximately $8.3 million represented the vesting of restricted shares never approved by the Compensation Committee, and another $17.3 million represented the purported relocation benefits. (SEE Ex. 19, attached hereto.) 59. Kozlowski again circumvented the Board and its Compensation Committee, and committed an ULTRA VIRES act by implementing the so-called ADT Automotive bonus 99.8-20 program of substantial magnitude for executive officers and key managers that was not within his discretion as the Company's chief executive to award. 60. As with the "TyCom" unauthorized bonus, other senior executives were led by a Kozlowski letter to believe that the "ADT-Automotive" share bonus was a Board-approved program. (SEE Ex. 16 and 18, attached hereto.) No such Compensation Committee or Board approval exists for the issuance of those restricted shares. 61. Since a smaller, more select group of executives was involved in the special "ADT Automotive Bonus," Kozlowski did not require a confidentiality agreement. However, the expenses were again allocated to various accounts and were added to the direct selling costs, which were in turn netted against the gain associated with the divestiture. 62. As was the case with the "TyCom Forgiveness Bonus," Kozlowski concealed the existence of the "ADT Automotive Bonus" from the Board and its Compensation Committee. 63. Both of the unauthorized purported relocation benefits were individually reported on his 2000 W-2 wage statements. (SEE Ex. 20, attached hereto.) Thus, only Kozlowski's confidants, a few personnel in the Human Resources department, and the IRS knew that, in calendar year 2000 alone, Kozlowski's W-2 income was an incredible $137,491,353.39. 2001 - KOZLOWSKI'S COMPENSATION BENEFITS: FRAUDULENTLY PROCURED RETENTION AGREEMENT AND AMENDMENT, UNJUSTIFIED EXECUTIVE LIFE INSURANCE BENEFIT AND UNWARRANTED "FLAG TELECOM HOLDINGS LTD." VESTING 64. Through these "special bonus" artifices, Kozlowski ensured that neither the Compensation Committee nor the Board would learn about the total of his unauthorized 99.8-21 and true compensation. Then, at fiscal year-end, in October 2000 he permitted the Compensation Committee - from whom he had concealed his forgiveness benefits - - to expand his compensation and, based upon the Company's successful results in the millennium year, to grant him another 600,000 shares on October 3, 2000. Deceived by Kozlowski's fraud, the Committee also funded a lucrative Executive Life Insurance Program with approximately $20 million. 65. Shortly thereafter, on January 22, 2001 Kozlowski pressed the Company to sign a retention agreement "to ensure the continued leadership by Tyco's CEO until retirement and solidify his commitment towards succession planning." (SEE Term Sheet attached as Ex. 21, hereto.) 66. According to the Term Sheet presented at the January 22, 2001 Compensation Committee meeting, the retention agreement would provide for: a. ongoing compensation and benefits for three years following age 62 in the form of annual base salary and proxy bonus; b. the continuation of all applicable benefits such as welfare, relocation, and other perquisites including New York City gross-up for state and city taxes; c. lifetime welfare benefits and access to Company facilities and services comparable to those provided while CEO, such as financial planning, use of company planes, cars, and "services," office, secretarial and administrative support; and d. an additional 800,000 shares of Company stock to vest pro rata through the age of 62. (Id.) The monetary value of paragraph "a" above would have been approximately $19,950,000. It was approved by the Compensation Committee in March 2001, although 99.8-22 the agreement was back dated to the date of the Compensation Committee's agreement in principle. [Compensation Committee Minutes, January 22 and March 12, 2001]. 67. However, in July 2001 Kozlowski, through the Senior Vice President of HR, suggested an amendment to the formula, substituting for the term "highest annual proxy bonus" the term "highest annual bonus earned (including cash, shares and other forms of consideration)." The Compensation Committee approved the amendment in principle on August 1, 2001, after the Chair of the Committee was assured by the Senior Vice President of HR (on July 26, 2001) that Kozlowski's "earned bonus" was not materially different from his "proxy bonus." (Though dated in August, the Compensation Committee members never formally executed the amendment until December 12, 2001.) 68. As a result of the change, the monetary value of paragraph "a" increased nearly tenfold to an amount claimed by Kozlowski to exceed at least $197,667,618. Yet Kozlowski never personally, or through his HR representatives, disclosed to the Compensation Committee that there was an enormous difference between his "proxy bonus" and his "cash, shares and other forms of consideration" annual bonuses. 69. In addition, in October, 2001 the Compensation Committee - still uninformed about the true income that Kozlowski had manufactured for himself through secret benefits - approved a second funding stream for his Executive Life Insurance Program with approximately $20 million. 70. Another Kozlowski deception about his purported compensation in 2001 related to the vesting of 290,000 Company shares for Kozlowski's executive officers and key managers as the result of a purported gain on the swap of TyCom shares for an equity interest in Flag Telecom Holdings Ltd. ("Flag"). The Company reported a $79,264,700 99.8-23 gain associated with the swap of TyCom shares for the Flag equity on June 20, 2001. Shortly thereafter Kozlowski authorized the accelerated vesting of shares to various key individuals, including at least 155,000 shares for himself; 77,500 for Swartz; and 60,000 shares for certain of Kozlowski's other senior executives and key managers, based upon that apparent gain on the transaction. Those shares were sold back to the Company and cash delivered to the recipients in August 2001. 71. However, Kozlowski did not seek or obtain approval for his own and Swartz's bonuses until two months later, at the October 1, 2001 Compensation Committee meeting. By this time, the gain had become an unrealized loss - significantly in excess of the June 20 gain - yet the Committee was misled into awarding the bonuses "in conjunction with the gain on the sale of TyCom shares." (SEE Ex. 22, attached hereto.) Kozlowski never sought any approval from the Compensation Committee for the grant of shares awarded to the other senior executives and key managers. 72. The total cost to the Company related to the award of these shares exceeded $15,378,700. More than half of this amount, $8,219,650, accrued to the benefit of Kozlowski individually. 73. In a breach of his fiduciary duty to the Company, Kozlowski never disclosed the true economics of the Flag transaction to the Compensation Committee. In short, he never corrected the misinformation upon which the Committee predicated the Flag awards. 74. The combined cost of these unauthorized "special bonus" programs - TyCom Forgiveness Program ($95,962,653), the ADT Automotive Bonus ($55,954,455), 99.8-24 and Flag Vesting ($15,378,700) - cost the Company over $167,295,808. None of these programs was properly approved by the Board or its Compensation Committee. The net benefit from these combined programs accrued overwhelmingly to Kozlowski and permitted him to realize more than $66,760,551 in undisclosed income in less than twelve months. 2001 - KOZLOWSKI'S SECRET PAYMENTS TO THEN-LEAD DIRECTOR WALSH AND THE BOARD'S INVESTIGATIONS 75. Kozlowski also breached his fiduciary duties, and engaged in deliberate acts of fraud and concealment in 2001 and 2002 when he paid $20 million in Company funds to his friend, then-director Frank Walsh, in July 2001. 76. Walsh was a personal friend of Kozlowski and had served as a Tyco director for several years; in the late 1990s, he was the Chairman of the Board's Compensation Committee, and by early 2001 he had been appointed Lead Director, making him the principal conduit for communications between the Company's management and the Board. 77. In early 2001, Walsh recommended to the Board that Tyco acquire a financial services company, and later proposed that he introduce Kozlowski to Al Gamper, the Chairman and CEO of The CIT Group, a large financial services company. Subsequent negotiations led to an agreement for Tyco to acquire CIT, which closed in June 2001. 78. After the terms of the CIT transaction had been agreed to, Walsh and Kozlowski agreed that Tyco would pay Walsh a $20 million fee for his role in the transaction. Consistent with his pattern of concealment and self-dealing, Kozlowski told Walsh, and Walsh agreed, that they should conceal this payment from the Board. 99.8-25 79. Tyco's directors (other than Kozlowski, Swartz and Walsh) were not aware of the Walsh payment until early January 2002, when they read draft language from the Company's annual proxy statement disclosing the payment. Contrary to later statements made by Kozlowski, the directors did NOT condone the payment; on the contrary, angry directors confronted Kozlowski and Walsh and demanded that the money be returned immediately. When Walsh refused, and Kozlowski offered no explanation other than that he had "screwed up", the matter was added to the agenda of an informal meeting of directors scheduled for January 16, 2002. 80. The January 16 meeting had been scheduled to discuss Kozlowski's plan to realize tens of billions of dollars in shareholder value by breaking up the Company into four parts - each a multi-billion dollar entity in its own right - and selling billions of other assets. 81. The directors reviewed the facts and circumstances relating to the Walsh payment at the January 16 meeting and gave Walsh the opportunity to explain himself. Walsh was then excused from the discussion, and upon his return was told that it was the UNANIMOUS view of the directors that the money should be returned. Walsh responded by gathering up his papers, saying "adios" to the other directors, and walking out of the meeting. 82. The Board never ratified the Walsh payment, at that meeting or later. The Board never expressed the view that the Walsh payment was reasonable or appropriate. And the Board never authorized or approved any of the public statements Kozlowski later made, or caused to be made, suggesting that the Board had approved or condoned the payment. 99.8-26 83. When the board learned about the Walsh payment, it undertook close scrutiny of management and a review of the Company's compensation and corporate governance procedures. Kozlowski's unauthorized statements regarding the payment after it was disclosed, which misrepresented the Board's views, were an additional cause of concern. 84. Accordingly, in February 2002, the Audit Committee undertook a review of all transactions involving senior management. Each of the members of the Corporate Governance and Nominating Committee then met with Kozlowski to express their concerns about the Walsh situation and to stress to Kozlowski the importance that the Board be fully informed of, and approve, management's actions. 85. In particular, John Fort, Chairman of the Audit Committee, had a long conversation with Kozlowski on February 19, 2002 in which Fort stressed the need for full disclosure of management's action to the Board. Kozlowski reassured Fort that the payment to Walsh was an isolated mistake, that there were no other problematic or undisclosed transactions. 86. While Kozlowski claimed to welcome this heightened Board oversight, this was only lip service; at no time did Kozlowski disclose the unauthorized benefits and loans that he had lavished on himself and other senior management in the preceding years as described above. And while Kozlowski told the Board that he would continue to try to get Walsh to return the money, he actually encouraged and worked with Belnick to induce the Board to ratify retroactively the Walsh payments, or to take no action to recover the money. 99.8-27 87. The Board nevertheless continued its efforts, in February 2002 and later, to get Walsh to return the money he had received - even though Kozlowski repeated on more than one occasion that since he had agreed to the payment, an action against Walsh to recover the payment was equivalent to an action against Kozlowski. 88. Notwithstanding Kozlowski's assurances, the Corporate Governance Committee also announced a review of Company records and policies in April 2002. This review raised further questions regarding how certain approved programs were being run, and regarding certain persons (including Mark Belnick). Thus in early May 2002, director Richard Bodman, at the request of the Corporate Governance Committee instructed Chief Financial Officer Mark Swartz to provide comprehensive records on various subjects, including: a. charitable contributions over $10,000; b. all use of apartments and other company assets by employees; c. all use of company planes; d. all stock transactions by Kozlowski, Swartz and Belnick for the preceding five years; e. all loans to members of management; and f. any other matters that Swartz, in his judgment, thought should be brought to the Board's attention 89. Also in early May 2002, the Corporate Governance Committee hired independent counsel with no prior connection to the Company, Boies, Schiller & Flexner LLP, to represent the Company with regard to the Walsh matter. 90. In sum, the Board promptly initiated internal reviews and investigations, which it continued despite repeated, express assurances from the CEO that there were no 99.8-28 other undisclosed transactions. The Board's investigations covered a variety of areas of potential concern - indeed, it included all the areas in which problematic transactions have now been found - and also covered others in senior management (Swartz and Belnick) who seemed to have engaged in unapproved transactions, such as Belnick's relocation loans, which had only just been disclosed a few months earlier. 91. From February through May 2002, Kozlowski, Swartz and Belnick each knew that the Board's investigation was continuing and had been broadened to include the subject areas noted above. Kozlowski, Swartz and Belnick each knew that they had engaged in unapproved and unauthorized transactions within the scope of that inquiry, enriching them by millions of dollars. Rather than disclose those facts, Kozlowski, Swartz and Belnick worked together to delay and frustrate the investigation: for example, Swartz did not disclose the unapproved bonuses and forgiveness from 2000 in response to Director Bodman's questions in May 2002. 92. When Kozlowski received a subpoena from the New York County District Attorney's office on May 3, 2002 seeking information regarding his purchase of artwork and his compensation from the Company - areas that were also the subject of the Board's ongoing investigation - that subpoena was not revealed to the Board. Instead, Kozlowski and Belnick agreed and conspired to conceal that subpoena from the Board, and to stall and frustrate the Board's investigation, in a desperate hope that they could weather both investigations. That agreement constituted a further breach of their duties to the Company and frustrated for a time the Board's independent investigation. 93. On June 10, 2002, John Fort, interim CEO, discovered that Belnick was attempting to remove confidential Company documents from the Company's New York 99.8-29 offices. Thereupon the Board authorized Fort to terminate Belnick. Only then did the internal investigation start to make substantial progress. 2002 - WITH BELNICK'S HELP, KOZLOWSKI CONCEALS HIS CRIMINAL INVESTIGATION FROM THE BOARD 94. As alleged earlier, in 2001 Kozlowski purchased with Company money a second more lavish apartment at 950 Fifth Avenue and improved and appointed it with art and antiques without ever advising the Board that the apartment was paid for by the Company and carried as a corporate asset. 95. Kozlowski acquired, sometimes through intermediaries, artwork and antiques from New York merchants in an amount exceeding $11 million. Since his termination, the Company's investigation has discovered that Kozlowski rarely paid any sales taxes for these purchases. Thus, Kozlowski violated the trust reposed in him as the Chief Executive of the Company and breached his fiduciary duties to the Company by engaging in criminal conduct. 96. Upon suspicion of Kozlowski's nonpayment of sales tax, the Manhattan District Attorney opened an investigation and, on May 3, 2002, served Kozlowski with a subpoena seeking documents relating to (a) Kozlowski's compensation and (b) Kozlowski's recent art purchases. 97. Kozlowski had affirmative duties to disclose to the Board any potential conflict or self-interest of any executive, including himself, in any pending legal matter. Kozlowski was immediately aware of the seriousness of this investigation and the danger it posed to the Company: that same day, Tyco's Chief Corporate Counsel retained criminal counsel to represent Kozlowski. Yet Kozlowski failed to inform the Board, its 99.8-30 Corporate Governance Committee, or its Lead Director of that active criminal investigation in a timely fashion. Nor did Belnick do so. 98. For example, on May 23, 2002 Kozlowski met and conferred with the members of the Board in New York (with eight directors present in person and three by phone). At no time did Kozlowski or Belnick mention (on or off the record) the pending criminal investigation or the subpoena to the Company. 99. Kozlowski did not begin to inform Tyco's Board, the Corporate Governance Committee, or the Lead Director of the criminal investigation or of the subpoenas until the evening of Friday May 31, after Kozlowski had been told that he was about to be indicted. Only then did he begin to call directors to inform them of his impending indictment. 100. As a result of Kozlowski's breach of fiduciary duties, the Company was harmed in various ways. In the early morning hours of Monday, June 3 - at 1:30 am - the Tyco Board met by phone and demanded and accepted Kozlowski's resignation as Chairman, CEO and director. On Monday, June 3, the District Attorney held a press conference to announce its investigation and on Tuesday June 4, Kozlowski was indicted. KOZLOWSKI'S OTHER BREACHES OF FIDUCIARY DUTIES 101. Kozlowski's conduct since 1995 - and especially since 1999 - constitutes a clear and deliberate breach of his duties to the Company through a pattern of non-disclosure, concealment, and obstruction, which has caused substantial harm to the Company. 102. Throughout this same time period, Kozlowski engaged in a pattern of self-dealing and exploitation of the corporate assets of the Company: 99.8-31 a. After the 1995 purchase of 167 LITTLE HARBOR, NEW CASTLE, NH, Kozlowski furnished it at a cost of $269,000, which he expensed to the Company, and thereafter reportedly made exclusive use of the property, while charging the maintenance costs to the Company. b. After the 1996 purchase of 59 HARBOR ROAD, RYE, NH, for which he used Company funds that he later reimbursed, Kozlowski has reportedly made personal use of the property, while expensing its maintenance to the Company. c. After the lavish Fifth Avenue apartment at 817 FIFTH AVENUE, NEW YORK was provided to Kozlowski in 1996 through a corporate lease with an annual rent of $264,000, Kozlowski reportedly exclusively used it for nearly four years. d. After the 1997 purchase of 471 EAST ALEXANDER PALM RD, BOCA RATON, which he effected through the Company, Kozlowski reportedly made personal use of the property for himself and visiting family members. e. After the sale of his New Hampshire home, 10 RUNNYMEDE DRIVE, NORTH HAMPTON, NH, to the Company in 2000, Kozlowski reportedly continued to make personal use of the property by permitting his ex-wife to reside there for two years, without a lease or without even reimbursement to the Company of expenses. f. Kozlowski neither sought nor obtained any approvals from the Board or its Compensation Committee prior to the purchase of a second, more extravagant apartment at 950 FIFTH AVENUE at a total cost to the Company of more than $20 million, including improvements, in 2000 and concealed this extraordinary benefit from the Board. g. After his purchase of 950 FIFTH AVENUE using corporate funds, Kozlowski further improved the apartment with $3 million of corporate funds and furnished it with art and antiques using an additional $11 million of corporate funds, without obtaining the approval for this exceptional compensatory benefit from the Board or its Compensation Committee. 103. Kozlowski also freely used Company funds to pay for his other personal interests, including the following: a. In January 2002, Kozlowski expensed the $700,000 cost of a personal investment in the film "Endurance," produced by White Mountain Films, to the Company. No basis for the business expense 99.8-32 for this film was provided to the Company. (SEE Ex. 23, attached hereto.) b. In June 2001, Kozlowski expensed more than $1 million to the Company for an extravagant birthday party celebration for his wife in Sardinia and justified the purported business purpose thereof by putting some executives from the Company on the guest list. (SEE Ex. 24, attached hereto.) c. From 1998 through 2002, Kozlowski claimed and was reimbursed for $1 million of business expenses without proper documentation. Among the items claimed were a private venture (West Indies Management - $134,113); jewelry ($72,042); clothing ($155,067); flowers ($96,943); club membership dues ($60,427); and wine ($52,334). d. Kozlowski also charged the Company at least $110,000 for the corporate use of his personal yacht, "the Endeavour," an antique J-class sloop on which he has had occasional business guests. No records were submitted to justify this expense. 104. From 1997 to 2002, in his capacity as Chief Executive of the Company, Kozlowski committed sizable donations and pledges to charitable organizations with Company money amounting to more than $106 million. Fully $43 million of these donations were represented as his personal donations or made using the Company's funds for Kozlowski's personal benefit. For example, in 2001 Kozlowski donated to the Nantucket Conservation Foundation, Inc. a total of $1,300,000 in Company money. (SEE Ex. 25, attached hereto). Reportedly, the donation was used to purchase property (Squam Swamp) adjacent to Kozlowski's own Nantucket estate on Squam Road, so as to preclude future development of the land. 105. In addition, while causing Tyco to fund donations, Kozlowski's accompanying letters often indicated that the contribution was made "on behalf of L. Dennis Kozlowski," conveying the erroneous impression to the recipient that the donations were made by Kozlowski. For example: 99.8-33 a. In 1997, Kozlowski made a pledge to his alma mater Seton Hall University, with a $1 million Tyco check with a letter stating "I have enclosed a check for $1 million in payment toward my pledge to Seton Hall University." (SEE Ex. 26, attached hereto). b. In making a contribution to the Shackleton Schools, Inc. Kozlowski claimed, "I hereby pledge $1,000,000" while remitting a Company check. (SEE Ex. 27, attached hereto). c. Kozlowski used Company money to promote his own name. Middlebury College thanked Kozlowski for his "additional commitment," suggesting that they create "THE KOZLOWSKI FUND." (SEE Ex. 28, attached hereto). Kozlowski funded the "Koz Plex" at Berwick Academy by causing Tyco to donate $300,000 to the school. (SEE Ex. 29, attached hereto). In 1996 Kozlowski, after committing to a pledge of $1 million, wrote to discuss "a naming opportunity" with a hospital. (SEE Ex. 30, attached hereto). d. Organizations also recognized Tyco contributions as "Dennis' donations." For example, the California International Sailing Association acknowledged a $10 million pledge, funded by Tyco, as "Dennis' donation." (SEE Ex. 31, attached hereto). e. He also caused a $1,000,000 contribution to be made to Cambridge University and charged it to his KEL account. This amount was later transferred out of his KEL account and booked by Tyco as a charitable contribution. f. Kozlowski also claimed partial credit for a $2.5 million pledge to Angell Memorial Hospital (SEE Ex. 32, attached hereto) and a million dollar pledge to the Nantucket Historical Association (SEE Ex.33, attached hereto). FIRST CAUSE OF ACTION (BREACH OF FIDUCIARY DUTY) 106. Plaintiffs reallege paragraphs 1 through 105 as if fully set forth herein. 107. As the Chairman and Chief Executive Officer of the Company, Kozlowski owed strict fiduciary duties to the Company. Kozlowski was required to act at all times honestly and in good faith with a view to the best interests of the Company and to 99.8-34 exercise the care, diligence, and skill that a reasonably prudent person would exercise in comparable circumstances. 108. Kozlowski failed to fulfill his obligations to the Company, failed to faithfully execute service, and breached his duties to Tyco in various ways, including by: a. failing to seek or obtain authorization for substantial amounts of purported compensation; b. failing to seek or obtain authorization for compensation programs, loans and awards for other senior executives of the Company; c. failing to inform, and affirmatively concealing from, the Board the true facts concerning amounts he had taken as purported compensation for himself and the unauthorized compensation programs and loans he had approved for other senior executives of the Company; d. misappropriating hundreds of millions of dollars in Company funds and assets, which have not been repaid; e. failing to seek or obtain approval for the $20 million payment to Frank Walsh before such payment was made, and conspiring with Walsh to conceal that payment from the Board until Walsh was forced to disclose it in early 2002 as part of the Company's preparation of its proxy statement; f. failing to inform the Board about the criminal investigation of him that began in early May 2002, and the fact that he had used Company resources to carry out his unlawful sales tax avoidance scheme; and g. failing to cooperate with and actively impeding the Board's efforts to investigate the above matters. 109. As a direct and proximate result of Kozlowski's breaches of his fiduciary duties detailed above, the Company has been damaged in an amount that far exceeds the amounts Kozlowski directly misappropriated for himself. The total amount of these damages can only be determined at trial. 99.8-35 110. Because of the willful, wanton, and intentional nature of Kozlowski's conduct, and his abuse of his position of trust, Kozlowski is also liable for punitive damages, in an amount to be determined at trial. SECOND CAUSE OF ACTION (INDUCING BREACH OF FIDUCIARY DUTY) 111. Plaintiffs reallege Paragraphs 1 through 105 as if fully set forth herein. 112. As the three executive officers of the Company, each of Kozlowski, Mark Swartz and Mark Belnick owed Tyco strict fiduciary duties. Each of Kozlowski, Swartz and Belnick was required to act at all times honestly and in good faith with a view to the best interests of the Company and to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. 113. Kozlowski was well aware of the duties that each of he, Swartz and Belnick owed to the Board and the Company, and he deliberately used his position as Chairman and Chief Executive Officer to induce others within the Company to breach their fiduciary duties to Tyco, and to fail to faithfully execute service to their principal, Tyco. 114. Specifically, Kozlowski induced Swartz and Belnick, and each of them, to breach their duties to the Company in various ways, including: a. enabling Kozlowski to obtain, and to conceal from the Board, the unapproved and undisclosed purported compensation and benefits described above; and b. enriching persons in the Company whom Kozlowski particularly wished to reward, through undisclosed and unauthorized benefits and loans. 115. As a direct and proximate result of these breaches of fiduciary duty induced by Kozlowski, the Company has been damaged in an amount that far exceeds the 99.8-36 amounts Kozlowski directly misappropriated for himself. Kozlowski is therefore liable to Tyco for all damages proximately caused by the breaches of fiduciary duty he induced, in an amount that can only be determined at trial. 116. Because of the willful, wanton, and intentional nature of Kozlowski's conduct, and his abuse of his position of trust, Kozlowski is also liable for punitive damages in an amount to be determined at trial. THIRD CAUSE OF ACTION (CONSPIRACY TO BREACH FIDUCIARY DUTY) 117. Plaintiffs reallege paragraphs 1 through 105 as if fully set forth herein. 118. Kozlowski, Mark Swartz and Mark Belnick were the most senior officers of the Company. Each of Kozlowski, Swartz and Belnick were required to act honestly and in good faith with a view to the best interests of the Company and to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. 119. Rather than fulfill their duties to the Company, Kozlowski, Swartz and Belnick agreed among themselves to breach their duties to the Company and fail to faithfully execute service to their principal. 120. Kozlowski, Swartz and Belnick, in furtherance of their common scheme and objective, acted in concert to: a. failing to inform the Compensation Committee of the true facts concerning the amount of Kozlowski's purported compensation; b. failing to obtain Compensation Committee approval for Kozlowski's purported compensation and agreements related thereto; 99.8-37 c. failing to inform the Board about the criminal investigation of Kozlowski and the hiring of criminal defense counsel for Kozlowski and the Company; and d. failing to cooperate with and actively impeding the Board's efforts to investigate these matters. 121. As a direct and proximate result of the joint and concerted action between and among Kozlowski, Swartz and Belnick to breach their fiduciary duties, the Company has been damaged in an amount that far exceeds the amounts Kozlowski directly misappropriated for himself. Kozlowski is therefore liable to Tyco for all damages proximately caused by his agreement and his joint and concerted action with Swartz and Belnick to breach their fiduciary duties to Tyco. 122. Because of the willful, wanton, and intentional nature of Kozlowski's unlawful joint and concerted action, and his abuse of his position of trust, Kozlowski is also liable for punitive damages in an amount to be determined at trial. FOURTH CAUSE OF ACTION (FRAUD) 123. Plaintiffs reallege paragraphs 1 through 105 as more fully set forth herein. 124. From 1997 through 2000, Kozlowski made representations to the Company, and in its financial documents, including but not limited to the Company's Officers and Directors' Questionnaires (dated November 30, 1997, November 30, 1998, August 1, 1999, December 30, 1999, and December 20, 2000) about (a) his KEL indebtedness and the indebtedness of other key executives; and (b) the total purported compensation and other benefits received by him and his key executives from the Company. 125. In fact, Kozlowski represented in each of the Officers and Directors' Questionnaires that he had no indebtedness to the Company in excess of $60,000 "other 99.8-38 than indebtedness arising from transaction in the ordinary course of business and indebtedness owed Tyco in connection with any loan granted in connection with the Company's [KEL program]." Kozlowski concealed from the Company, the extent of: his individually tailored relocation loans; his KEL loans used for non-program purposes; and his KEL loans that violated the authorization limits of the program. 126. As shown above, Kozlowski's representations to the Company regarding his loans and other compensation were false, and he knew they were false: Kozlowski had borrowed money from programs, such as the relocation program, to which he was not entitled; and he had received other amounts as purported compensation that was not authorized by the Compensation Committee or Board. 127. Moreover, Kozlowski fraudulently concealed facts from the Board, namely all amounts received by him as purported compensation and benefits arising from his illegal conduct. 128. Kozlowski made his representations - and failed to disclose his illegal conduct - knowing that the Company would rely on his misrepresentations and concealment in preparing its financial disclosures to the public, and that it was absolutely vital for those disclosures to be true, complete, and accurate. 129. Each of the above representations was made for the purpose of inducing the Company, the Compensation Committee, or Board of Directors, to rely upon them. 130. The Company did in fact rely upon such representations, in ignorance of the representations' falsity, and the Company has been - and continues to be damaged as a result of the belated discovery of the facts regarding unauthorized loans and purported compensation received by Kozlowski and others at the Company. 99.8-39 131. Kozlowski's actions were willful, wanton and undertaken with malice subjecting Kozlowski to punitive damages. FIFTH CAUSE OF ACTION (CONSTRUCTIVE FRAUD) 132. Plaintiffs reallege paragraphs 1 through 105 as if fully set forth herein. 133. At all material times alleged herein, Kozlowski had a fiduciary and confidential relationship with the Company and was in a position of superiority and influence over it. 134. Plaintiffs reallege paragraph 124-126 as if fully set forth herein. 135. Kozlowski's representations to the Company regarding his loans and other amounts he received as purported compensation were false, and he knew they were false: Kozlowski had borrowed money from programs, such as the relocation programs, to which he was not entitled, and he had received other unauthorized compensation. 136. Kozlowski made his representations - and failed to disclose his illegal conduct - knowing that the Compensation Committee would rely on his misrepresentations and concealment in awarding him further compensation and that it was absolutely vital that the Compensation Committee's knowledge and understanding of his full compensation and benefits be true, complete, and accurate. 137. Each of the above representations was made for the purpose of inducing the Company, including the Compensation Committee to rely upon them. 138. The Company did in fact rely upon such representations, in ignorance of the representations' falsity, and the Company has been - and continues to be - - damaged as a result of the belated discovery of the facts regarding the unauthorized loans and 99.8-40 unauthorized amounts that he granted himself and others at the Company as purported compensation. SIXTH CAUSE OF ACTION (ACCOUNTING) 139. Plaintiffs reallege paragraphs 1 through 105 as if fully set forth herein. 140. As an officer of the Company, Kozlowski owed Tyco strict fiduciary duties. Kozlowski was required to act honestly with full disclosure and in good faith with a view to the best interests of the Company, and to exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. 141. Kozlowski breached his fiduciary and other duties to the Company, and failed to faithfully execute service, in various ways, and profited from his breach of duty through the receipt of unauthorized and undisclosed amounts of money and credits, interest-free use of millions of dollars of Tyco's funds for unauthorized relocation loans, and unauthorized grants of hundreds of thousands of shares of Company stock, which Kozlowski promptly sold and on which he earned millions. 142. Kozlowski commingled the funds he received in breach of his fiduciary duties, and the proceeds obtained on his use of those funds, with his own funds. 143. As a fiduciary, Kozlowski must account to his principal, Tyco, for the funds that he received during the course of his employment - an amount that, in total, exceeds a hundred million dollars. 144. Kozlowski must therefore render an account to Tyco for the funds that he received during the course of his employment, including an accounting for the interest on 99.8-41 the funds he obtained and benefits he obtained as a result of his wrongful use of the Company's funds. SEVENTH CAUSE OF ACTION (CONSTRUCTIVE TRUST) 145. Plaintiffs reallege paragraphs 1 through 105 as if set forth fully herein. 146. At all relevant times, Kozlowski was in a fiduciary and confidential relationship with the Company. 147. For at least the past several years, Kozlowski was a disloyal fiduciary: he used his position as Chairman and Chief Executive Officer to breach his own duties to the Company, to induce Swartz and Belnick (and others) to breach their duties to the Company and conspired with Frank Walsh to pay Walsh $20 million in unauthorized compensation, and to then conceal that fact from the Board. 148. Kozlowski profited enormously, and was enriched by his various breaches of duty, in various ways, including the receipt of unauthorized amounts, the use of Company funds through the misuse of loan programs and unauthorized loans, and through other wrongful use of Company assets and property. 149. As an intentionally disloyal fiduciary who profited as a result of his disloyalty, Kozlowski is deemed to hold the funds and benefits he has received, and the interest and proceeds obtained on the use of the funds he wrongfully received, in constructive trust for the benefit of Tyco. EIGHTH CAUSE OF ACTION (BREACH OF CONTRACT) 150. Plaintiffs reallege paragraphs 1 through 105 as if fully set forth herein. 99.8-42 151. Kozlowski breached the terms of the Company's KEL Program, to which he agreed to be bound in accepting loans thereunder. 152. Pursuant to the terms of the KEL Program, Kozlowski was required to re-pay all loans made by the Company under the KEL Program upon his termination from the Company. 153. Kozlowski terminated his employment with the Company on June 3, 2002. Pursuant to the terms of the KEL program, all amounts previously loaned to him under such plan became immediately due and payable on that date. 154. Despite a demand for payment duly made by the Company, Kozlowski has refused to repay any of the money loaned to him under the KEL Program. The amounts owed by Kozlowski amounts, in the aggregate, to at least $43,840,461, exclusive of interest. 155. Kozlowski is therefore obligated to pay the Company all amounts due and owing under the KEL, plus interest, in an exact amount to be determined at trial NINTH CAUSE OF ACTION (DECLARATORY JUDGMENT) 156. Plaintiffs reallege paragraphs 1 through 105, as if fully set forth herein. 157. Kozlowski's 2001 "Retention Agreement" was, as noted above, procured by Kozlowski based upon representations that he was dutifully and loyally fulfilling his duties to the Company and that such benefits provided for therein were necessary to retain his loyal services to the Company. 158. Kozlowski has claimed, through his counsel, that he is entitled to the funds and benefits set forth in his 2001 Retention Agreement. Tyco has taken the position that 99.8-43 Kozlowski's Retention Agreement is not valid or enforceable, and that Kozlowski owes the Company a substantial amount of money. 159. There is an actual and ripe controversy regarding the validity and enforceability of Kozlowski's Retention Agreement, and the interests of justice would be served by an adjudication of the parties' respective rights and obligations in this proceeding. 160. Plaintiffs therefore ask for a declaratory judgment that the 2001 Retention Agreement, as amended, is void and not effective and that the Company owes Kozlowski no obligation thereunder. TENTH CAUSE OF ACTION (UNJUST ENRICHMENT) 161. Plaintiffs reallege paragraphs 1 through 105 as if set forth fully herein. 162. As set forth in more detail above, Kozlowski has been unjustly enriched in various ways, including: a. by his unearned and unauthorized misappropriation of funds as purported compensation, which he and others working with him concealed from the Board, and b. by his receipt of unauthorized loans and other amounts as purported compensation from the Company, which was either not approved by the Compensation Committee or which was in excess of program amounts and limits, and rules, approved by the board for such loans and programs. 163. Kozlowski has been unjustly enriched to the detriment of the Company, which has been significantly damaged. 99.8-44 ELEVENTH CAUSE OF ACTION (CONVERSION) 164. Plaintiffs reallege paragraphs 1 -105 as if fully set forth herein. 165. Over the past several years, both directly and through the actions of others taken at his direction and control, or with his approval, Kozlowski came to exercise unauthorized dominion and control over hundreds of millions of dollars of Company funds, stock and assets, as well as assets obtained as a result of the improper use of Company resources, including but not limited to the property enumerated above and rare items of art worth in excess of $10 million. 166. Kozlowski's dominion and control over the property has been to the exclusion of, and in defiance of, the Company's rights, or has otherwise interefered with the rights of Company in and to such property. 167. Tyco has been damaged by Kozlowski's conversion of Company property, in an amount to be determined at trial. WHEREFORE, Tyco respectfully requests that the Court enter judgment in Plaintiff Tyco's favor, and against Defendant Kozlowski, as follows: A. On the First, Second, Third, Fourth, Fifth, and Eleventh causes of action, and each of them, awarding Tyco compensatory, consequential, special and punitive damages in an amount to be proven at trial, and disgorgement of all compensation and benefits obtained during the course of his breaches of his fiduciary duty and other wrongful conduct described above; B. On the Sixth cause of action, ordering Kozlowski to account for all amounts received from the Company as actual compensation received from the Company and unauthorized amounts taken from the Company as purported compensation, in an amount to be determined at trial; C. On the Seventh and Tenth causes of action, imposing a constructive trust on all of Kozlowski's actual compensation, unauthorized amounts taken from the 99.8-45 Company as purported compensation, and benefits obtained from the Company during the course of his unlawful conduct, and all proceeds obtained from the use thereof, with interest as allowed by law in an amount to be proven at trial; D. On the Eighth cause of action, ordering Kozlowski to repay immediately all funds he has improperly borrowed from the Company; E. On the Ninth cause of action, declaring the retention agreement null and void and the Company owes no obligations to Kozlowski thereunder; F. Awarding Tyco exemplary and punitive damages as may be available at law; and G. Such other and further relief, including interest, costs, disbursements and attorneys' fees incurred herein, as permitted by law. New York, New York September 12, 2002 BOIES, SCHILLER & FLEXNER LLP By: /s/ Ann M. Galvani ------------------ Ann M. Galvani (AG-1417) Andrew W. Hayes 333 Main Street Armonk, New York 10504 (914) 749-8200 Paul R. Verkuil Nicholas A. Gravante, Jr. Harlan A. Levy 570 Lexington Avenue, 16th Floor New York, New York 10022 (212) 446-2300 David W. Shapiro 1999 Harrison Street, Suite 900 Oakland, California 94612 (510) 874-1000 ATTORNEYS FOR PLAINTIFFS TYCO INTERNATIONAL LTD. AND TYCO INTERNATIONAL (US) INC. 99.8-46 DEMAND FOR A JURY TRIAL Pursuant to Fed. R. Civ. P. 38(b), Plaintiffs hereby demand a jury trial of all issues property triable thereby. New York, New York September 12, 2002 BOIES, SCHILLER & FLEXNER LLP By: /s/ Ann M. Galvani ------------------ Ann M. Galvani (AG-1417) Andrew W. Hayes 333 Main Street Armonk, New York 10504 (914) 749-8200 Paul R. Verkuil Nicholas A. Gravante, Jr. Harlan A. Levy 570 Lexington Avenue, 16th Floor New York, New York 10022 (212) 446-2300 David W. Shapiro 1999 Harrison Street, Suite 900 Oakland, California 94612 (510) 874-1000 ATTORNEYS FOR PLAINTIFFS TYCO INTERNATIONAL LTD. AND TYCO INTERNATIONAL (US) INC. 99.8-47 [EXHIBITS TO KOZLOWSKI COMPLAINT] 99.8-48 EXHIBIT 1 99.8-49 cc: Mr. Corn Mr. Zemlin Ms. Tse [LETTERHEAD OF TYCO INTERNATIONAL LTD.] BARBARA S. MILLER TREASURER March 10, 1995 Jeffrey C. Hadden, Esq. Goodwin, Procter & Hoar Exchange Place Boston, MA 02109 Dear Jeff: As you will recall, several months ago we discussed, on a conceptual basis, the form of proxy disclosure required relative to Tyco relocating some of its executive officers to New York City. The decision has now been made for such relocation to take place, and I would therefore appreciate your sending a copy of your file memorandum on the issues. Additionally, you were looking for examples of such disclosure in other proxy statements. If you have found anything on point, I'd be interested in seeing copies. To reiterate, the relocation is not part of a broad-based restructuring process that would be discussed elsewhere in the proxy or financial statements. The Company has leased additional office space in New York City (a small office has been open the past year), and expects the CEO, CFO as well as three or four other executives to spend approximately 50% of their time in New York with the balance at the Company's headquarters in New Hampshire. The relocation arrangements will be tailored to each individual's circumstances and could/will cover reimbursement for such items as: apartment leasing, rental furniture costs, tuition for childrens' schooling, interest free loans for a period of time to purchase a home or condominium, mortgage points and closing costs, monthly property taxes and maintenance, settling in allowance, moving of possessions, personal income tax adjustment on relocation items, gross up on salary for state and federal taxes, etc. We also discussed the point that such reimbursements may continue for a period of several years, but that disclosure would address only the current fiscal year (i.e. not required to discuss a potential future liability). At the current time, it appears that only the CEO and possibly the CFO would be subject to proxy disclosure as the other executives are not named employees. As I will be out of the office next week, could you please call Jeff Mattfolk if you have any further questions. Also, please address your response to Mark Swartz so he can have access to the information prior to my return. Thanks for your help. Sincerely, /s/ Barb ONE TYCO PARK, EXETER, NEW HAMPSHIRE 03833-1108 (803) 778-9700 FAX: (603) 778-0108 99.8-50 EXHIBIT 2 99.8-51 [LETTERHEAD OF GOODWIN, PROCTER & HOAR] A PARTNERSHIP INCLUDING PROFESSIONAL CORPORATIONS COUNSELLORS AT LAW EXCHANGE PLACE BOSTON, MASSACHUSETTS 02109-2881 JEFFREY C. HADDEN TELEPHONE (617) 570-1000 (617) 570-1872 TELECOPIER (617) 523-1231 TELEX 94-0640 CABLE - GOODPROCT, BOSTON March 17, 1995 VIA FAX Ms. Barbara Miller Tyco International Ltd. One Tyco Park Exeter, NH 03833-1108. Dear Barb: As we have previously discussed and as set forth in your letter dated March 10, 1995, Tyco plans to relocate some of its executive officers to New York City and would like advice concerning what type of proxy disclosure will be appropriate for the expenses paid in connection with this relocation. As indicated in your letter, the costs would include such items as: apartment leasing, property taxes, state and federal tax gross ups, moving of possessions, interest free loans on the purchase of a home and payment of other items. This letter addresses what type of disclosure is required and how it should be presented under the SEC's executive compensation rules contained in Item 402 of Regulation S-K. The relocation costs described above will probably be characterized as compensation expenses on the books of the Company and as such will have to be disclosed as compensation for Named Executive Officers under Item 402. To the extent that there will be ongoing expenses relating the executives' travel between New York and Exeter, such travel expenses may be otherwise accounted for by the Company and will not be included in the calculation of executive compensation under Item 402. Item 402(b) provides that a registrant disclose certain compensation information for its Named Executive Officers in a Summary Compensation Table. Along with columns for salary, bonus, restricted stock, SAR's and LTTP payouts, the table includes columns for "Other Annual Compensation" (column "e") and for "All Other Compensation" (column "i"). Disclosure of relocation expenses could properly be reported in either column. Item 402(b)(2)(iii)(C)(l) provides that perquisites and other personal benefits, securities or property should be included in column "e" unless the aggregate amount of such compensation is less than the lesser of $50,000 or ten percent of the total of annual salary and bonus reported in columns "c" and "d," in which case such items do not have to be disclosed at all. Item 402(B)(2)(iii)(C)(4) specifically indicates that amounts reimbursed during the fiscal year 99.8-52 [LETTERHEAD OF GOODWIN, PROCTER & HOAR] Mr. Barbara Miller March 17, 1995 Page 2 for the payment of taxes should be included in this column. (As we discussed, for our purposes, I am assuming that the relocation compensation will exceed the threshold and will therefore will need to be disclosed). Item 402(b)(2)(v) addresses "All Other Compensation" to be reported in column "i" of the Summary Compensation Table and serves as a catch-all for reporting compensation that the registrant could not properly report in any other column of the table. Since "perquisite" is not defined in the rule, it is not clear that the relocation compensation should necessarily be reported in column "e" and therefore such compensation could alternatively be reported in this catch-all column "i." If the Company were to choose to report the aggregate compensation in column "e" for Other Annual Compensation as a combination of perquisites and tax reimbursements. Instruction 1 to Item 402(b)(2)(iii)(C) indicates that where perquisite disclosure is required, each perquisite exceeding 25% of the value of all perquisites must be identified in type and amount in a footnote to the table or in accompanying narrative. Housing payments, for example, may be considered a "type" of perquisite and exceed the 25% test and as such would have to be broken out in the footnote. Otherwise, if no perquisites need to be specifically accounted for, the Company can simply footnote the aggregate amount in column "e" by indicating that these are relocation expenses incurred in connection with the establishment of the Company's New York Office. The SEC has offered neither interpretive advice nor no-action relief for this type of relocation compensation disclosure nor will it answer inquiries as to what constitutes a "perquisite." As such, it is not clear as to which column the amounts and explanatory footnotes should be placed. Experts on executive compensation disclosure suggest that registrants use their best judgment about which column is the most appropriate column for disclosing a particular compensation item. The SEC staff has an informal rule of thumb that moving disclosure to the left in the Summary Compensation Table is preferable to moving it to the right in the table. Notwithstanding the SEC preference or the fact that tax reimbursements are contemplated to be included in column "e," I believe the Company could include the aggregate compensation amounts related to the relocation in column "i" entitled Other Compensation and provide corresponding footnote disclosure. This approach eliminates any confusion about whether the amounts are "annual" compensation and eliminates a necessity to itemize "types" of perquisites. I feel the Company could reference the entire relocation expenses in one footnote without breaking out the individual aspects of such expenses. You may want to consider, however, breaking out separately the tax reimbursements as the column "e" instruction require this. 99.8-53 [LETTERHEAD OF GOODWIN, PROCTER & HOAR] Mr. Barbara Miller March 17, 1995 Page 3 Attached are sample proxy statements of other registrants that disclose relocation costs in their Summary Compensation Table. This sampling of proxy statements indicates that some registrants report relocation compensation in the column "e" Other Annual Compensation while others report similar compensation in column "i" All Other Compensation. If I can provide any further information, please let me know. Best regards. Very truly yours, /s/ Jeffrey C. Hadden Jeffrey C. Hadden JCH/cmb Attachment cc: Mr. Mark Swartz Mr. Jeffrey D. Mattfolk Ms. Kathy Manning Stephen W. Carr, P.C. 99.8-54 SUMMARY COMPENSATION TABLE
HOME SHOPPING NETWORK INC. ANNUAL COMPENSATION LONG-TERM COMPENSATION ------------------------------------------- ---------------------------------------- RESTRICTED SECURITIES OTHER ANNUAL STOCK UNDERLYING ALL OTHER YEAR SALARY BONUS COMPENSATION AWARDS OPTIONS/SARS COMPENSATION NAME & PRINCIPAL POSITION (1) ($) ($) ($)(2) ($)(3) ($)(4) ($)(5) - ------------------------------------- ------ ---------- --------- ------------ ---------- ------------- ------------ Gerald F.Hogan....................... 1993 $ 432,692 $ 0 $120,436 $ -- 984,876 $ 935(12) President and Chief Executive 1992 -- -- -- -- -- -- Officer(6) 1991 -- -- -- -- -- -- Roy M. Speer......................... 1993 326,923 0 0 0 0 218,534(13) Chairman and Chief Executive 1992 500,000 0 0 0 0 1,480(14) Officer(7) 1991 500,000 0 0 0 0 -- Les R. Vandler....................... 1993 225,000 0 0 0 0 32,718(15) Executive Vice President, 1992 200,000 0 0 0 0 904(14) Chief Financial Officer and 1991 198,846 0 0 343,750 115,000 -- Treasurer(8) Alan P. Gerson....................... 1993 225,000 0 0 0 0 1,006(14) Executive Vice President(9) 1992 194,712 0 105,862 0 200,000 374(12) 1991 -- -- -- -- -- -- L. Douglas Bailey.................... 1993 196,154 0 0 0 120,000 424(12) President, Home Shopping 1992 -- -- -- -- -- -- Club(10) 1991 -- -- -- -- -- -- Celia H. Bachman..................... 1993 179,673 0 0 0 40,000 908(14) Senior Vice President, General 1992 128,029 0 0 0 0 766(14) Counsel, and Secretary(11) 1991 123,269 0 0 53,750 0 --
- ---------- (1) Disclosure is required for each of the Company's last three completed fiscal years. The information disclosed in the Summary Compensation Table is for the twelve month periods ending December 31, 1993, August 31, 1992, and August 31, 1991. During the four month period ending December 31, 1992, the Exectuive Officers received no extraordinary non-cash compensation, except for Mr. Gerson who received 5,000 shares of Common Stock under the Award Program. Those shares were valued at $35,000 on the grant date. (2) Disclosure of perquisites and other personal benefits, securities or property received by an Executive Officer is required only in the event that the aggregate amount of such compensation exceeds the lesser of $50,000 or 10% of the total of the Executive Officer's salary and bonus for the year. The amounts set forth in this column represent reimbursements for relocation expenses. (3) During 1998, Roy M.Speer and Lovell W. [ILLEGIBLE], a former President of the Company, contributed 2,990,000 shares of Common Stock to fund the Award Program. Such shares were granted to 187 persons in 1990, each grant vesting in five equal, annual installments. The amount reported in the table represents the market value of the shares granted on the date of grant. As of the end of 1993, the total number of shares granted and invested under the Award Program was 654,680 shares, which shares were valued at $9,737,175 (based on the closing price of the Company's Common Stock on December 31, 1993, and without giving effect to the limitation of value attributable to any restrictions on such stock). Such amounts include $89,258 (6,000 shares) for Ms. Bachman, whose employment terminated January 7, 1994. A total of 80,000 shares worth $430,000 were awarded in 1991, and 287,000 shares worth $2,220,375 were awarded in 1992. No awards were made in 1993. These awards reflected the reallocation of shares originally granted in 1990, but which were forfeited by the original grantee as a 99.8-55 result of termination of employment with the Company. Grantees of stock under the Award Program are entitled to any dividends paid with respect to such shares. (4) The amount listed represents the total number of options or SARs which were granted to the Executive Officer. (5) Under the transition provision of the SEC's Executive Compensation Disclosure Rules. "All Other Compensation" is only required for the years 1993 and 1992. (6) Mr. Hogan joined the Company in February 1993. As a result, no information regarding his compensation prior to such date is provided herein. (7) Until his resignation on August 11, 1993, Mr. Speer was employed by the Company under an employment agreement dated as of March 5, [ILLEGIBLE], which provides for Mr. Speer to be retained as a consultant for a period of five years following the termination of his employment. See "Employment Agreements." On February 12, 1993, Mr. Speer resigned as Chief Executive Officer of the Company and on August 11, 1993, resigned as Chairman of the Board and a Director at which time his consultancy and non-competition compensation commenced. On February 23, 1993, Mr. Hogan was named as President and Chief Executive Officer and on August 11, 1993, Mr. Bennett was named as acting Chairman of the Board. On September 28, 1993, Mr. Bennett was elected Chairman of the Board. See "Employment Agreements." (8) Mr. Wandler's employment with the Company terminated December 31, 1993. See "Employment Agreements." (9) Mr. Gerson joined the Company in October 1991. As a result, no information regarding his compensation prior to such date is provided herein. Mr. Gerson's employment with the Company terminated December 31, 1993. See "Employment Agreements." (10) Mr. Bailey joined the Company in January 1993. As a result, no information regarding his compensation prior to such date is provided herein. (11) Ms. Bachman's employment with the Company terminated January 7, 1994. See "Employment Agreements." (l2) Represents the premium paid by the Company to provide term life insurance to the Executive Officer. No cash surrender value is generated under this policy. (13) Includes $520 which represents the purchase price of shares of Common Stock allocated under the Savings Plan. Pursuant to the Savings Plan, the Company's Board of Directors may elect to match a portion of employee contributions, which is currently matched up to $520 per year, per employee, which stock vests in five equal annual increments commencing three years from the contribution date. Includes $44,231 paid to Mr. Speer upon termination which amount represents unused vacation and sick leave benefits. Includes $173,077 representing payment under a consultancy and non-competition arrangement. See "Employment Agreements." Includes $706 which represents the premium paid by the Company to provide term life insurance. No cash surrender value is generated under this policy. (14) Includes $520 which represents the purchase price of shares of Common Stock allocated under the Savings Plan. The remainder of this amount represents the premium paid by the Company to provide term life insurance to the Executive Officer. No cash surrender value is generated under this policy. (15) Includes $520 which represents the purchase price of shares of Common Stock allocated under the Savings Plan. Includes $19,712 paid to Mr. Vandler upon termination which amount represents unused vacation and sick leave benefits. Includes $12,000 representing an office allowance. See "Employment Agreements." Includes $486 which represents the premium paid by the company to provide term life insurance. No cash surrender value is generated under this policy. 99.8-56 COMPENSATION OF EXECUTIVE OFFICERS EXECUTIVE COMPENSATION The following table sets forth certain information regarding compensation paid by the company to each of the five most highly compensated executive officers of the Company during the year ending December 31, 1993: SUMMARY COMPENSATION TABLE
JAN BELL MARKETING INC. LONG-TERM COMPENSATION ----------------------- ANNUAL COMPENSATION AWARDS ---------------------------------- ----------------------- OTHER RESTRICTED ANNUAL STOCK ALL OTHER SALARY BONUS COMPENSATION AWARDS(1) OPTIONS COMPENSATION(2) NAME AND PRINCIPAL POSITION YEAR ($) ($) ($) ($) (#) ($) - -------------------------------------- ------ --------- --------- ------------ ----------- --------- --------------- Alan H. Lipton 1993 $ 121,445 $ 0 N/A(3) $ 1,742,812 100,000 $ 14,318 CEO and President 1992 459,275 [ILLEGIBLE] N/A 0 0 0 1991 438,000 161,732 N/A 0 0 N/A Lee A. Mills(4) 1993 78,541 0 $ 88,883(5) 1,742,812 100,000 0 Chairman of the Board and 1992 294,477 182,285 N/A 278,625 75,000 0 Senior Advisor to the Board on 1991 372,173 226,150 N/A 450,000 50,000 N/A Strategic Planning Richard W. Bowers 1993 292,186 0 N/A 697,125 75,000 13,790 Senior Executive Vice President and 1992 294,477 182,285 135,000 58,000 0 General Counsel 1991 171,827 137,993 423,500 138,000 N/A Eli Ben Shmuel 1993 121,442 0 N/A 1,742,812 100,000 0 Executive Vice President of Procurement - Watches and Accessories Frank S. Fuino, Jr. 1993 114,423 45,000 N/A 0 45,000 15,000 Executive Vice President of Finance and Chief Financial Officer
- ---------- (1) The 97,500 restricted shares granted to Mr. Lipton in 1993 vest in 19,500 increments on July 31, 1994, 1995, 1996, 1997 and 1998. The 97,500 restricted shares granted to Mr. Mills in 1993 originally were to vest in 32,500 increments on July 31, 1994, 1995, and 1996; the shares vested upon his departure in March 1994. The 97,500 restricted shares granted to Mr. Ben Shmuel in 1993 vest in 19,500 increments on September 29, 1994, 1995, 1996, 1997, and 1998. The 39,000 restricted shares granted to Mr. Bowers in 1993 vest in 13,000 share increments on April 30, 1994, 1995 and 1996. All of the foregoing grants were made on May 14, 1993, at which time the common stock price was $17,875. Dividends (if any) will be paid on restricted stock. The aggregate number of shares of restricted stock and their value at fiscal year-end ($9,375 per share) is as follows: Alan Lipton - 97,500 shares, $914,862.58; Lee Mills - 158,195 shares, $428,679; Eli Ben Shmuel - 97,500 shares, $914,862.50; and Richard Bowers - 66,138 shares, $619,968.75. (2) The amounts set forth in this column for each individual represent payments of annual premiums by the Company for whole life insurance policies provided to executive officers. (3) Entries marked "n/a" represent information which is not reportable. (4) Mr. Mills' employment terminated in March 1994. 99.8-57 (5) Of the total amount, $15,553 represents an allocation of personal use of a Company provided automobile and approximately $73,000 represents payments for temporary housing assistance. Mr. Lipton is employed as the Chief Executive Officer until July 31, 1996. Mr Lipton receives a base salary of $451,800 (subject to annual adjustment to reflect increases in the consumer price index) and an annual bonus equal to one percent of income before taxes. The agreement allows Jan Bell to terminate the employment of Mr. Lipton prior to the expiration date for cause without termination benefits or without cause upon the payment of the base salary and annual bonus for the remaining term of the agreement with acceleration of outstanding options end vesting of bonus stock. Mr. Lipton may terminate the agreement upon 90 days prior written notice. Mr. Lipton may also terminate the agreement on the same terms as a termination by the Company without cause if the Company materially breaches the agreement, including the obligation to have him serve in the capacity as Chief Executive Officer. Mr. Lipton elected voluntarily at his decision not to receive his base salary from April 7, 1993 through December 31, 1993. Mr. Mills was employed as the Chairman of the Board of Directors and Senior Advisor to the Board on Strategic Planning until July 31, 1996. Mr. Mills received a base annual salary of $292,300 (subject to annual adjustment to reflect increases in the consumer price index) and an annual bonus equal to 1/2 of 1% of income before taxes. The agreement allowed Jan Bell to terminate the employment of Mr. Mills prior to the expiration date for cause without termination benefits or without cause upon the payment of the base salary and annual bonus for the remaining term of the agreement with acceleration of outstanding options and vesting of bonus stock. Mr. Mills elected voluntarily at his decision not to receive his base salary from April 7, 1993 through December 31, 1993. Mr. Mills and the Company agreed to his termination of employment and resignation as a director in March 1994, at which time Mr. Mills received approximately $681,966 in cash, a car and the acceleration of outstanding options and vesting of previously issued restricted stock. Mr. Ben Shmuel is employed as the Executive Vice President of Procurement. Watches and Accessories until September 30, 1996. Mr. Ben Shmuel receives a base salary of $451,800 (subject to annual adjustment to reflect increases in the consumer price index) and an annual bonus equal to one percent of income before taxes. The agreement allows Jan Bell to terminate the employment of Mr. Ben Shmuel prior to the expiration date for cause without termination benefits or without cause upon the payment of the base salary and annual bonus for the remaining term of the agreement with acceleration of outstanding options and vesting of bonus stock. Mr. Ben Shmuel may terminate the agreement upon 90 days written notice. Mr. Ben Shmuel may also terminate the agreement on the same terms as a termination by the Company without cause if the Company materially breaches the agreement, including the obligation to have him serve as the manager of the watch and special accessory division of the Company. Mr. Ben Shmuel elected voluntarily at his decision not to receive his base salary from April 7, 1993 through December 31, 1993. Mr. Bowers is employed as the Senior Executive Vice President, General Counsel and Vice Chairman of the Board until April 30, 1996. Mr. Bowers receives a base salary of $292,300 (subject to annual adjustment to reflect increases in the consumer price Index) and an annual bonus equal to 1/2 of 1% of income before taxes. The agreement allows Jan Bell to terminate his employment for cause without termination benefits or without cause upon payment of the base salary and annual bonus for the remaining term of the agreement plus one year with acceleration of outstanding options and vesting of bonus stock. Mr. Bowers may terminate the agreement on the same terms as a termination by Jan Bell without cause following a change in control, the departure of Alan Lipton, the takeover, merger or acquisition of Jan Bell or a sale of substantially all of Jan Bell's assets, or the failure to maintain him as Senior Executive Vice President and Vice Chairman of the Board. 99.8-58 EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE The following table sets forth certain information with respect to the compensation for the years 1993, 1992 and 1991 for American's Cheif Executive Officer, the four highest paid executive officers other than the Chief Executive Officer who were serving at the end of American's last fiscal year and two additional individuals, Messers. Pennoyer And Hooper, who would otherwise have been included in the table except for the fact that they were not serving as executive officers at the end of the Company's last fiscal year.
AMERICAN EXPLORATION CO. LONG-TERM COMPENSATION ANNUAL COMPENSATION AWARDS SECURITIES UNDERLYING RESTRICTED OPTIONS/SAR'S NAME AND STOCK (OPTION UNITS) ALL OTHER PRINCIPAL POSITION YEAR SALARY BONUS AWARDS(1) (SHARES) COMPENSATION(2) Mark Andrews 1993 $270,000 $68,000 $430,513 682,000(3) $147,919 Chairman & CEO 1992 270,000 68,000 None 100,000 18,964 1991 260,000 128,000 None 50,000 17,967 Harold M. Korell(4) 1993 103,413 57,000 146,766 232,500(3) 1,318 Senior Vice President - 1992 102,083 45,000 None 275,000 9,632 Production 1991 N/A N/A N/A N/A N/A John M. Hogan(5) 1993 158,000 58,000 146,766 232,500(3) 1,318 Senior Vice President and 1992 57,484 20,000 None 225,000 5,566 Chief Financial Officer 1991 N/A N/A N/A N/A N/A Ralph O. Kehle(6) 1993 170,000 - None None 300,532 Senior Vice President - 1992 170,000 20,000 None 25,000 12,136 Exploration 1991 161,440 40,000 None None 12,210 Roderick L. Oxford(7) 1993 140,000 - None None 156,858 Vice President - Marketing, 1992 140,000 15,000 None 15,000 10,094 Legal and Environmental 1991 134,000 25,000 None 15,000 9,059 Russell P. Pennoyer(8) 1993 135,000 - None None 114,700 Senior Vice President, 1992 180,000 40,000 None 58,000 17,042 Secretary and General 1991 170,000 75,000 None 25,000 15,456 Counsel V. Franklin Hooper(9) 1993 95,625 - None None 136,050 Vice President - 1992 135,000 68,000 None 25,000 12,095 International 1991 106,846 35,000 None 58,000 8,917
(1) Granted in October 1993, under American's Compensation Plan. One-Third of the shares will vest on the second anniversary of the grant, one-third of the shares will vest on the third anniversary of the grant and one-third of the shares will vest on the fourth anniversary of the grant. The total number of shares of Restricted Common Stock held by the named officers as of December 31, 1993 and the total value thereof based on the $1.3125 per share closing price of Common Stock on the American Stock Exchange on December 31, 1993 were as follows: Mr. Andrews - 341,000 shares: $447,563; Mr. Karell - 116,250 shares: $152,578; Mr. Hogan - 116,250 shares: $152,578. The aggregate number and value of all Restricted Stock Awards: 797,250 shares and $1,006,528. To the extend paid on shares of Common Stock, dividends will be paid on Restricted Stock. 99.8-59 (2) All Other Compensation for 1993 consisted of the following: (i) Severance payments of $340,000, $155,000, $110,000 and $135,000, respectively, to Messrs. Kehle, Oxford, Pennoyer and Hooper: (ii) Company contributions to the 401(k) Plan of $1,058 for each of the named officers; (iii) Payment of relocation expenses of Messrs. Andrews and Kehle in connection with consolidation of the Company in Houston of $148,844, including tax reimbursements of $48,963, and $39,882, respectively; (iv) $698, $268 and $268 in respect of Messrs. Andrews, Korell and Hogan, respectively, representing the difference between the interest rates charged senior management and the prevailing margin rate in respect to loans to finance purchases of Common Stock during 1993; and (v) Company-paid life insurance premiums - Messrs. Andrews and Pennoyer of $5,355 and $3,658, respectively. (3) Granted in October 1993 under American's Phanton Plan. One quarter of the Option Units vest on each anniversary of the grant. (4) Harold M. Korell joined American in July 1992. (5) John M. Hogan joined American in October 1992. (6) Ralph O. Kehle resigned from the Company on January 31, 1994. (7) Roderick L. Oxford served as Vice President - Marketing, Legal and Environmental until December 31, 1993. (8) Russell P. Pennoyer served as Senior Vice President, Secretary and General Counsel of American until September 30, 1993. (9) V. Franklin Hooper served as Vice President-International of American until September 15, 1993. OPTION/SAR GRANTS TABLE The following table provides information with respect to Option Units ("SAR's") (1) granted during 1993 under the Phanton Plan to the executive officers named in the Summary Compensation Table. No options under the Compensation Plan were granted to such persons during 1993. OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS POTENTIAL REALIZABLE VALUE % OF TOTAL AT ASSUMED ANNUAL SAR'S EXERCISE RATES OF STOCK PRICE NUMBER GRANTED TO OR BASE APPRECIATION FOR OF SAR'S EMPLOYEES PRICE EXPIRATION TERM NAME GRANTED IN 1993 ($/UNIT) DATE 5%(2) 18%(3) Mark Andrews 682,000 26% $ 1.50 (1) $19,574 $129,000 Harold M. Korell 232,500 9% $1.3125 (1) 40,100 84,385 John M. Hogan 232,500 9% $1.3125 (1) 40,100 84,385 Ralph O. Kehle None N/A N/A - - - Roderick L. Oxford None N/A N/A - - - Russell P. Pennoyer None N/A N/A - - - W. Franklin Hooper None N/A N/A - - -
(1) Granted in October 1993 under American's Phanton Plan. One 99.8-60 EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE The following table presents information about compensation awarded over the Company's last three fiscal years to Mr. Pankratz and the Company's other four most highly compensated executive officers of December 31, 1993.
MAGMA POWER CO. ANNUAL COMPENSATION LONG-TERM COMPENSATION AWARDS --------------------------- ----------------------------------------------- RESTRICITED SECURITIES OTHER ANNUAL STOCK UNDERLYING ALL OTHER NAME AND PRINCIPAL SALARY BONUS COMPENSATION AWARDS OPTIONS/SARS COMPENSATION POSITION YEAR ($) ($)(1) ($)(2) ($)(3) ($)(4) ($)(5) ------------------------ ---- -------- ------- -------------- ------------- ------------- ------------- Paul M. Pankratz(6)(7) ... 1993 $263,250 $389688 -- -- 48000 $ 69,226 Chairman of the Board of 1992 229,166 202,500 -- -- 66,000(8) 142,967(9) Directors 1991 N/A N/A N/A N/A N/A N/A Raiph W. Boeker(6)(18) ... 1993 286,731 289,688 -- $167,500(11) 65,000 453,389(12) President and Chief Executive 1992 N/A N/A N/A N/A N/A N/A Officer 1991 N/A N/A N/A N/A N/A N/A Jon R. Peele .............. 1993 153,346 125,531 -- N/A 7,500 31,760 Executive Vice President, 1992 145,000 87,750 -- -- 30,000 26,385 Secretary, General Counsel 1991 138,439 90,000 -- -- 15,000 -- Trond Aschehoug(13) ...... 1993 139,356 86,906 -- $ 65,625(14) 0 17,554 Vice President & Director of North 1992 N/A N/A N/A N/A N/A N/A American Operations 1991 N/A N/A N/A N/A N/A N/A Wallace C. Dieckmann ...... 1993 119,563 67,594 -- N/A 0 24,153 Vice President & Chief 1992 188,500 40,500 -- -- 11,600 15,371 Financial Officer 1991 184,834 30,000 -- -- 3,500 --
- ---------- (1) Cash bonuses are paid to executive officers of the Company based upon their individual contribution to the Company and the Company's overall financial performance. A portion of the bonuses for the 1993 were paid in the fourth quarter of 1993, and the balance was paid in the first quarter of 1994. (2) Excludes the value of perquisites and other personal benefits. The incremental cost to the Company of providing such perquisites and other personal benefits did not, during 1993, exceed the lesser of $50,000 or 10% of annual salary and bonus for the respective individuals named in the Summary Compensation Table. (3) Company Deferred Stock is subject to vesting based on continuing employment, and the holder of such Deferred Stock is not entitled to note or receive dividends until such Deferred Stock is vested. The grant date value shown may overstate the value of Deferred Stock because it does not take into account the negative effect of the lack of transferability, vesting restrictions and potential loss of the Deferred Stock upon termination of employment. This table excludes shares of Company Deferred Stock which are expected to be granted to Messrs. Peele, Aschehoug and Dieckmann following the Annual Stockholders Meeting if and to the extent that the 1994 Equity Participation Plan is approved. (4) There are currently no SARs outstanding. 99.8-61 (5) Represents amounts allocated by the Company for the accounts of the named individuals to the Company Benefit Plans (as defined below) 1993 as follows:
EMPLOYEE RETIREMENT EMPLOYEES' EXECUTIVE SAVINGS PENSION SUPPLEMENTAL NAME PLAN PLAN PLAN ---- ------------- -------------- ---------------- Paul M. Pankratz ......................... $6,855 $14,043 $48,328 Ralph W. Boeker .......................... [ILLEGIBLE] 14,150 29,901 Jon R. Peele ............................. 6,855 14,043 10,862 Trond Aschehoug .......................... 5,096 8,903 3,555 Wallace C. Dieckmann ..................... 6,716 13,311 4,126
(6) Prior to January 11, 1994, Mr. Pankratz served as Chairman and CEO and Mr. Boeker served in the capacity of President. (7) Mr. Pankratz joined the Company as of February 1, 1992. (8) Includes 30,000 options granted to Mr. Pankratz in conjunction with his initial employment by the Company. (9) Includes the fair market value on the grant date (98,750) of 5,000 shares of Company Common Stock awarded to Mr. Pankratz, without restrictions, in conjunction with his initial employment by the Company. (10) Mr. Boeker joined the Company on March 1, 1993. (11) Respresents the value on the grant date of 5,000 shares of Company Deferred Stock granted in conjunction with Mr. Boeker's initial employment by the Company on March 1, 1993. (12) Includes $404,858 associated with Mr. Boeker's relocation to Southern California from Midland, Hichigan. (13) Includes amounts paid to Dow for Mr. Aschehoug as a "leased employee" from Dow. Mr. Aschehoug became an employee of the Company on July 1, 1993. Excludes options granted Mr. Aschehoug prior to his becoming an employee of the Company. (14) Represents the value on the grant date 2,100 shares of Company Deferred Stock granted to Mr. Aschehoug in conjunction with his employement on July 1, 1993. 99.8-62 EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE The following sets forth information concerning the compensation of the Company's Chief Executive Officer and each of the other four most highly compensated executive officers of the Company (the "Named Executive Officers") for the fiscal years shown.
AMERICREDIT CORP. LONG TERM COMPENSATION -- ANNUAL COMPENSATION AWARDS ------------------------------------ -------------- ALL OTHER NAME AND OPTIONS/ SARS COMPENSATION PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) (#) ($)(1) - ------------------------------------------ ------------------------------------ -------------- -------------- Clifton H. Morris, Jr. ................... 1994 276,800 39,700 141,333 42,217 Chairman, CEO and President 1993 273,000 -- -- 52,472 1992 279,200 -- 500,000 50,830 Michael R. Barrington .................... 1994 191,000 27,030 96,187 2,089 President and Chief 1993 186,200 -- -- 653 Operating Officer - AFSI 1992 186,200 -- 100,000 867 Daniel E. Berce .......................... 1994 191,800 27,830 96,107 4,765 Vice President, Chief Financial 1993 186,200 -- 75,000 575 Officer and Treasurer 1992 186,200 -- 100,000 575 Edward H. Esstman ........................ 1994 158,846 16,000 85,333 10,381 Senior Vice President, Director of 1993 125,000 25,000 150,000 94,755 Consumer Finance - AFSI (2) Dennis R. Adams .......................... 1994 109,668 11,135 35,000 1,587 Senior Vice President, 1993 102,600 20,000 -- -- Director of Collections - AFSI 1992 95,635 -- 50,000 --
- ---------- (1) The amounts disclosed in this column for fiscal 1994 include payment by the Company of premiums for term life insurance on behalf of Messrs. Barrington, Berce and Esstman of $1,237 and $575 and $5,885, respectively, and premiums of $37,271 under a whole life insurance policy on Mr. Morris. The amounts in this column for fiscal 1994 also include contributions by the Company, made in the form of the Company's Common Stock, to 401(k) retirement plans for each executive officer, as follows: Mr. Morris, $4,496; Mr. Barrington, $851; Mr. Berce, $4,198: Mr. Esstman, $4,496: and Mr. Adams, $1,587. (2) Mr. Esstman joined the Company on June 24, 1992. Upon joining the Company in fiscal 1993, Mr. Esstman received a $25,000 signing bonus and a $34,755 allowance for relocation expenses (of which $6,733 was reimbursement for income taxes associated with such allowance). 99.8-63 SUMMARY COMPENSATION TABLE
CADMUS COMMUNICATIONS CORP LONG TERM COMPENSATION ANNUAL COMPENSATION (1) SECURITIES OTHER UNDERLYING ALL OTHER NAME (AGE) AND ANNUAL OPTIONS/ COMPENSATION PRINCIPAL POSITION (2) YEAR SALARY($)(3) BONUS ($)(4) COMPENSATION($) SARS(#S)) ($)(5) C. Stephenson Gillispie, Jr. (52) FY94 [ILLEGIBLE] 150,000 - 25,000 4,497 President and Chief FY93 279,200 63,000 - 25,000 4,364 Executive Officer FY92 214,200 [ILLEGIBLE] - 0 0 Vallace Stettinius (61) FY94 248,600 [ILLEGIBLE] - 0 4,497 Chairman of the Board FY93 239,200 0 - 25,000 4,364 FY92 262,067 48,000 - 0 0 Michael Dinkins (48) FY94 179,200 75,000 115,922(6) 10,000 0 Vice President and FY93 0 0 - 0 0 Chief Financial Officer FY92 0 0 - 0 0 John H. Phillips (58) FY94 163,848 83,000 - 13,500 4,497 Vice President, Operations FY93 157,700 68,000 - 7,500 4,267 and Control FY92 0 0 - 0 0 Bruce V. Thomas (37) FY94 154,200 80,000 - 12,000 1,875 Vice President, Secretary FY93 134,200 80,000 - 8,000 0 and General Counsel FY92 11,183(7) 0 - 0 0
(1) Except as reported for Mr. Dinkins under "Other Annual Compensation," non-cash perquisites or personal benefits are not reported as such amounts did not exceed the lesser of 10% of the respective named executive officer's individual salary and bonus or $25,000. (2) Prior to October 1, 1992, Mr. Gillispie had served as President and Chief Operating Officer, and Mr. Stettinius as Chairman of the Board and Chief Executive Officer; accordingly, amounts shown for the 1992 Fiscal year are for services in such capacities. (3) Reflects salary before pre-tax contribution under the Thrift Savings Plan. (4) Reflects short-term incentive awards accrued for each of the three years ended June 30, 1994 under the Cadmus Executive Incentive Plan described in the Compensation Committee Report on page 15. (5) Reflects amounts contributed or matched by Cadmus or its subsidiaries for the year ended June 30, 1994 under the Cadmus Thrift Savings Plan. (6) Of the total amount reported as "Other Annual Compensation" for Mr. Dinkins, $50,000 was paid as a reimbursement for the value of stock options forfeited by Mr. Dinkins when he left his previous employer to join Cadmus during the last fiscal year, with the balance of the amount so reported attributable in the aggregate to other relocation expenses, including tax payments on moving 99.8-64 expenses, settlement and closing costs, temporary living and travel expenses and moving expenses, each of which individually amounts to less than 25% of the total amount reported. (7) The amount of salary shown for Mr. Thomas for the 1992 fiscal year reflects amounts paid for the two-month period in 1992 during which he served as Vice President and General Counsel. STOCK OPTIONS The following table reflects grants of stock options made during the year ended June 30, 1994 to each of the named executive officers. OPTIONS GRANTED IN LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE AT NUMBER OF ASSUMED ANNUAL SECURITIES PERCENTAGE OF RATES OF STOCK UNDERLYING TOTAL OPTIONS/ EXERCISE PRICE APPRECIATION OPTIONS SARS GRANTED OR BASE FOR OPTION GRANTED TO EMPLOYEES PRICE EXPIRATON TERM (2) NAME (#) IN FISCAL YEAR ($/SH) DATE 5% 10% C. Stephenson Gillispie, Jr. 25,000 23% $9.50 08/06/03 $149,362 $378,514 Vallace Stettinius 0 - - - - - Michael Dinkins 10,000 9% 9.81 09/28/03 61,695 156,346 John H. Phillips 13,500 12% 9.50 08/06/03 88,656 284,397 Bruce V. Thomas 12,000 11% 9.50 08/06/03 71,694 181,687
(1) All grants were made under the Company's 1990 Incentive Stock Plan and first become exercisable six months from date of grant. The option exercise price was equal to the market price on the date of grant. (2) The dollar amounts under these columns are the result of calculations at assumed annual rates of stock price appreciation set by the Securities and Exchange Commission. The dollar amounts shown are not intended to forecast possible future appreciation, if any, of the Company's stock price. The following table reflects certain information regarding the exercise of stock options during the year ended June 30, 1994, as well as information with respect to unexercised options held at such date by each of the named executive officers. 99.8-65 EXHIBIT 3 99.8-66 TYCO INTERNATIONAL LTD. RELOCATION PROGRAM NEW YORK CITY CORPORATE HEADQUARTERS RELOCATION OBJECTIVE: The program, as adopted by the Compensation Committee of the Board of Directors on August 1, 1995, is to cover the transfer of applicable employees to the New York City area as part of the relocation of the Company's Corporate Headquarters to New York City. The program is intended not to discriminate in scope, terms or operation in favor of executive officers or directors of the Company and is to be available generally to all applicable salaried employees, in a form as contemplated by SEC Regulation S-K Instruction (7) (ii) of Item 402 (a)3. HOUSING COSTS - PURCHASE SELLING EXISTING PROPERTY The Company will assist the employee in selling their existing property by either purchasing it at fair market value or reimbursing the employee for their direct costs of sale (including such items as real estate commissions and closing costs). If the employee requests that the Company purchase their existing property, the Company will contract to have the employee's property appraised. The Company shall have the residence appraised by a licensed, certified general appraiser. At the employee's option, an additional appraisal firm may be contracted by the employee to provide another appraisal. The market value of the residence for all purposes shall be the average of the values determined by such two appraisals, provided that if one of such values is more than 110% of the other, then the Company and the employee shall jointly choose a third appraiser who shall make an independent determination of the market value of the residence, which value shall be conclusive and binding upon the Company and employee for all purposes hereunder. The Company and employee shall each bear all fees and expenses of their respective appraisers and shall share equally the fees and expenses of the third appraiser, if any. If the property has been held three years or less, the fair market value may be determined by reference to the employee's cost of the property plus capital improvements. The employee shall provide to the Company a signed statement of their cost in the property, including capital improvements, along with supporting documentation. 99.8-67 Upon notice from the employee, the Company will purchase said property and file all applicable legal documents pertaining to such sale, including, but not limited to a new mortgage. At such time, the Company will become responsible for insurance, maintenance and care of the property. The Company will bear the cost of and coordinate the process of listing the property for sale. If requested, the Company will advance an interest free bridge loan to the employee to facilitate the purchase of a new principal residence. In any event, the bridge loan shall not exceed the value of the employee's equity in their existing property and such loan shall be repaid to the Company within fifteen days after the date of the closing of the sale of the former principal residence. The employee shall have one year from the date they are notified by the Company that relocation is required as a condition of employment to inform the Company that they intend to avail themselves of this program to sell their existing property. The employee must make an irrevocable election at this time as to whether the Company will purchase the property or the employee intends to sell the property themselves. In order to participate in the program, the employee must be employed by the Company both at time of election and at the time the Company purchases the property. PURCHASE OF NEW PROPERTY The Company and the employee shall enter into a separate loan agreement covering the purchase of a new property. A summary of the loan agreement follows: The employee is required to provide at least 10% of the initial purchase price of the new residence. The remaining 90% financing shall be interest free and shall be provided by the Company up to a maximum of five times the employee's fiscal 1995 bonus and the annualized salary based on the amount earned in the month the employee commences working in the New York City headquarters (the "Cap"). The Company will also loan up to 90% of the cost of capital improvements to the residence for items expended within two years of the purchase date (but at no time will the Company's total loan exceed the Cap). The employee is responsible for payment of all real estate taxes, assessments, maintenance and insurance for the property. The agreement provides for the repayment of the Company's loan by the employee through annual payments over a specified period of time in accordance with a formula based on a percentage of salary, such amount to be reduced by property taxes and insurance paid in respect of the residence, and in addition, repayment based on proceeds, under certain circumstances, from the sale of Company stock by the employee. 99.8-68 Upon termination of the agreement, the Company will be required to purchase the employee's residence at the employee's request, based on fair market value. The Company and employee share in any changes in market value of the residence. Alternatively, the employee can repay in full the Company's loan relative to the property at any time. FINANCING OF EMPLOYEE DOWNPAYMENT The Company will make available, when requested by the employee, financing to assist the employee in making their 10% downpayment in purchasing the new residence. The loan will be evidenced by an unsecured promissory note for a period not to exceed fifteen years, bearing interest at the long term annual applicable federal rate under Internal Revenue Code Section 1274(d), to be adjusted annually. The interest will be due and payable annually, but not later than January 15th of the year following the calculation period. At the employee's option, principal pre-payment can be made at any time. HOUSING COSTS - LEASE/RENTAL TEMPORARY RENTAL While making the transition under this relocation program, the employee may, through assistance from the Company, utilize rental property in the New York City area for living quarters. The employee must pre-approve their choice and the cost of rental property with the Company. The Company will reimburse the employee for rent, utilities and other sundry costs of this arrangement for a period not to exceed 12 months. This arrangement presumes the employee is still maintaining their primary residence in the vicinity of Tyco's Exeter headquarters. These expenses will be treated as compensation to the employee, subject to withholding taxes and reported as such on their Form W-2 for the applicable period. RENTAL FOR FAMILY HOUSING In order to assist the employee when relocating their family, the program will reimburse rental expense in an amount (a) of 100% if the employee is still maintaining a primary residence in the vicinity of Tyco's Exeter headquarters or (b) of 75% if employee is no longer maintaining their primary residence in the Exeter area. The employee must pre-approve their choice and the cost of rental property with the Company. This aspect of the program will be available for a 12-month period after the family has moved to the New York City area. At the end of that period, a new property will be purchased or the employee will start bearing the full cost of the rental. These expenses will be treated as compensation to the employee, subject to withholding taxes and reported as such on their Form W-2 for the applicable period. 99.8-69 SALARY ADJUSTMENT A one time salary increase will be provided in the amount of 7% of the fiscal 1995 bonus and the annualized salary based on the amount earned in the month the employee commences working in the New York City Headquarters to assist in offsetting significantly higher state and local income taxes associated with living in the New York City area. The increase will be effective in the month in which the employee commences working in the Tyco New York City Headquarters. The increase will be taxable to the employee as additional compensation in the appropriate period, and tax gross-up on such earnings will not be provided by the Company. OTHER REIMBURSEMENTS HOUSE HUNTING EXPENSES The employee will be reimbursed for transportation, reasonable lodging, and meal expenses in connection with travel to the new location for the purposes of locating a new home. MOVING COSTS The employee will be reimbursed for transportation of household goods and personal effects through use of selected moving companies as coordinated with the Company. Additionally, the employee will be reimbursed for all reasonable travel expenses incurred in getting the employee and their family to the new location. HOUSE CLOSING EXPENSES Reimbursement will be provided for the employee's normal closing costs and related expenses in connection with the purchase of a new home. Costs include such items as title search, attorneys' fees for preparation of purchase agreement and/or the deed, surveys, inspections, appraisal fees, state and local transfer tax, settlement fees, etc. Employee taxes (federal, state & local) incurred on this allowance will be reimbursed. SETTLING-IN ALLOWANCE In recognition that there are usually many incidental expenses that may be incurred in relocating and settling in a new home which are not specifically reimbursable under this relocation program, a settling-in allowance will be granted. Such allowance will be an amount equal to two months salary of the employee based on their annual rate as of December 1995. Employee taxes (federal, State, and local) incurred on this allowance will be reimbursed. 99.8-70 TAX LAW CHANGES The employee will be protected from any adverse federal tax law changes that may occur subsequent to implementation of this program. September 1995 99.8-71 EXHIBIT 4 99.8-72 TYCO INTERNATIONAL LTD. RELOCATION PROGRAM NEW YORK CITY CORPORATE HEADQUARTERS RELOCATION OBJECTIVE: The program, as adopted by the Compensation Committee of the Board of Directors on August 1, 1995, is to cover the transfer of applicable employees to the New York City area as part of the relocation of the Company's Corporate Headquarters to New York City. The program is intended not to discriminate in scope, terms or operation in favor of executive officers or directors of the Company and is to be available generally to all applicable salaried employees, in a form as contemplated by SEC Regulation S-K Instruction (7) (ii) of Item 402 (a)3. (For purposes of this memorandum, any reference to the term "property" or "residence" shall mean up to two properties or residences). HOUSING COSTS - PURCHASE SELLING EXISTING PROPERTY The Company will assist the employee in selling their existing property by either purchasing it at fair market value or reimbursing the employee for their direct costs of sale (including such items as real estate commissions and closing costs). If the employee requests that the Company purchase their existing property, the Company will contract to have the employee's property appraised. The Company shall have the property appraised by a licensed, certified general appraiser. At the employee's option, an additional appraisal firm may be contracted by the employee to provide another appraisal. The market value of the property for all purposes shall be the average of the values determined by such two appraisals, provided that if one of such values is more than 110% of the other, then the Company and the employee shall jointly choose a third appraiser who shall make an independent determination of the market value of the property, which value shall be conclusive and binding upon the Company and employee for all purposes hereunder. The Company and employee shall each bear all fees and expenses of their respective appraisers and shall share equally the fees and expenses of the third appraiser, if any. If the property has been held three years or less, the fair market value may be determined by reference to the employee's cost of the property plus capital improvements. The employee shall provide to the Company a signed statement of their cost in the property, including capital improvements, along with supporting documentation. 99.8-73 Upon notice from the employee, the Company will purchase said property and file all applicable legal documents pertaining to such sale, including, but not limited to a new mortgage. At such time, the Company will become responsible for insurance, maintenance and care of the property. The Company will bear the cost of and coordinate the process of listing the property for sale. If requested, the Company will advance an interest free bridge loan to the employee to facilitate the purchase of a new principal residence. In any event, the bridge loan shall not exceed the value of the employee's equity in their existing property and such loan shall be repaid to the Company within fifteen days after the date of the closing of the sale of the former principal residence. The employee shall have two years from the date they are notified by the Company that relocation is required as a condition of employment to inform the Company that they intend to avail themselves of this program to sell their existing property. The employee must make an irrevocable election at this time as to whether the Company will purchase the property or the employee intends to sell the property themselves. In order to participate in the program, the employee must be employed by the Company both at time of election and at the time the Company purchases the property. PURCHASE OF NEW PROPERTY The Company and the employee shall enter into a separate loan agreement covering the purchase of a new property. A summary of the loan agreement follows: The employee is required to provide at least 10% of the initial purchase price of the new property. The remaining 90% financing shall be interest free and shall be provided by the Company up to a maximum of five times the employee's fiscal 1995 bonus and the annualized salary based on the amount earned in the month the employee commences working in the New York City headquarters (the "Cap"). The Company will also loan up to 90% of the cost of capital improvements to the residence for items expended within two years of the purchase date (but at no time will the Company's total loan exceed the Cap). The employee is responsible for payment of all real estate taxes, assessments, maintenance and insurance for the property. The agreement provides for the repayment of the Company's loan by the employee through annual payments over a specified period of time in accordance with a formula based on a percentage of salary, such amount to be reduced by property taxes and insurance paid in respect of the residence, and in addition, repayment based on proceeds, under certain circumstances, from the sale of Company stock by the employee. 99.8-74 Upon termination of the agreement, the Company will be required to purchase the employee's residence at the employee's request, based on fair market value. The Company and employee share in any changes in market value of residence. Alternatively, the employee can repay in full the Company's loan relative to the property at any time. Any loan for property will have interest imputed unless for such property the employee meets the requirements under IRC regulation 1.7872-5T(c)(1)(i). FINANCING OF EMPLOYEE DOWNPAYMENT The Company will make available, when requested by the employee, financing to assist the employee in making their 10% downpayment in purchasing the new residence. The loan will be evidenced by an unsecured promissory note for a period not to exceed fifteen years, bearing interest at the long term annual applicable federal rate under Internal Revenue Code Section 1274(d), to be adjusted annually. The interest will be due and payable annually, but not later than January 15th of the year following the calculation period. At the employee's option, principal pre-payment can be made at any time. HOUSING COSTS - LEASE/RENTAL TEMPORARY RENTAL While making the transition under this relocation program, the employee may, through assistance from the Company, utilize rental property in the New York City area for living quarters. The employee most pre-approve their choice and the cost of rental property with the Company. The Company will reimburse the employee for rent, utilities and other sundry costs of this arrangement for a period not to exceed 24 months. This arrangement presumes the employee is still maintaining their primary residence in the vicinity of Tyco's Exeter headquarters. These expenses will be treated as compensation to the employee, subject to withholding taxes and reported as such on their Form W-2 for the applicable period. A tax gross-up will be provided by the Company. RENTAL FOR FAMILY HOUSING In order to assist the employee when relocating their family, the program will reimburse rental expense in an amount (a) of 100% if the employee is still maintaining a primary residence in the vicinity of Tyco's Exeter headquarters or (b) of 75% if employee is no longer maintaining their primary residence in the Exeter area. The employee must pre-approve their choice and the cost of rental property with the Company. This aspect of the program will be available for a 24-month period after the family has moved to the New York City area. At the end of that period, a new property will be purchased or the employee will start bearing the full cost of the rental. These expenses will be treated as compensation to the employee, subject to withholding 99.8-75 taxes and reported as such on their Form W-2 for the applicable period. A tax gross-up will be provided by the Company. SALARY ADJUSTMENT A one time salary increase will be provided in the amount of 7% of the fiscal 1995 bonus and the annualized salary based on the amount earned in the month the employee commences working in the New York City Headquarters to assist in offsetting significantly higher cost of living and state and local income taxes associated with living in the New York City area. The increase will be effective in the month in which the employee commences working in the Tyco New York City Headquarters. The increase will be taxable to the employee as additional compensation in the appropriate period, and tax gross-up on such earnings will not be provided by the Company. OTHER REIMBURSEMENTS HOUSE HUNTING EXPENSES The employee will be reimbursed for transportation, reasonable lodging, and meal expenses in connection with travel to the new location for the purposes of locating a new home. MOVING COSTS The employee will be reimbursed for transportation of household goods and personal effects through use of selected moving companies as coordinated with the Company. Additionally, the employee will be reimbursed for all reasonable travel expenses incurred in getting the employee and their family to the new location. HOUSE CLOSING EXPENSES Reimbursement will be provided for the employee's normal closing costs and related expenses in connection with the purchase of a new home. Costs include such items as title search, attorneys' fees for preparation of purchase agreement and/or the deed, surveys, inspections, appraisal fees, state and local transfer tax, settlement fees, etc. Employee taxes (federal, state & local) incurred on this allowance will be reimbursed. SELLING-IN ALLOWANCE In recognition that there are usually many incidental expenses that may be incurred in relocating and settling in a new home which are not specifically reimbursable under this relocation program, a settling-in allowance will be granted. Such allowance will be an amount equal to two months salary of the employee based on their annual rate as of 99.8-76 December 1995. Employee taxes (federal, State, and local) incurred on this allowance will be reimbursed. EDUCATIONAL EXPENSES Reimbursement will be provided for schooling costs for employee's children for grades kindergarden through 12. A tax gross-up will be provided by the Company. TAX LAW CHANGES The employee will be protected from any adverse federal tax law changes that may occur subsequent to implementation of this program. September 1995 99.8-77 EXHIBIT 5 99.8-78 TME [ILLEGIBLE] CORPORATION 107000-[ILLEGIBLE]-900 & 120000-0003-900 COMPANY OWNED RESIDENCES SCHEDULE OF ACQUISITION COSTS, DEPRECIATION AND ACCUMULATED DEPRECIATION As Of: 27-Jan-01
Beginning Balance Address Acquisition Date Life in Months Acquisition Cost - ---------------------------------------------------------------------------------------------- 4001 North Ocean Blvd, 8505, Boca Raton, FL 33431 (Gini Wetzel) 15-Mar-98 240 361,337.70 - ---------------------------------------------------------------------------------------------- 3505 South Ocean Blvd, #53, Highland Beach, FL (Mary Sullivan) 15-Mar-98 240 582,938.53 - ---------------------------------------------------------------------------------------------- Need Address (Barbara Jacques) New Hampshire 15-Apr-98 240 184,101.18 - ---------------------------------------------------------------------------------------------- 1800 South Ocean Blvd, Placide Condominium, Unit 2-F, Boca Raton, FL 33432 (Patricia Prue) 15-Apr-98 240 323,556.18 - ---------------------------------------------------------------------------------------------- 1800 South Ocean Blvd, Placide Condominium, Storage unit for Unit 2-F, Boca Raton, FL 33432 (Patricia Prue) 15-Jan-00 240 3,135.00 - ---------------------------------------------------------------------------------------------- Addison on the Ocean, #S-1101, Boca Raton, FL (Michael Robinson) 15-Apr-98 240 1,160,024.13 - ---------------------------------------------------------------------------------------------- 2 Wyndbrook Circle (Lot 52, Exeter Farms) Exeter, NH (Kathy McRae) 27-May-99 240 248,009.87 - ---------------------------------------------------------------------------------------------- 28 Eagle Drive, Newmarket, NH (Geri Kierstead) 27-May-99 240 340,981.20 - ---------------------------------------------------------------------------------------------- 14 Pleasant View Drive, Exeter, NH 03833 (Kathy Manning) 27-May-99 240 192,556.35 - ---------------------------------------------------------------------------------------------- 4178 Northwest 55th Place, Boca Raton, FL 33490 (Tyco Electronics) Retreat (Ed Federman) 26-Jun-00 240 525,110.30 - ---------------------------------------------------------------------------------------------- 150 Columbus Avenue, Unit 12D, New York, NY (Patty Prue) 24-Jul-00 240 861,000.00 - ---------------------------------------------------------------------------------------------- 75 Gates Street, Portsmouth, NH (Dr. Gary Fagin) 31-Aug-00 240 540,450.90 - ---------------------------------------------------------------------------------------------- Trump Tower, Unit 33B, NY (Brad McGen) 28-Jul-01 240 2,552,350.00 - ---------------------------------------------------------------------------------------------- Runnymeade, Rye, NH (LDK) 1-Sep-01 240 4,549,576.29 - ---------------------------------------------------------------------------------------------- Wentworth, 167 Little Harbor Road, New Castle, NH (LDK) IR/C from (107000-0001-900 Feb '02) 28-Feb-02 240 1,498,301.87 - ---------------------------------------------------------------------------------------------- ----------------- 13,923,429.50 ================= Address Additions Disposals Adjusted Acquisition Cost - -------------------------------------------------------------------------------------------------- 4001 North Ocean Blvd, 8505, Boca Raton, FL 33431 (Gini Wetzel) 0.00 [361,337.70] 0.00 - -------------------------------------------------------------------------------------------------- 3505 South Ocean Blvd, #53, Highland Beach, FL (Mary Sullivan) 0.00 [582,938.53] 0.00 - -------------------------------------------------------------------------------------------------- Need Address (Barbara Jacques) New Hampshire 0.00 0.00 184,101.18 - -------------------------------------------------------------------------------------------------- 1800 South Ocean Blvd, Placide Condominium, Unit 2-F, Boca Raton, FL 33432 (Patricia Prue) 0.00 [323,556.18] 0.00 - -------------------------------------------------------------------------------------------------- 1800 South Ocean Blvd, Placide Condominium, Storage unit for Unit 2-F, Boca Raton, FL 33432 (Patricia Prue) 0.00 [3,135.00] 0.00 - -------------------------------------------------------------------------------------------------- Addison on the Ocean, #S-1101, Boca Raton, FL (Michael Robinson) 0.00 [1,160,024.13] 0.00 - -------------------------------------------------------------------------------------------------- 2 Wyndbrook Circle (Lot 52, Exeter Farms) Exeter, NH (Kathy McRae) 0.00 [248,009.87] 0.00 - -------------------------------------------------------------------------------------------------- 28 Eagle Drive, Newmarket, NH (Geri Kierstead) 0.00 0.00 [ILLEGIBLE] - -------------------------------------------------------------------------------------------------- 14 Pleasant View Drive, Exeter, NH 03833 (Kathy Manning) 0.00 [192,556.35] 0.00 - -------------------------------------------------------------------------------------------------- 4178 Northwest 55th Place, Boca Raton, FL 33490 (Tyco Electronics) Retreat (Ed Federman) 0.00 [525,110.30] 0.00 - -------------------------------------------------------------------------------------------------- 150 Columbus Avenue, Unit 12D, New York, NY (Patty Prue) 0.00 [861,000.00] 0.00 - -------------------------------------------------------------------------------------------------- 75 Gates Street, Portsmouth, NH (Dr. Gary Fagin) 0.00 0.00 540,450.90 - -------------------------------------------------------------------------------------------------- Trump Tower, Unit 33B, NY (Brad McGen) 0.00 0.00 2,552,350.00 - -------------------------------------------------------------------------------------------------- Runnymeade, Rye, NH (LDK) 0.00 [ILLEGIBLE] 1,500,000.00 - -------------------------------------------------------------------------------------------------- Wentworth, 167 Little Harbor Road, New Castle, NH (LDK) IR/C from (107000-0001-900 Feb '02) 0.00 0.00 1,498,301.87 - -------------------------------------------------------------------------------------------------- ------------------------------------------------------- 0.00 [7,307,244.35] 6,616,185.15 ======================================================= As per # 107000-0003-900 6,616,185.15 ------------------------- Difference 0.00
99.8-79 ADDRESS [ILLEGIBLE] Pittsburg FOR ACCOUNT ABA # 043000261 Sub A/C # 1011730 PURPOSE: Merrill Lynch, Pierce Fenner & Smith Further Credit To [ILLEGIBLE] ACCOUNT # 891-14483 DATE REQUESTED: 7-6-00 AMOUNT: 4500-000.00 REQUESTED BY: [ILLEGIBLE] APPROVED BY: /s/ [ILLEGIBLE] ------------------ DATE REQUIRED: 7-7-00 [ILLEGIBLE] GENERAL LEDGER $: ASSET HELD FOR SALE # 105060-900 DATE DONE: __________________ 99.8-80 [ILLEGIBLE] 3/11/02 APPRAISED AT # 1,500,000 [GRAPHIC] PROPERTY ADDRESS: 10 Runnymede Dr. No. Hampton, NH 03862 APPRAISAL PREPARED FOR: Tyco International 3 Tyco Park, Exeter, New Hampshire 03833 Shirley, Here is the support for PREPARED AS OF: the W/D to $1.5m (illegible). March 11th, 2002 PREPARED BY: The Stanhope Group LLC. 500 Market Street, Unit 1C, Portsmouth, New Hampshire 03801 This Form was reproduced by United Systems Software Company (000) [ILLEGIBLE] [ILLEGIBLE] 99.8-81 VALUATION SECTION UNIFORM RESIDENTIAL APPRAISAL REPORT FILE NO ZRP20516 - ------------------------------------------------------------------------------------------------------------------------------------ COST APPROACH ESTIMATED SITE VALUE ..............................................= $ 325,000 Comments on Cost Approach (such as, source of ESTIMATED REPRODUCTION COST-NEW OF IMPROVEMENTS: cost estimate, site value, square land Dwelling 8320 Sq. Ft. @ $ 127.55 = $ 1,061,216 calculation and, for HUD, VA and For HA, the Basement: 2700 Sq. Ft. @ $ 22.85 = 61,695 estimated remaining economic life of the Amenities = 136,043 property): Cost estimates based on Marshall & Garage/Carport 936 Sq. Ft. @ $ 28.18 = 26,376 Swift, Exceptional Homes Handbook pgs. Total Estimated Cost-New ............ = $ 1,285,330 A-24, 96-100, & C-B. Remaining economic life is Last Physical Functional External 67-68 years. Physical deterlocation based on 3.0 5.0 N/A age/life method is 356 Land sale: 22 Ship Rock Depreciation 38,560 69,267 0 = $ 107,827 Rd., No. Hampton, NH: SOLD 01/04/02 for Depreciated Value of Improvements .................................= $ 1,177,503 $295,000. 2 Acres. No views, Smaller lot, "As-Is" Value of Site Improvements ................................= $ 35,000 less privacy, no distant ocean or INDICATED VALUE BY COST APPROACH ..................................= $ 1,537,503 marsh/estuary views. - ------------------------------------------------------------------------------------------------------------------------------------ SALES COMPARISON ANALYSIS
ITEM SUBJECT COMPARABLE NO. 1 - ----------------------------------------------------------------------------------------- 10 Runnymede Dr. 145 Mill Rd. Address No. Hampton, NH No. Hampton, NH - ----------------------------------------------------------------------------------------- Proximity to Subject 1 Mile +/- NW - ----------------------------------------------------------------------------------------- Sales Price $ NA - ----------------------------------------------------------------------------------------- Price/Gross Liv. Area $ N/A / / $ 728.52 / / - ----------------------------------------------------------------------------------------- Data and/or Inspection MLS# 798021, Ass'r Verification Sources Ass'r Real Data publications - ----------------------------------------------------------------------------------------- VALUE ADJUSTMENTS DESCRIPTION DESCRIPTION +(-) Adjustment - ----------------------------------------------------------------------------------------- Sales or Financing Conven:None Concessions Disclosed - ----------------------------------------------------------------------------------------- Date of Sale/Time 11/01 - ----------------------------------------------------------------------------------------- Location Average Average - ----------------------------------------------------------------------------------------- Leasehold/Fee Simple Fee Simple Fee Simple - ----------------------------------------------------------------------------------------- Site 15.7 Acres 4.43 Acres 34,000 - ----------------------------------------------------------------------------------------- View Distant Ocean Neighborhood 20,000 - ----------------------------------------------------------------------------------------- Design and Appeal Contemp/Avg. Contemp/Avg. - ----------------------------------------------------------------------------------------- Quality of Construction Very Good Extraordinary -165,000 - ----------------------------------------------------------------------------------------- Age 15 Yrs. New -5,000 - ----------------------------------------------------------------------------------------- Condition Average New -25,000 - ----------------------------------------------------------------------------------------- Above Grade Total Bdrms Baths Total Bdrms Baths - ----------------------------------------------------------------------------------------- Room Count 15 4 5/1 13 5 4/1 6,000 - ----------------------------------------------------------------------------------------- Gross Living Area 8,326 Sq. Ft. 7,000 Sq. Ft. 52,800 - ----------------------------------------------------------------------------------------- Basement & Finished Partial: Full: Rooms Below Grade Wine Cellar No Finish 3,000 - ----------------------------------------------------------------------------------------- Functional Utility Oil Tank Remov Average -5,000 - ----------------------------------------------------------------------------------------- Heating/ Cooling FHA/CentralAC FHA/CentralAC - ----------------------------------------------------------------------------------------- Energy / Efficient Items Standard Standard - ----------------------------------------------------------------------------------------- Garage/ Carport Three Car Att Three Car Att - ----------------------------------------------------------------------------------------- Porch, Patio, Deck, Patlos, Dck, Balcn EncldPorch, Dck Fireplace(s), etc. 2 Fn's Hearth Five Fireplaces -7,500 - ----------------------------------------------------------------------------------------- Fence, Pool, etc. Pool Tennis Crt. None 25,000 - ----------------------------------------------------------------------------------------- Other Sauna Hot Tub None 8,000 - ----------------------------------------------------------------------------------------- Net Adj. (total) / /+ /X/- $ -58,700 - ----------------------------------------------------------------------------------------- Adjusted Sales Price or Comparable $ 1,541,300 - ----------------------------------------------------------------------------------------- ITEM COMPARABLE NO. 2 COMPARABLE NO. 3 - ---------------------------------------------------------------------------------------------------------- 10 Runnymede Dr. 239 Wallis Rd. 49 Little Harbor Rd. Address No. Hampton, NH Rye, NH New Castle, NH - ---------------------------------------------------------------------------------------------------------- Proximity to Subject 5 Miles +/- N 9 Miles +/- NE - ---------------------------------------------------------------------------------------------------------- Sales Price $ 1,125,000 $ 1,250,000 - ---------------------------------------------------------------------------------------------------------- Price/Gross Liv. Area $ 164.96 / / $ 293.77 / / - ---------------------------------------------------------------------------------------------------------- Data and/or MLS# 780196 MLS# 802657 Verification Sources Ass'r, Broker Ass'r, Broker - ---------------------------------------------------------------------------------------------------------- VALUE ADJUSTMENTS DESCRIPTION +(-) Adjustment DESCRIPTION +(-) Adjustment - ---------------------------------------------------------------------------------------------------------- Sales or Financing Cash:None Cash:None Concessions Disclosed Per Broker - ---------------------------------------------------------------------------------------------------------- Date of Sale/Time 05/01 +1% 11,300 08/01 - ---------------------------------------------------------------------------------------------------------- Location Average Average - ---------------------------------------------------------------------------------------------------------- Leasehold/Fee Simple Fee Simple Fee Simple - ---------------------------------------------------------------------------------------------------------- Site 6.96 Acres 26,000 60 Acre 45,000 - ---------------------------------------------------------------------------------------------------------- View Neighborhood 20,000 Neighborhood 20,000 - ---------------------------------------------------------------------------------------------------------- Design and Appeal Colonial/Avg. Contemp/Avg. - ---------------------------------------------------------------------------------------------------------- Quality of Construction Verygood Extraordinary 100,000 - ---------------------------------------------------------------------------------------------------------- Age 1 Yr. -5,000 6 Yrs - ---------------------------------------------------------------------------------------------------------- Condition Nearly New -20,000 Average - ---------------------------------------------------------------------------------------------------------- Above Grade Total Bdrms Baths Total Bdrms Baths - ---------------------------------------------------------------------------------------------------------- Room Count 10 5 5/2 -4,000 10 4 4/1 6,000 - ---------------------------------------------------------------------------------------------------------- Gross Living Area 6,820 Sq. Ft. 60,000 4,255 Sq. Ft. 162,600 - ---------------------------------------------------------------------------------------------------------- Basement & Finished Full: Full: Rooms Below Grade No Finish 3,000 One Lg. Room -12,000 - ---------------------------------------------------------------------------------------------------------- Functional Utility Average -5,000 Average -5,000 - ---------------------------------------------------------------------------------------------------------- Heating/ Cooling FHW/CentralAC FHA/CentralAC - ---------------------------------------------------------------------------------------------------------- Energy / Efficient Items Standard Standard - ---------------------------------------------------------------------------------------------------------- Garage/ Carport Three Car Att Two Car Att 8,000 - ---------------------------------------------------------------------------------------------------------- Porch, Patio, Deck, Lg.Open Porch 4,000 Brzwy, Dck, Patio Fireplace(s), etc. Two Fireplaces 2,500 Fireplace 5,500 - ---------------------------------------------------------------------------------------------------------- Fence, Pool, etc. None 25,000 Amenities Avail 10,000 - ---------------------------------------------------------------------------------------------------------- Other None 8,000 None 8,000 - ---------------------------------------------------------------------------------------------------------- Net. Adj. (total) /X/ + / / - $ 125,800 /X/ + / / - $ 148,100 - ---------------------------------------------------------------------------------------------------------- Adjusted Sales Price or Comparable $ 1,250,800 $ 1,398,100 - ----------------------------------------------------------------------------------------------------------
Comments on Sales Comparison (including the subject property's compatibility to the neighbourhood, etc.); Equal emphasis is placed on the sales in estimating Market Value due to an equal number of differences and/or similarities with the subject. Sale #2 warranted a market adjustment since it transferred during a period of appreciating values. Based on regional/local studies, it was estimated that property values increased between 10% to 13% per year. Sale #2 is adjusted 1% until mid-2001. The sales warranted acreage adjustments to reflect the subject excess acreage which provides an increase in privacy. Sales #1, #2 and #3 warranted view adjustments to reflect the subject distant ocean views and open estuary views.
ITEM SUBJECT COMPARABLE NO.1 COMPARABLE NO.2 COMPARABLE NO.3 - ---------------------------------------------------------------------------------------------- Date, Price None per town None per town 03/05/99 (Appreciation) None per town and Data records records $ 193,000 (Lot Only) records Source for Town Records prior sales within year of appraisal
Analysis of any current agreement of sale, option, or listing of the subject property and analysis of any prior sales of subject and comparables within one year of the date of appraisal: The subject has not been listed for sale in the past twelve months, per MLS. INDICATED VALUE BY SALES COMPARISON APPROACH......................................................... $ 1,500,000 ----------- INDICATED VALUE BY INCOME APPROACH (If Applicable) Estimated Market Rent $ N/A /Mo. x Gross Rent Multiplier N/A:. $ N/A -----------
RECOMMENDATION The appraisal is made /X/ "as is" / / subject to the repairs, alterations, inspections, or conditions listed below / / subject to completion per plans and specifications. Conditions of Appraisal: No conditions of the report. The Income Approach is not developed due to the lack of partinent capital data of single family properties Final Reconciliation: Most emphasis is placed on the Sales Comparison Analysis since it best reflects the actions of informed buyers and sellers in the market. The Cost Approach supports the subject's estimated Market Value. The purpose of this appraisal is to estimate the market value of the real property that is the subject of the report, based on the above conditions and the certification, contingent and limiting conditions, and market value definition that are stated in the attached Freddie Mac Form 439/Fannie Mae Form 1004B (Revised - 06/93). I (WE), ESTIMATE THE MARKET VALUE, AS DEFINED OF THE REAL PROPERTY THAT IS THE SUBJECT OF THIS REPORT, AS OF March 11th 2002 (WHICH IS THE DATE OF INSPECTION AND EFFECTIVE DATE OF THIS REPORT) TO BE $ 1,500,000. Subject to Attached Explanatory Comments APPRAISER: APPRAISER (ONLY IF REQUIRED): Signature /s/ P. Stanhope Signature /s/ L. Larocque /X/ Did / / Did Not Name: P. Stanhope Name: L. Larocque Date Report Signed March 15th, 2002 Date Report Signed March 15th 2002 State Certification # NHCG-31 State NH State Certification # NHCR-202 State NH Or State License # State Or State License # State
Freddie Mac Form 70 6-93 This form was reproduced by United Systems Software Company (800) 949-4727 - page 2 Fannie Mae Form 1004 6-93 99.8-82 EXHIBIT 6 99.8-83 REDACTED TYCO LABORATORIES, INC. KEY EMPLOYEE CORPORATE LOAN PROGRAM 1983 PURPOSE The Company believes that a program of providing loans to Key Employees for the purpose of attracting and retaining outstanding individuals as employees of Tyco Laboratories, Inc. (the "Company") and its subsidiaries would be beneficial. Therefore, the Company has established the Key Employee Corporate Loan Program (the "Program") to encourage ownership of Company common stock on favorable terms, and to reward those who have contributed to past success and those who are expected to make substantial contributions in the future to the successful management and growth of the Company. Under the Program, loan proceeds may be used for the payment of federal income taxes due upon the vesting of Company common stock from time to time under 1983 Restricted Stock Ownership Plans for Key Employees, and to refinance other existing outstanding loans for such purposes. In no event, however, may such loan exceed the amount allowable to be loaned by the Company to such individual for such purpose as provided by any regulation of the United States Treasury or other state or federal statute. 99.8-84 ADMINISTRATION The Program will be administered by the Compensation Committee (the "Committee") appointed by the Board of Directors and consisting of three or more members of the Board of Directors. None of the members of the Committee shall be eligible to participate in the Program during such membership. The interpretation and construction by the Committee of any provisions of the Program or of other matters related to the Program shall be final unless otherwise determined by the Board of Directors. A majority of the members of the Committee qualified to act on any question may act by meeting or by writing signed without meeting, and may execute any instrument or document required, or delegate to one of its members authority to sign. The Committee from time to time may adopt such rules and regulations as it considers desirable for the administration of the Program. No member of the Committee or of the Board of Directors shall be liable for any action or determination made in good faith with respect to the Program. PARTICIPANTS In the sole discretion of the Committee, Participants in the Program will consist of officers or other Key Employees of the Company and its subsidiaries who are recipients of awards under the 1983 Restricted Stock Ownership Plan for Key Employees, and any other similar plans hereafter adopted by the Company. 99.8-85 The Committee may authorize a maximum amount of loans under the Program up to a limit of five times the Participant's annual salary (base salary plus bonus) determined at the time of loan application. TERMS PROMISSORY NOTE: A Promissory Note will be executed at the time of the Loan, setting forth the terms and conditions of the loan. The term of the loan will be the lesser of Ten (10) years or attainment of age 69, subject to the following mandatory prepayment schedule in cases in which the term of the Note matures subsequent to normal retirement age: ATTAINMENT OF: Age 66 - payment of 10% of Loan outstanding at normal retirement age Age 67 - payment of 20% of Loan outstanding at normal retirement age Age 68 - payment of 30% of Loan outstanding at normal retirement age Age 69 - payment of 40% of Loan outstanding at normal retirement age. The Note may be renewed solely at the option of the Company. 99.8-86 INTEREST RATE: Eight percent (8%) per annum, payable annually on or before December 31st of each calendar year. Upon payment of all outstanding balances, a payment of Interest accrued to such date shall be paid simultaneously therewith. Interest shall be calculated on the basis of a 365 day year. PAYMENT OF PRINCIPAL The principal may be prepaid at any time, and from time to time, without penalty, during the term of the Loan. Such prepayment shall be made together with payments of accrued interest on the prepaid amount to date of prepayment. In the event a Participant voluntarily terminates employment, other than by reason of a disability permanently preventing his continued employment, principal repayment shall be made in Two (2) equal payments of Fifty percent (50%) of the amount then outstanding. The first payment is due forthwith upon termination; the second payment Three (3) months after termination; with interest on each payment accrued to the date of such payment. For purposes of applying the principal repayment provision of this paragraph, retirement by a Participant prior to attaining age 65 (unless authorized by the Committee) will constitute voluntary termination of employment. In the event a Participant is terminated by the Company, other than for cause, repayment of all outstanding loans together with interest thereon, must be made within Twelve (12) months of such termination. 99.8-87 Death of a Participant shall not constitute termination of employment for repayment purposes. In the event of the death of a Participant, repayment of all outstanding loans, including interest thereon, must be made within twelve months from the date of death. Termination of a Participant for cause will require immediate repayment of all outstanding loans and all accrued interest. Cause is herein defined as dishonesty or engagement in illegal activities in the course of employment, or the conviction of the Participant of a felony or the entry of a plea of nolo contendere or like plea to a felony charge against the Participant. Upon the sale or other transfer or disposition of all or any part of shares for which loans hereunder have been granted (other than a gift to parents, spouse or children), then the Participant shall forthwith prepay, an amount which shall be the greater of: (a) fifty percent (50%) of the market value of the Common Stock of the Company, sold, transferred or disposed of, as reported on the New York Stock Exchange as of the close of business on the date of such sale, transfer or disposition; or (b) the full amount of the loan that has been made to its Participant with reference to such shares which were sold, transferred or disposed of. 99.8-88 ADDITIONAL CONDITIONS In the event the Company should subsequently sell or otherwise dispose of its ownership of a subsidiary by which the Participant is employed and if the Participant is not retained as an employee of the Company or another subsidiary of the Company after the transaction, such event shall be treated as a termination of the employment of the Participant by the Company requiring the prepayment as above provided. A subsidiary of the Company, for purposes of the Loan Program, shall mean a corporation in which the Company owns at least 80% of the equity securities directly and/or indirectly through other corporations, so long as the ownership interest in such corporation ultimately attributable to the Company through such direct and/or indirect ownership is not less than 80%. The Company shall be entitled to declare the entire unpaid principal sum and all accrued and unpaid interest hereunder immediately due and payable at any time after the occurrence of any of the following events: (a) The failure of the Participant to make any payment of interest or principal by the due date therefor, which failure shall continue for more than 30 days after written notice of such failure shall have been given to the Participant. (b) The insolvency or inability of the Participant to pay his debts as they mature, the filing by the Participant of a voluntary petition in bankruptcy or for the adjustment of his debts under the Bankruptcy Code or the failure to have dismissed within 45 days after filing of an involuntary petition in bankruptcy filed against the Participant. 99.8-89 EXHIBIT 7 99.8-90 EXHIBIT 10(b) AS AMENDED DECEMBER 9, 1993 TYCO INTERNATIONAL LTD. 1983 KEY EMPLOYEE CORPORATE LOAN PROGRAM PURPOSE The Company believes that a program of providing loans to Key Employees for the purpose of attracting and retaining outstanding individuals as employees of Tyco International Ltd. (the "Company") and its subsidiaries would be beneficial. Therefore, the Company has established the 1983 Key Employee Corporate Loan Program (the "Program") to encourage ownership of Company common stock on favorable terms, and to reward those who have contributed to past success and those who are expected to make substantial contributions in the future to the successful management and growth of the Company. Under the Program, loan proceeds may be used for payment of federal income taxes due upon the vesting of Company common stock from time to time under the 1983 and 1994 Restricted Stock Ownership Plans for Key Employees, and to refinance other existing outstanding loans for such purposes. In no event, however, may such loan exceed the amount allowable to be loaned by the Company to such individual for such purpose as provided by any regulation of the United States Treasury or other state or federal statute. ADMINISTRATION The Program will be administered by the Compensation Committee (the "Committee") appointed by the Board of Directors and consisting of three or more members of the Board of Directors. None of the members of the Committee shall be eligible to participate in the Program during such membership. The interpretation and construction by the Committee of any provisions of the Program or of other matters related to the Program shall be final unless otherwise determined by the Board of Directors. A majority of the members of the Committee qualified to act on any question may act by meeting or by writing signed without meeting, and may execute any instrument or document required, or delegate to one of its members authority to sign. The Committee, from time to time, may adopt such rules and regulations as it considers desirable for the administration of the Program. No member of the Committee or of the Board of Directors shall be liable for any action or determination made in good faith with respect to the Program. PARTICIPANTS In the sole discretion of the Committee, Participants in the Program will consist of officers or other Key Employees of the Company and its subsidiaries who are recipients of awards under the 1983 or 1994 Restricted Stock Ownership Plan for Key Employees, and any other similar plans hereafter adopted by the Company. The Committee may authorize a maximum amount of loans under the Program up to a limit of five times the Participant's annual salary (base salary plus bonus) determined at the time of loan application. TERMS PROMISSORY NOTE: A Promissory Note will be executed at the time of the Loan, setting forth the terms and conditions of the loan. The term of the loan will be the lesser of Ten (10) years or attainment of age 69, subject to 99.8-91 the following mandatory prepayment schedule in cases in which the term of the Note matures subsequent to normal retirement age: ATTAINMENT OF: Age 66--payment of 10% of Loan outstanding at normal retirement age Age 67--payment of 20% of Loan outstanding at normal retirement age Age 68--payment of 30% of Loan outstanding at normal retirement age Age 69--payment of 40% of Loan outstanding at normal retirement age The foregoing mandatory prepayment schedule shall not apply as long as the Participant has not retired from active employment by the Company or in the event the Participant continues to serve on the Board of Directors of the Company. In such instances, the mandatory prepayment schedule shall commence after retirement or the date of termination of his service as a member of the Board of Directors. Prepayment in such event shall be 10% of the loan outstanding one year after such date; 20% of the loan outstanding two years after such date; 30% of the loan outstanding three years after such date; 40% of the loan outstanding four years after such date. The Note may be renewed solely at the option of the Company. INTEREST RATE: Effective January 1, 1993, interest on amounts loaned under the Program shall be at a rate equal to prime lending rate announced by the principal lending or agent commercial bank of the Company (or such other bank as may be determined by the Board of Directors), such rate to change, from time to time, so that it shall at all times be equal to such prime lending rate, but adjusted no more often than quarterly. Interest is payable annually by the borrower on or before January 15 of the next succeeding calendar year. Upon payment of all outstanding balances, a payment of interest accrued to such date shall be paid simultaneously therewith. Interest shall be calculated on the basis of a 365 day year. For loans granted prior to January 1, 1993, interest shall be at a rate of eight percent (8%) per annum, unless the borrower made a one-time election during January, 1993 to convert such interest rate to the prime lending rate method discussed in the paragraph above. PAYMENT OF PRINCIPAL The principal may be prepaid at any time, and from time to time, without penalty, during the term of the Loan. Such prepayment shall be made together with payments of accrued interest on the prepaid amount to date of prepayment. In the event a Participant voluntarily terminates employment, other than by reason of a disability permanently preventing his continued employment, principal repayment shall be made in Two (2) equal payments of Fifty percent (50%) of the amount then outstanding. The first payment is due forthwith upon termination; the second payment Three (3) months after termination; with interest on each payment accrued to the date of such payment. For purposes of applying the principal repayment provision of this paragraph, retirement by a Participant prior to attaining age 65 (unless authorized by the Committee) will constitute voluntary termination of employment. In the event a Participant is terminated by the Company, other than for cause, repayment of all outstanding loans together with interest thereon, must be made within Twelve (12) months of such termination. Death of a Participant shall not constitute termination of employment for repayment purposes. In the event of the death of a Participant, repayment of all outstanding loans, including interest thereon, must be made within twelve months from the date of death. Termination of a Participant for cause will require immediate repayment of all outstanding loans and all accrued interest. Cause is herein defined as dishonesty or engagement in illegal activities in the course of employment, or the conviction of the Participant of a felony or the entry of a plea of nolo contendere or like plea to a felony charge against the Participant. 99.8-92 Under the sale or other transfer or disposition of all or any part of shares for which loans hereunder have been granted (other than a gift to parents, spouse or children), then the Participant shall forthwith prepay an amount which shall be the greater of: (a) fifty percent (50%) of the market value of the Common stock of the Company, sold, transferred or disposed of, as reported on the New York Stock Exchange as of the close of business on the date of such sale, transfer, or disposition; or (b) the full amount of the loan that has been made to the Participant with reference to such shares which were sold, transferred or disposed of. ADDITIONAL CONDITIONS In the event the Company should subsequently sell or otherwise dispose of its ownership of a subsidiary by which the Participant is employed and if the Participant is not retained as an employee of the Company or another subsidiary of the Company after the transaction, such event shall be treated as a termination of the employment of the Participant by the Company requiring the repayment as above provided. A subsidiary of the Company, for purposes of the Loan Program, shall mean a corporation in which the Company owns at least 80% of the equity securities directly and/or indirectly through other corporations, so long as the ownership interest in such corporation ultimately attributable to the Company through such direct and/or indirect ownership is not less than 80%. The Company shall be entitled to declare the entire unpaid principal sum and all accrued and unpaid interest hereunder immediately due and payable at any time after the occurrence of any of the following events: (a) The failure of the Participant to make any payment of interest or principal by the due date therefor, which failure shall continue for more than 30 days after written notice of such failure shall have been given to the Participant. (b) The insolvency or inability of the Participant to pay his debts as they mature, the filing by the Participant of a voluntary petition in bankruptcy or for the adjustment of his debts under the Bankruptcy Code or the failure to have dismissed within 45 days after filing of an involuntary petition in bankruptcy filed against the Participant. 99.8-93 EXHIBIT 8 99.8-94 TME Management Corp PTD General Journal For August 1999 Batches 000479 Through [ILLEGIBLE] All Transactions All Journals [ILLEGIBLE] Posting Period Description Reference Type Status Control Total - --------- --------- -------------------------------- ----------- ------- --------- ------------- 479 11/1999 Entered by ERIC on 09/02/99 837 Normal Posted [ILLEGIBLE] Src [ILLEGIBLE] Tran Date Type Session Stat Jnl. Reference Transaction Description Rev? Rev Per/Yr - --------- --------- ----- -------- ----- ----- ---------- ------------------------ ------ ---------- [ILLEGIBLE] [ILLEGIBLE] M P GL 837 TO RECORD ACCRUALS No / Account Number Description Debit Credit Detail Line Comment - -------------- --------------------------------- ------------- ------------- ------------------------- 020-900 ACCRUED BONUS LDK 25,000,000.00 TO RECORD ACCRUALS 020-900 ACCRUED BONUS MS 12,500,000.00 TO RECORD ACCRUALS 020-900 ACCRUED BONUS B. Jacques 1,000,000.00 TO RECORD ACCRUALS 255-900 TYCO US 38,500,000.00 TO RECORD ACCRUALS 025-851 BONUS EXP-EXECUTIVE 50,000,000.00 TO RECORD ACCRUALS 020-900 ACCRUED BONUS 50,000,000.00 TO RECORD ACCRUALS 255-900 TYCO US 1,250,000.00 TO RECORD ACCRUALS 020-900 ACCRUED BONUS 1,250,000.00 TO RECORD ACCRUALS ------------- ------------- Total for Transaction # 000837: 89,750,000.00 89,750,000.00 [ILLEGIBLE] 8/28/99 M P GL 838 VARIOUS COMPUTERS - NECB No / Account Number Description Debit Credit Detail Line Comment - -------------- --------------------------------- ------------- ------------- ------------------------ 000-900 OFFICE EQUIPMENT TYCO 12,376.00 VARIOUS COMPUTERS - NECB 255-900 TYCO US 12,376.00 VARIOUS COMPUTERS - NECB ------------- ------------- Total for Transaction # 000838: 12,376.00 12,376.00 ------------- ------------- Batch Totals: 89,762,376.00 89,762,376.00 2 transactions in batch ============= ============= 10 detail lines in batch
- ---------- [ILLEGIBLE] Type (Transaction Type): A = Allocation M = Manual T = Template Z = Subledger C = Conversion R = Recurring V = Reversing L = Reclassified S = Summarized Y = Year-end Closing Net Effect ---------- Dr Bonus Expense 38,500,000 on KEL 38,500,000 99.8-95 JOURNAL ENTRY COMPANY: Tyco US COMPANY # [ILLEGIBLE] MONTH 8/99
ACCOUNT # DESCRIPTION DEBIT CREDIT - ------------------------------------------------------------------------------ 215260-900 Key Employee Loan Payoff Via Bonus 38,500,000- 160000-900 LDK Key Employee Loan Payoff [ILLEGIBLE] 25,000,000- 160000-900 MHS Key Employee Loan Payoff 12,500,000- 160000-900 BJ Key Employee Loan Payoff 1,000,000- (Per Mark F) 405100-851 To accrue [ILLEGIBLE] Exp 1,250,000- 215260-900 1,250,000- (Recurring) 209187-900 Reclass Deposit on Mueller 6,500,000- 600100-900 Sale To Income 6,500,000- (Per MF) 215260 Reclass F/A from office 12376- 405045-852 Supplies 12376-
99.8-96 2/18/02 per Mark Foley KEL - LDK 25,000,000 KEL - MHS 12,500,000 KEL - BJ 1,000,000 Accrued Bonus 1,000,000 Accrued Pension (ERA) 37,500,000 TO CORRECT 8/99 JOURNAL ENTRY (SEE ATTACHED) KEL - LDK 3,324,298 KEL - MHS 1,631,510 KEL - BJ 132,972 Interest Income 5,088,781 TO RECORD INTEREST INCOME FROM 8/28/99 THROUGH 6/30/02 (SEE ATTACHED) NY Apartment 9,646,975 KEL - MHS 9,646,975 TO REVERSE 5/6/02 PURCHASE OF NY APARTMENT (DEPRECIATION TO BE BOOKED IN Q4) -------------------------- 53,235,755 53,235,756 ==========================
99.8-97 EXHIBIT 9 99.8-98 TYCO INTERNATIONAL (US) INC. RELOCATION PROGRAM FLORIDA CORPORATE HEADQUARTERS RELOCATION OBJECTIVE: The program, as adopted by the Compensation Committee of the Board of Directors on August 1, 1995, is to cover the transfer of applicable employees to the Florida area as part of the relocation of the Company's United States headquarters to Boca Raton, Florida. \The program is intended not to discriminate in scope, terms or operation in favor of executive officers or directors of the Company and is to be available generally to all applicable salaried employees, in a form as contemplated by SEC Regulation S-K Instruction (7) (ii) of Item 402 (a)3[ILLEGIBLE] HOUSING COSTS - PURCHASE SELLING EXISTING PROPERTY The Company will assist the employee in selling their existing property by purchasing it at fair market value. If the employee requests that the Company purchase their existing property, the Company will contract to have the employee's property appraised. The Company shall have the property appraised by two licensed, certified general appraisers. The market value of the property for all purposes shall be the average of the values determined by such two appraisals, provided that if one of such values is more than 110% of the other, then the Company and the employee shall jointly choose a third appraiser who shall make an independent determination of the market value of the property. The value of the third appraisal shall be combined with the two prior appraisals and such average market value shall be conclusive and binding upon the Company and employee for all purposes hereunder. Upon notice from the employee, the Company will purchase said property and file all applicable legal documents pertaining to such sale, including, but not limited to a new mortgage. At such time, the Company will become responsible for insurance, maintenance and care of the property. The Company will bear the cost of and coordinate the process of listing the property for sale. If requested, the Company will advance an interest free bridge loan to the employee to facilitate the purchase of a new principal residence. In any event, the bridge loan shall not exceed the value of the employee's equity in their existing property and such loan shall be repaid to the Company within fifteen days after the date of the closing of the sale of the former principal residence. 99.8-99 The employee shall have three months from the date they are notified by the Company that relocation is required as a condition of employment to inform the Company that they intend to avail themselves of this program to sell their existing property. The employee must make an irrevocable election at this time as to whether they want the Company to purchase their property. In order to participate in the program, the employee must be employed by the Company both at time of election and at the time the Company purchases the property. The employee can choose to manage the sale of their principal residence without Company assistance. However, for purposes of Company bridge loans, such loan must be repaid within three months, or the Company will enter into a purchase transaction with the employee at that time to acquire the employee's primary residence. PURCHASE OF NEW PROPERTY If the employee sells their current primary residence, the employee may elect to enter into a separate loan agreement with the Company covering the purchase of a new property. A summary of the loan agreement follows: The employee is required to provide at least 10% of the initial purchase price of the new property (including, if applicable, the interest free bridge loan discussed above). For the remaining 90%, financing may include from the Company an interest free loan up to a maximum of one times the employee's 1997 W-2 earnings (plus any 1997 deferrals under the Company's Deferred Compensation Program) (the "Cap") but in no event would the loan available be less than $200,000, or three times the employee's current salary. This financing is also applicable in the case of the property being new construction. The amount available for loans includes the cost of capital improvements to the residence for items expended within two years of the purchase date (but at no time will the Company's total loan exceed the Cap.) The employee will be required to grant a mortgage on the new property to the Company in order to secure the loan. The employee will be required to grant a mortgage on the new property to the Company in order to secure the loan. The employee is responsible for payment of all real estate taxes, assessments, maintenance and insurance for the property. The agreement provides for the repayment of the Company's loan by the employee through annual payments over a specified period of time in accordance with a formula based on a percentage of salary, such amount to be reduced by property taxes and insurance paid in respect of the residence, and in addition, repayment based on proceeds, under certain circumstances, from the sale of Company stock by the employee (either from the restricted stock plan or shares sold after exercise of options.) The agreement is conditioned upon the future performance of substantial services by the employee and the benefits of the agreement are not transferable by the employee. 99.8-100 Upon termination of the agreement by the employee, the Company will be required to purchase the employee's residence at the employee's request, based on fair market value. The Company and employee share in any changes in market value of the residence. Alternatively, the employee can repay in full the Company's loan relative to the property at any time. Any loan for property will have interest imputed unless for such property the employee meets the requirements under IRC regulation 1.7872-5T(c)(l)(i) (i.e., the loan proceeds must be used to purchase a new principal residence and the employee must expect to be entitled to and actually itemize deductions for each year the loan is outstanding.) FINANCING OF EMPLOYEE DOWNPAYMENT The Company will make available, when requested by the employee, financing to assist the employee in making their 10% downpayment in purchasing the new residence. The loan will be evidenced by a secured promissory note for a period not to exceed fifteen years, bearing interest at the long term annual applicable federal rate under Internal Revenue Code Section 1274(d), to be adjusted annually. The interest will be due and payable annually, but not later than January 15th of the year following the calculation period. At the employee's option, principal pre-payment can be made at any time. Such loan will be secured by a mortgage on the new residence. HOUSING COSTS - LEASE/RENTAL TEMPORARY RENTAL While making the transition under this relocation program, the employee may, through assistance from the Company, utilize rental property in the Florida area for living quarters. The employee must pre-approve their choice and the cost of rental property with the Company. The Company will reimburse the employee for rent, utilities and other sundry costs of this arrangement for a period not to exceed three months. This arrangement presumes the employee is still maintaining their primary residence in the vicinity of Tyco's Exeter offices. These expenses will be treated as compensation to the employee, subject to withholding taxes and reported as such on their Form W-2 for the applicable period. A tax gross-up will be provided by the Company. RENTAL FOR FAMILY HOUSING In order to assist the employee when relocating their family, the program will reimburse rental expense for a three month period after the family has moved to the Boca Raton area. The employee must pre-approve their choice and the cost of rental property with the Company. These expenses will be treated as compensation to the employee, subject to withholding taxes and reported as such on their Form W-2 for the applicable period. A tax gross-up will be provided by the Company. 99.8-101 OTHER REIMBURSEMENTS HOUSE HUNTING EXPENSES The employee will be reimbursed for transportation, reasonable lodging, and meal expenses in connection with travel to the new location for the purposes of locating a new home. Reimbursement for up to two visits will be provided. MOVING COSTS The employee will be reimbursed for transportation of household goods and personal effects through use of selected moving companies as coordinated with the Company. Additionally, the employee will be reimbursed for all reasonable travel expenses incurred in getting the employee and their family to the new location. HOUSE CLOSING EXPENSES Reimbursement will be provided for the employee's normal closing costs and related expenses in connection with the purchase of a new home. Costs include such items as title search, attorneys' fees for preparation of purchase agreement and/or the deed, surveys, inspections, appraisal fees, state and local transfer tax, settlement fees, etc. Employee taxes (federal, state & local) incurred on this allowance will be reimbursed. SETTLING-IN ALLOWANCE In recognition that there are usually many incidental expenses that may be incurred in relocating and settling in a new home which are not specifically reimbursable under this relocation program, a settling-in allowance will be granted. Such allowance will be an amount equal to two months salary of the employee based on their annual rate as of September 30, 1997. Employee taxes (federal, State, and local) incurred on this allowance will be reimbursed. TAX LAW CHANGES The employee will be protected from any adverse federal tax law changes that may occur subsequent to implementation of this program. Miscellaneous This document is intended to govern the rights and obligations of the employee and the Company under the program, irrespective of anything to the contrary contained in any documents or instruments related to the program. 1/14/98 99.8-102 EXHIBIT 10 99.8-103 Redacted TYCO INTERNATIONAL (US) INC. RELOCATION PROGRAM FLORIDA CORPORATE HEADQUARTERS RELOCATION OBJECTIVE: The program, as adopted by the Compensation Committee of the Board of Directors on August 1, 1995, is to cover the transfer of applicable employees to the Florida area as part of the relocation of the Company's United States headquarters to Boca Raton, Florida. The program is intended not to discriminate in scope, terms or operation in favor of executive officers or directors of the Company and is to be available generally to all applicable salaried employees, in a form as contemplated by SEC Regulation S-K Instruction (7) (ii) of Item 402 (a)3. HOUSING COSTS - PURCHASE SELLING EXISTING PROPERTY The Company will assist the employee in selling their existing property by purchasing it at fair market value. If the employee requests that the Company purchase their existing property, the Company will contract to have the employee's property appraised. The Company shall have the property appraised by two licensed, certified general appraisers. The market value of the property for all purposes shall be the average of the values determined by such two appraisals, provided that if one of such values is more than 110% of the other, then the Company and the employee shall jointly choose a third appraiser who shall make an independent determination of the market value of the property. The value of the third appraisal shall be combined with the two prior appraisals and such average market value shall be conclusive and binding upon the Company and employee for all purposes hereunder. Upon notice from the employee, the Company will purchase said property and file all applicable legal documents pertaining to such sale, including, but not limited to a new mortgage. At such time, the Company will become responsible for insurance, maintenance and care of the property. The Company will bear the cost of and coordinate the process of listing the property for sale. If requested, the Company will advance an interest free bridge loan to the employee to facilitate the purchase of a new principal residence. In any event, the bridge loan shall not exceed the value of the employee's equity in their existing property and such loan shall be repaid to the Company within fifteen days after the date of the closing of the sale of the former principal residence. 99.8-104 Redacted The employee shall have three months from the date they are notified by the Company that relocation is required as a condition of employment to inform the Company that they intend to avail themselves of this program to sell their existing property. The employee must make an irrevocable election at this time as to whether they want the Company to purchase their property. In order to participate in the program, the employee must be employed by the Company both at time of election and at the time the Company purchases the property. The employee can choose to manage the sale of their principal residence without Company assistance. However, for purposes of Company bridge loans, such loan must be repaid within three months, or the Company will enter into a purchase transaction with the employee at that time to acquire the employee's primary residence. PURCHASE OF NEW PROPERTY The employee may elect to enter into a separate loan agreement with the Company covering the purchase of a new property. A summary of the loan agreement follows: The employee is required to provide at least 10% of the initial purchase price of the new property (including, if applicable, the interest free bridge loan discussed above). For the remaining 90%, financing may include from the Company an interest free loan up to a maximum of one times the employee's 1997 W-2 earnings (plus any 1997 deferrals under the Company's Deferred Compensation Program) (the "Cap") but in no event would the loan available be less than $200,000, or three times the employee's current salary. This financing is also applicable in the case of the property being new construction. The amount available for loans includes the cost of capital improvements to the residence for items expended within two years of the purchase date (but at no time will the Company's total loan exceed the Cap.) The employee will be required to grant a mortgage on the new property to the Company in order to secure the loan, and provide Tyco with a current home inspection report on the new property. The employee is responsible for payment of all real estate taxes, assessments, maintenance and insurance for the property. The agreement provides for the repayment of the Company's loan by the employee through annual payments over a specified period of time in accordance with a formula based on a percentage of salary, such amount to be reduced by property taxes and insurance paid in respect of the residence, and in addition, repayment based on proceeds, under certain circumstances, from the sale of Company stock by the employee (either from the restricted stock plan or shares sold after exercise of options.) The agreement is conditioned upon the future performance of substantial services by the employee and the benefits of the agreement are not transferable by the employee. 99.8-105 Redacted Upon termination of the agreement by the employee, the Company will be required to purchase the employee's residence at the employee's request, based on fair market value. The Company and employee share in any changes in market value of the residence. Alternatively, Tyco may require, upon 90 day's written notice to the employee given at anytime after the sixth anniversary of such termination, that the employee promptly elect (i) to repay the Company's loan account balance on the property or (ii) to sell the employee's ownership of the residence to the Company. However, the employee can also repay in full the Company's loan relative to the property at any time. Any loan for property will have interest imputed unless for such property the employee meets the requirements under IRC regulation 1.7872-5T(c)(1)(i) (i.e., the loan proceeds must be used to purchase a new principal residence and the employee must expect to be entitled to and actually itemize deductions for each year the loan is outstanding.) If the employee chooses not to sell their current residence, they are still eligible for the loan program through the Company (as described above) to assist in purchasing a new property. However, in the event of termination of employment, Tyco may require, upon 90 days written notice to the employee, that the employee promptly elect (i) to repay the Company's loan account balance on the property, or (ii) to sell the employee's ownership of the residence to the Company. The employee's decision to not sell their current residence will be evidenced through a notification letter to the Company at the time of closing on the new Florida residence. Subsequent disposal of the current property will not affect application of this provision of the loan arrangement. FINANCING OF EMPLOYEE DOWNPAYMENT The Company will make available, when requested by the employee, financing to assist the employee in making their 10% downpayment in purchasing the new residence. The loan will be evidenced by a secured promissory note for a period not to exceed fifteen years, bearing interest at the long term annual applicable federal rate under Internal Revenue Code Section 1274(d), to be adjusted annually. The interest will be due and payable annually, but not later than January 15th of the year following the calculation period. At the employee's option, principal pre-payment can be made at any time. Such loan will be secured by a mortgage on the new residence. HOUSING COSTS - LEASE/RENTAL TEMPORARY RENTAL While making the transition under this relocation program, the employee may, through assistance from the Company, utilize rental property in the Florida area for living quarters. The employee must pre-approve their choice and the cost of rental property with the Company. The Company will reimburse the employee for rent, utilities, meals, rental car, telephone toll calls and trips home every other weekend for a period not to exceed three 99.8-106 Redacted months. This arrangement presumes the employee is maintaining a primary residence in the vicinity of Tyco's Exeter or Boca Raton offices. These expenses will be treated as compensation to the employee, subject to withholding taxes and reported as such on their Form W-2 for the applicable period. A tax gross-up will be provided by the Company. RENTAL FOR FAMILY HOUSING In order to assist the employee when relocating their family, the program will reimburse rental expense for a three month period after the family has moved to the Boca Raton area. The employee must pre-approve their choice and the cost of rental property with the Company. These expenses will be treated as compensation to the employee, subject to withholding taxes and reported as such on their Form W-2 for the applicable period. A tax gross-up will be provided by the Company. OTHER REIMBURSEMENTS HOUSE HUNTING EXPENSES The employee will be reimbursed for transportation, reasonable lodging, and meal expenses in connection with travel to the new location for the purposes of locating a new home. Reimbursement for up to two visits will be provided. MOVING COSTS The employee will be reimbursed for transportation of household goods and personal effects through use of selected moving companies as coordinated with the Company. Additionally, the employee will be reimbursed for all reasonable travel expenses incurred in getting the employee and their family to the new location. HOUSE CLOSING EXPENSES Reimbursement will be provided for the employee's normal closing costs and related expenses in connection with the purchase of a new home. Costs include such items as title search, attorneys' fees for preparation of purchase agreement and/or the deed, surveys, inspections, appraisal fees, state and local transfer tax, settlement fees, etc. Employee taxes (federal, state & local) incurred on this allowance will be reimbursed. SETTLING-IN ALLOWANCE In recognition that there are usually many incidental expenses that may be incurred in relocating and settling in a new home which are not specifically reimbursable under this relocation program, a settling-in allowance will be granted. Such allowance will be an amount equal to two months salary of the employee based on their annual rate as of the date they purchase property or move to Florida. Employee taxes (federal, State, and local) incurred on this allowance will be reimbursed. 99.8-107 Redacted TAX LAW CHANGES The employee will be protected from any adverse federal tax law changes that may occur subsequent to implementation of this program. MISCELLANEOUS This document is intended to govern the rights and obligations of the employee and the Company under the program, irrespective of anything to the contrary contained in any documents or instruments related to the program. 2/17/98 99.8-108 EXHIBIT 11 99.8-109 [LETTERHEAD OF TYCO] [ILLEGIBLE] CONFIDENTIAL TO: Mark Swartz Patty Prue FROM: L. Dennis Kozlowski SUBJECT: Compensation DATE: September 11, 2000 A decision has been made to forgive the relocation loans for those individuals (refer to attached list) whose efforts were instrumental to successfully completing the TyCom IPO. This incremental bonus should have no impact on these individuals' regular year-end performance based bonus. 99.8-110 EXHIBIT 12 99.8-111 [LETTERHEAD OF TYCO] [ILLEGIBLE] REDACTED CONFIDENTIAL TO: Mark Swartz Patty Prue FROM: L. Dennis Kozlowski SUBJECT: Compensation DATE: September 11, 2000 A decision has been made to forgive the relocation loans for those individuals (refer to attached list) whose efforts were instrumental to successfully completing the TyCom IPO. This incremental bonus should have no impact on these individuals' regular year-end performance based bonus. 99.8-112 REDACTED
TOTAL W2 MORTGAGE GROSS-UP INCOME PROMISSORY (TAXES) A 786,513.99 463,650.00 322,863.99 B 335,679.39 195,723.50 139,955.89 B 339,770.17 199,000.00 140,770.17 B 468,193.38 276,000.00 192,193.38 C 424,854.70 250,000.00 174,854.70 C 949,800.17 559,907.20 369,892.97 C 485,156.91 286,000.00 199,156.91 C 489,793.77 232,750.00 257,043.77 C 380,671.36 222,900.00 157,771.36 D 384,153.33 225,800.00 158,353.33 F 1,681,933.84 991,500.00 690,433.84 F 844,359.63 497,750.00 346,609.63 G 387,883.07 228,500.00 159,383.07 G 828,561.83 488,437.20 340,124.63 G 602,303.78 310,788.75 291,515.03 G Redacted 5,275,608.67 3,109,971.31 2,165,637.36 H 342,225.24 201,741.78 140,483.46 J 483,460.56 285,000.00 198,460.56 K 327,989.24 192,024.00 135,965.24 K 456,658.18 269,200.00 187,458.18 L 379,663.46 222,500.00 157,363.46 L 318,636.28 185,111.86 133,524.42 M 571,416.45 336,850.00 234,566.45 M 464,468.14 273,803.97 190,664.17 M 441,051.74 260,000.00 181,051.74 M 377,812.50 220,022.70 157,789.80 M 1,399,491.09 825,000.00 574,491.09 M 3,294,361.95 1,942,026.37 1,352,335.58 M 380,831.21 224,500.00 156,331.21 M 727,066.83 428,600.00 298,456.83 P 373,064.43 218,000.00 155,064.43 P 572,095.00 337,250.00 234,845.00 P 393,800.69 206,200.00 187,600.69 S 1,434,893.35 845,869.63 589,023.72 S 671,019.37 395,565.92 275,453.45 S 380,310.36 222,222.00 158,088.36 W 525,869.38 310,000.00 215,869.38 S 16,610,687.02 9,792,000.00 6,818,687.02 KOZLOWSKI 32,976,067.85 19,439,392.00 13,536,675.85 R Redacted 1,803,826.04 1,063,355.45 740,470.59 P 1,269,396.74 748,309.38 521,087.36 K 379,983.04 224,000.00 155,983.04
99.8-113 EXHIBIT 13 99.8-114
MISC LOAN GROSS UP FIT FICA SS FICA MED ST/[ILLEGIBLE]/TAX NET A 463,650.00 786,513.99 311,459.54 11,404.45 963,650.00 B 195,723.00 335,579.39 132,929.04 2,159.50 4,807.35 195,723.50 B 199,800.00 339,770.17 134,548.99 1,294.51 4,926.67 199,000.00 B 276,000.00 468,193.38 185,404.58 6,788.90 275,000.00 C 250,000.00 424,854.70 168,242.46 451.85 6,160.35 253,000.00 C 559,907.00 949,800.17 375,120.87 12,772.10 559,907.23 C 286,200.00 485,156.91 192,122.14 7,034.78 286,000.00 C 232,750.00 489,793.77 193,958.33 7,102.01 55,983.43 232,750.00 C 222,900.00 380,671.36 150,745.36 1,505.77 5,319.73 222,900.00 D 225,800.00 384,153.33 152,124.72 658.39 5,570.22 225,800.00 F 991,500.00 1,581,933.84 666,045.80 24,388.04 991,500.00 F 497,750.00 844,359.68 334,366.41 12,243.21 497,750.00 G 228,500.00 387,883.07 153,601.70 157.07 5,624.30 228,500.00 G 488,437.20 828,561.83 328,110.49 12,014.15 488,437.20 G 310,788.75 602,303.78 238,512.30 8,733.40 44,269.33 310,788.75 G 3,109,971.31 5,275,608.67 2,089,141.03 76,496.33 3,109,971.31 H 201,741.79 342,225.24 135,521.20 4,962.27 201,741.78 J 285,000.00 483,460.56 191,450.38 7,010.18 285,000.00 K Redacted 192,024.00 327,989.24 129,883.74 1,325.66 4,755.84 142,024.00 K 269,200.00 456,658.18 180,836.64 6,621.54 269,200.00 U 222,500.00 379,863.46 150,425.93 1,429.51 5,508.02 222,500.00 L 185,111.86 318,636.28 126,179.97 2,724.23 4,620.23 185,111.86 M 336,850.00 571,416.45 226,280.92 8,285.54 336,850.00 M 273,803.97 464,468.14 183,929.38 6,734.79 273,803.97 M 260,000.00 441,051.74 174,656.49 6,395.25 260,000.00 M 220,022.70 377,812.50 149,613.75 2,697.77 5,478.28 220,022.70 M 823,000.00 1,399,491.09 554,198.47 20,292.62 825,000.00 M 1,942,026.37 3,294,361.95 1,304,567.33 47,768.25 1,942,025.37 M 224,500.00 380.831.21 150,809.16 5,522.05 224,500.00 M 428,600.00 727,056.83 287,914.50 10,542.32 428,600.00 P 218,000.00 373,064.43 147,733.51 1,921.48 5,409.43 218,000.00 P 337,250.00 572,095.00 226,549.62 8,295.38 337,250.00 P 206,200.00 393,800.69 155,945.07 2,317.47 5,710.11 23,628.04 206,200.00 S 845,869.63 1,434,893.35 568,217.77 20,805.95 845,869.63 S 395,565.00 671,019.37 265,723.67 9,729.78 395,565.92 S 222,222.00 380,310.36 150,602.90 1,970.96 5,514.50 222,222.00 W 310,000.00 525,869.38 208,244.27 7,625.11 310,000.00 S 9,792,000.00 16,610,687.02 6,577,832.06 240,854.96 9,792,000.00 KOZLOWSKI 19,439,392.00 32,976,067.85 13,058,522.87 478,152.98 19,439,392.00 R 1,063,355.45 1,803,826.04 714,315.11 26,155.48 1,063,355.45 P 748,309.38 1,269,396.74 502,681.11 18,406.25 748,309.38 K 224,000.00 379,983.04 150,473.28 5,509.75 224,000.00 -------------- -------------- -------------- ------------ ------------- ----------- -------------- 48,207,223.02 82,021,574.15 32,480,543.37 20,614.17 1,189,312.83 123,880.80 48,207,223.00 Redacted B 5,000,000.00 8,481,764.21 3,358,778.63 122,985.58 5,000,000.00 C 508,769.00 863,051.74 341,768.49 12,514.25 508,769.00 C 300,000.00 508,905.85 201,526.72 7,379.13 300,000.00 H 302,688.57 513,466.62 203,332.78 7,445.27 302,688.57 H 222,500.00 380,731.72 150,769.76 1,941.35 5,520.61 222,500.00 M 304,607.00 516,720.95 204,621.50 7,492.45 304,607.00 M 370,000.00 635,664.80 251,723.26 4,724.40 9,217.14 35,000.00 335,000.00 0 199,250.00 344,420.13 136,390.37 3,785.67 4,994.09 199,250.00 -------------- -------------- -------------- ------------ ------------- ----------- -------------- 7,207,514.00 12,244,726.02 4,848,911.50 10,451.42 177,548.53 35,000.00 7,172,814.57 POWER 1,000,000.00 1,696,352.84 671,755.73 24,597.12 1,000,000.00 56,415,037.59 95,962,653.01 38,001,210.59 31,065.59 1,391,458.47 158,880.80 56,330,037.57 ============== ============== ============== ============ ============= =========== ============== .02 95,962,652.99
99.8-115 EXHIBIT 14 99.8-116 [LETTERHEAD OF TYCO] [ILLEGIBLE] September 26, 2000 L. Dennis Kozlowski One Town Center Boca Raton, Fl 33486 Dear Dennis: We are pleased to inform you that TME Management Corp. (the "Company"), has elected to forgive an amount equal to $19,439,392.00 (the "Forgiven Amount") from the Mortgage Note due from you to the Company (the "Mortgage Note"), which Mortgage Note relates to your relocation to the Boca Raton, Florida office. Accordingly, subject to the provisions of this letter agreement (this "Agreement"), you will have no obligation to repay the Forgiven Amount. The forgiveness of a portion of the Mortgage Note will be considered income to you. Therefore, the Company has agreed to provide a "gross-up" in the amount of $13,536,675.85 for taxes relating to this benefit. The remaining outstanding principal on the Mortgage Note will be due and payable according to the terms and conditions of the original Loan Agreement between you and the Company. The Company has agreed to forgive the Forgiven Amount on the condition that you maintain in strict confidence the fact that this amount has been forgiven and the other terms and conditions of this Agreement. In consideration for the Company's forgiving the Forgiven Amount, you hereby agree that the terms of this Agreement are confidential and shall not be disclosed to anyone other than your financial, tax or legal advisors. If you do not keep the terms of this Agreement confidential, you agree that the Company may, at its option, and in addition to any other remedies the Company may have, rescind this Agreement and require payment on the Forgiven Amount within ninety days. You acknowledge and agree that the Company would not have an adequate remedy at law and would be irreparably harmed in the event that any of the provisions of the Agreement are not performed in accordance with their terms or are otherwise breached. It is, therefore, agreed that the Company shall be entitled to equitable relief, including injunction and specific performance, in the event of any breach of the provisions of this Agreement, in addition to all other remedies available to the Company at law or in equity. Additionally, the Company shall not be required to post bond, any requirement of bond being specifically waived by you. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts, without regard to its choice of law rules. Very truly yours, TME MANAGEMENT CORP. By: /s/ [ILLEGIBLE] --------------------------- Its: Vice President Agreed and Accepted this 29th day of September, 2000 /s/ L. Dennis Kozlowski - ------------------------------- L. DENNIS KOZLOWSKI 99.8-117 EXHIBIT 15 99.8-118 [LETTERHEAD OF TYCO] TYCO INTERNATIONAL (US) INC. PO BOX 5035 BOCA PATON, FL 33431-0835 WRITER'S DIRECT: 561-988-3683 WRITER'S FAX: 561-988-3639 INTEROFFICE MEMORANDUM [ILLEGIBLE] DATE September 29, 2000 TO Files FROM Mark Swartz SUBJECT Special TyCom related bonuses On July 27, 2000, Tyco successfully completed the TyCom IPO. The sale of 14% of TyCom generated a one-time gain of approximately $1.760 billion on the books of Tyco. We have decided to award special bonuses to various Tyco employees for their efforts over the past few years in enhancing the value of TyCom, and thereby contributing to this gain. Selected employees will receive their bonus in the form of Cash, forgiveness of relocation loans, and/or Tyco Common shares under Tyco's restricted stock program. These bonus payments are NOT in lieu of a normal yearend bonus, rather the amounts represent an incremental payment to reward selected employees for the successful TyCom IPO and the generation of a $1.760 billion gain. Cc: LD Kozlowski P Prue 99.8-119 TME MANAGEMENT CORP SUBLEDGER ACTIVITY DETAIL BY ACCOUNT. Periods 200012 To 200012
CO ACCT SUB DEP TY ACCOUNT DESCRIPTION SOURCE JE/VOU NO PERIOD JE DESCRIPTION/ VENDOR NAME INVOICE # DEBITS - ---------------------------------------------------------------------------------------------------------------------------- BOCA42 210000 0001 900 F ACCRUED FEDERAL INCOME Beginning Balance GL 2606 200012 accrued federal income tax 1,430,001.05 GL 2609 200012 accrued federal income tax 39,547,615.40 GL 2648 200012 Reclass Accrued FIT 0.00 -------------- Net Change $40,977,616.45 ============== Net Activity Ending Balance Report Totals Beginning Balance -------------- Net Change $40,977,616.45 ============== Net Activity Ending Balance CO ACCT SUB DEP TY ACCOUNT DESCRIPTION SOURCE JE/VOU NO PERIOD JE DESCRIPTION/ VENDOR NAME INVOICE # CREDITS BALANCE - ----------------------------------------------------------------------------------------------------------------------------------- BOCA42 210000 0001 900 F ACCRUED FEDERAL INCOME Beginning Balance $ 0.00 GL 2606 200012 accrued federal income tax 0.00 GL 2609 200012 accrued federal income tax 0.00 GL 2648 200012 Reclass accrued FIT 40,977,616.45 -------------- Net Change $40,977,616.45 ============== ------- Net Activity $ (0.00) ======= Ending Balance $ (0.00) ======= ------- Report Totals Beginning Balance $ (0.00) ======= -------------- Net Change $40,977,616.45 ============== ------- Net Activity $ (0.00) ======= Ending Balance $ (0.00) =======
99.8-120 TME MANAGEMENT CORP JOURNAL ENTRY LISTING
BATCH CO JE CD PERIOD DATE STATUS SRC REF COMMENT CO ACCT - ------------------------------------------------------------------------------------------------- 001180 BOCA42 648 200012 09/25/00 Posted GL 001748 Reclass Accrued FIT BOCA42 210000 Reclass Accrued FIT BOCA42 210000 Reclass Accrued FIT BOCA42 214000 BATCH SUB DEP TY ACCOUNT DESCRIPTION DEBIT AMOUNT CREDIT AMOUNT - ------------------------------------------------------------------------------ 001180 0001 900 F ACCRUED FEDERAL INCO 0.00 39,547,615.40 0001 900 F ACCRUED FEDERAL INCO 0.00 1,430,001.05 0403 900 F TYCO US 40,977,616.45 0.00 --------------- --------------- $ 40,977,616.45 $ 40,977,616.45 =============== ===============
99.8-121 ALL COMPANIES JOURNAL ENTRY LISTING
BATCH CO JE CD PERIOD DATE STATUS SRC REF COMMENT CO ACCT - -------------------------------------------------------------------------------------------------------- 004167 BOCA40 652 200012 09/25/00 Posted GL 007114 REclass Accr FIT from TME BOCA40 210000 REclass Accr FIT from TME BOCA40 210000 REclass Accr FIT from TME BOCA40 214000 BATCH SUB DEP TY ACCOUNT DESCRIPTION DEBIT AMOUNT CREDIT AMOUNT - ------------------------------------------------------------------------------ 004167 0001 900 F ACCRUED FEDERAL INCO 1,430,001.05 0.00 0001 900 F ACCRUED FEDERAL INCO 39,547,615.40 0.00 0009 900 F TME [9000.05.TME] 0.00 40,977,616.45 --------------- --------------- $ 40,977,616.45 $ 40,977,616.45 =============== ===============
99.8-122 TME MANAGEMENT CORP JOURNAL ENTRY LISTING
BATCH CO JE CD PERIOD DATE STATUS SRC REF COMMENT CO ACCT - -------------------------------------------------------------------------------------------------------- 001154 BOCA42 619 200012 09/25/00 Posted GL 001719 uk5 - 8/29 BOCA42 203000 8jk & 8j - 9/27 BOCA42 203000 6/9/28 BOCA42 203000 8jk & 8j - 9/27 BOCA42 203000 uk5 9/29 BOCA42 203000 aj 9/28 BOCA42 203000 8jk & 8j - 9/27 BOCA42 203000 8j - 9/28 BOCA42 203000 uk5 - 9/29 BOCA42 203000 8j 9/28 BOCA42 206000 8jk & 8j 9/27 BOCA42 206000 uk5 9/29 BOCA42 206000 8j 9/28 BOCA42 206000 8jk & 8j 9/27 BOCA42 206000 uk5 9/29 BOCA42 206000 8j 9/28 BOCA42 206000 uk5 9/29 BOCA42 206000 8jk & 8j 9/27 BOCA42 206000 sit BOCA42 214000 local BOCA42 214000 lica BOCA42 214000 futa BOCA42 214000 sui BOCA42 214000 9/27-9/29 p/r taxes BOCA42 214000 BATCH SUB DEP TY ACCOUNT DESCRIPTION DEBIT AMOUNT CREDIT AMOUNT - ------------------------------------------------------------------------------- 001154 0002 900 F FED INC TAX WITHHELD 30,513.81 0.00 0002 900 F FED INC TAX WITHHELD 512,355.56 0.00 0002 900 F FED INC TAX WITHHELD 38,001,210.58 0.00 0003 900 F STATE INC TAX WITHHELD 35,292.25 0.00 0003 900 F STATE INC TAX WITHHELD 2,315.67 0.00 0003 900 F STATE INC TAX WITHHELD 103,897.21 0.00 0005 900 F FICA TAX WITHHELD 144,900.94 0.00 0005 900 F FICA TAX WITHHELD 2,410,742.11 0.00 0005 900 F FICA TAX WITHHELD 9,715.30 0.00 0005 900 F ACCRUED FEDERAL UNE 56.00 0.00 0005 900 F ACCRUED FEDERAL UNE 216.00 0.00 0006 900 F ACCRUED FEDERAL UNE 100.60 0.00 0006 900 F ACCRUED STATE UNEMP 7,421.00 0.00 0006 900 F ACCRUED STATE UNEMP 425.93 0.00 0006 900 F ACCRUED STATE UNEMP 250.40 0.00 0008 900 F ACCRUED LOCAL TAX 19,983.59 0.00 0008 900 F ACCRUED LOCAL TAX 805.23 0.00 0008 900 F ACCRUED LOCAL TAX 6,776.48 0.00 0408 900 F TYCO US 0.00 141,505.13 0408 900 F TYCO US 0.00 27,565.27 0408 900 F TYCO US 0.00 2,565,358.35 0408 900 F TYCO US 0.00 372.60 0408 900 F TYCO US 0.00 8,097.33 0408 900 F TYCO US 0.00 38,544,079.95 --------------- --------------- $ 41,286,978.63 $ 41,286,978.63 =============== ===============
99.8-123 TME MANAGEMENT CORP JOURNAL ENTRY LISTING
BATCH CO JE CD PERIOD DATE STATUS SRC REF COMMENT CO ACCT - --------------------------------------------------------------------------------------------------------- 001144 BOCA42 609 200012 09/25/00 Posted GL 001708 accrued federal income tax BOCA42 203000 accrued federal income tax BOCA42 203000 accrued federal income tax BOCA42 203000 accrued federal income tax BOCA42 205000 accrued federal income tax BOCA42 210000 BATCH SUB DEP TY ACCOUNT DESCRIPTION DEBIT AMOUNT CREDIT AMOUNT - ------------------------------------------------------------------------------- 001144 0002 900 F FED INC TAX WITHHELD 0.00 36,001,210.58 0003 900 F STATE INC TAX WITHHELD 0.00 103,897.21 0005 900 F FICA TAX WITHHELD 0.00 1,422,524.02 0008 900 F ACCRUED LOCAL TAX 0.00 19,983.59 0001 900 F ACCRUED FEDERAL INC 39,547,615.40 0.00 --------------- --------------- $ 39,547,615.40 $ 39,547,615.40 =============== ===============
99.8-124 TYCO INTERNATIONAL US JOURNAL ENTRY LISTING
BATCH JE CD PERIOD DATE SRC COMMENT CO ACCT - ------------------------------------------------------------------------------- 004082 7565 200012 09/25/00 GL 9/30/00 payroll entry BOCA40 104000 9/30/00 payroll entry BOCA40 160000 9/30/00 payroll entry BOCA40 160000 9/30/00 payroll entry BOCA40 160000 9/30/00 payroll entry BOCA40 160000 9/30/00 payroll entry BOCA40 160000 9/30/00 payroll entry BOCA40 214000 9/30/00 payroll entry BOCA40 600500 BATCH SUB DEP TY ACCOUNT DESCRIPTION DEBIT AMOUNT CREDIT AMOUNT - --------------------------------------------------------------------------------------- 004082 0001 900 F NOTES RECEIVABLE CURRENT 0.00 1,035,000.00 0003 900 F NOTES RECEIVABLE EMPLOYEE A 0.00 19,439,392.00 0005 900 F NOTES RECEIVABLE EMPLOYEE C 0.00 9,792,000.00 0007 900 F BOCA RELOCATION FIRE PROT 0.00 603,871.20 0008 900 F NOTES RECEIVABLE BOCA TYCO US 0.00 1,553,094.00 0009 900 F MORTGAGES 0.00 20,854,363.73 0009 900 F TME (9000.05.TME) 0.00 3,137,316.66 0229 900 F TYCOM OFFERING EXPENSES 56,415,037.59 0.00 --------------- --------------- $ 56,415,037.59 $ 56,415,037.59 =============== ===============
99.8-125 TYCO INTERNATIONAL US JOURNAL ENTRY LISTING
JE CD PERIOD DATE STATUS SRC REF COMMENT CO ACCT - ------------------------------------------------------------------------------------------------------- 7662 200012 09/25/00 Posted GL 007125 Q1-Q3 adj amortization BOCA40 214000 4th Q Restricted Stock entry BOCA40 214000 new shares issued BOCA40 214000 new shares issued BOCA40 214000 Reverse error BOCA40 214000 4th Q Restricted Stock entry BOCA40 [ILLEGIBLE] 4th Q Restricted Stock entry BOCA40 218000 expensed shares billed BOCA40 218000 4th Q Corp amort BOCA40 218000 adj Q1 Q3 amort of vestings [ILLEGIBLE] BOCA40 218000 Corp time vestings FY 2000 BOCA40 218000 Tycom bonus restricted stock BOCA40 301000 reverse error BOCA40 301000 New shares issued BOCA40 301000 4th Q Corp amort BOCA40 301000 expensed shares billed BOCA40 301000 Corp time vestings FY 2000 BOCA40 301000 Tycom bonus restricted stock BOCA40 600500 JE CD SUB DEP TY ACCOUNT DESCRIPTION DEBIT AMOUNT CREDIT AMOUNT - --------------------------------------------------------------------------------------------- 7662 0036 900 F TYCO International Ltd.(9000.05.TIL) 3,403,227.30 0.00 0036 900 F TYCO International Ltd.(9000.05.TIL) 0.00 406,023.75 0036 900 F TYCO International Ltd.(9000.05.TIL) 0.00 29,681,737.15 0036 900 F TYCO International Ltd.(9000.05.TIL) 0.00 116,284.60 0213 900 F TYCO ELECTRONICS 0.00 1,931,205.00 0004 900 F Accrued Restricted Stock Compensation 0.00 84,851.29 0004 900 F Accrued Restricted Stock Compensation 490,875.00 0.00 0004 900 F Accrued Restricted Stock Compensation 0.00 1,047,816.19 0004 900 F Accrued Restricted Stock Compensation 332,870.00 0.00 0004 900 F Accrued Restricted Stock Compensation 0.00 3,403,727.30 0004 900 F Accrued Restricted Stock Compensation 10,582,671.50 0.00 0002 900 F DEFERRED COMPENSATION R.S. 0.00 28,551,667.03 0002 900 F DEFERRED COMPENSATION R.S. 1,931,205.00 0.00 0002 900 F DEFERRED COMPENSATION R.S. 29,798,021.75 0.00 0002 900 F DEFERRED COMPENSATION R.S. 0.00 332,570.00 0002 900 F DEFERRED COMPENSATION R.S. 1,347,815.19 0.00 0002 900 F DEFERRED COMPENSATION R.S. 0.00 50,582,671.50 0229 900 F TYCOM OFFERING EXPENSES 28,551,667.03 0.00 --------------- --------------- $ 76,438,353.77 $ 76,438,353.77 =============== ===============
99.8-126 TYCO MANAGEMENT INC. JOURNAL ENTRY LISTING
BATCH CO JE CD PERIOD DATE STATUS SRC REF COMMENT CO ACCT - ------------------------------------------------------------------------------------------------------------------ 000017 [ILLEGIBLE] 1022 200012 09/25/00 Posted GL 000022 sept 2000 p/r - bonus BOCA26 100000 sept 2000 p/r - bonus BOCA26 203000 sept 2000 p/r - bonus BOCA26 203000 sept 2000 p/r - bonus BOCA26 203000 sept 2000 p/r - bonus BOCA26 203000 sept 2000 p/r - bonus BOCA26 206000 sept 2000 p/r - bonus BOCA26 206000 sept 2000 p/r - bonus(def comp BOCA26 214000 sept 2000 p/r - bonus(employee BOCA26 214000 sept 2000 p/r - bonus BOCA26 214000 BATCH SUB DEP TY ACCOUNT DESCRIPTION DEBIT AMOUNT CREDIT AMOUNT - ---------------------------------------------------------------------------------- 000017 0040 900 F CASH-MELLON #020-890 0.00 3,171,361.30 0002 900 F FED INC TAX WITHHELD 0.00 1,393,262.92 0003 900 F STATE INCOME TAX WITHHELD 0.00 90,852.06 0005 900 F FICA TAX WITHHELD 0.00 206,802.59 0005 900 F 401K WITHHELD 0.00 23,237.50 0006 900 F ACCRUED STATE UNEMP 0.00 152.25 0008 900 F ACCRUED LOCAL TAX 0.00 25,452.57 0408 800 F TYCO US 0.00 4,493,750.00 0408 900 F TYCO US 44,871.19 0.00 0408 900 F TYCO US 9,350,000.00 0.00 -------------- -------------- $ 9,404,871.19 $ 9,404,871.19 ============== ==============
99.8-127 TYCO INTERNATIONAL US JOURNAL ENTRY LISTING
JE CD PERIOD DATE SRC REF COMMENT CO ACCT - ---------------------------------------------------------------------------- 7639 200012 9/25/00 GL 007100 TYCOM MANAGEMENT INC. BOCA40 214000 P/R ENT TYCOM MANAGEMENT INC. BOCA40 214000 P/R ENT TYCOM MANAGEMENT INC. BOCA40 214000 P/R ENT TYCOM MANAGEMENT INC. BOCA40 214000 P/R ENT TYCOM MANAGEMENT INC. BOCA40 214000 P/R ENT TYCOM MANAGEMENT INC. BOCA40 600500 P/R ENT TYCOM MANAGEMENT INC. BOCA40 600500 P/R ENT TYCOM MANAGEMENT INC. BOCA40 600500 P/R ENT TYCOM MANAGEMENT INC. BOCA40 600500 P/R ENT TYCOM MANAGEMENT INC. BOCA40 600500 P/R ENT JE CD SUB DEP TY ACCOUNT DESCRIPTION DEBIT AMOUNT CREDIT AMOUNT - ------------------------------------------------------------------------------- 7639 0215 900 F TYCOM MANAGEMENT 4,493,750.00 0.00 0215 900 F TYCOM MANAGEMENT 0.00 2,527,200.00 0215 900 F TYCOM MANAGEMENT 0.00 44,871.19 0215 900 F TYCOM MANAGEMENT 0.00 9,360,000.00 0215 900 F TYCOM MANAGEMENT 1,000,000.00 0.00 0229 900 F TYCOM OFFERING EXPE 2,527,200.00 0.00 0229 900 F TYCOM OFFERING EXPE 0.00 4,493,750.00 0229 900 F TYCOM OFFERING EXPE 44,871.19 0.00 0229 900 F TYCOM OFFERING EXPE 0.00 1,000,000.00 0229 900 F TYCOM OFFERING EXPE 9,360,000.00 0.00 --------------- ---------------- $ 17,425,821.19 $ 17,425,621.19 =============== ================
99.8-128 TYCO INTERNATIONAL US SUBLEDGER ACTIVITY DETAIL BY ACCOUNT. Periods 200001 To 200210
CO ACCT SUB DEP TY ACCOUNT DESCRIPTION SOURCE JE/VOU NO PERIOD JE DESCRIPTION/VENDOR NAME INVOICE # - ------------------------------------------------------------------------------ BOCA40 600500 0229 900F TYCOM OFFERING EXPENSES GL 7565 200012 9/30/00 payroll entry GL [ILLEGIBLE] 200012 TYCOM MANAGEMENT INC. P/R ENT GL 7682 200012 4th Q Restricted Stock entry GL 7669 200012 to rec bonus credit GL 7672 200012 Additional bonus credit GL 7673 200012 Adjustment to accruals GL 7662 200012 correct payroll entry GL 7693 200013 2000 Year-End Closing Entry GL 8166 200102 Reclass P/R GL 8167 200102 Reclass P/R GL 8168 200102 Reclass P/R GL 8169 200102 Reclass P/R VO 48682 200102 MERRILL COMMUNICATIONS LLC 0600211848 GL 8462 200103 Reclass Merill Communications JE 11958 200204 Corrections JE 11963 200204 Correct Entry CO SOURCE DEBITS CREDITS BALANCE - -------------------------------------------------------------------------------------- BOCA40 Beginning Balance $ 0.00 GL 56,415,037.59 0.00 GL 11,932,071.19 5,493,750.00 GL 28,551,667.00 0.00 GL 12,710,000.00 0.00 GL 400,000.00 0.00 GL 0.00 7,207,814.57 GL 5,493,750.00 4,610,029.25 GL 0.00 98,193,931.99 GL 567,000.00 0.00 GL 2,100,000.00 0.00 GL 0.00 2,100,000.00 GL 0.00 567,000.00 VO 176,371.52 0.00 GL 0.00 176,371.52 JE 831,889.46 0.00 JE 0.00 831,889.46 ---------------- ---------------- Net Change $ 119,180,786.79 $ 119,180,786.79 ================ ================ ------- Net Activity $ 0.00 ======= Ending Balance $ 0.00 ======= ------- Report Totals Beginning Balance $ 0.00 ======= ---------------- ---------------- Net Change $ 119,180,786.79 $ 119,180,788.79 ================ ================ ------- Net Activity $ 0.00 ======= Ending Balance $ 0.00 =======
99.8-129 Analysis of TyCom Offering Expenses 30-Sep-00 Corp payroll entries 56,415,037.59 Less Reclass corr to expense (11,772,972.63) -------------- Total Mortgages 44,642,064.96 Total Corp Cash Bonus 11,887,200.00 Restricted Stock Vesting 28,551,667.03 TyCom Bonus 13,113,000,00 - adj. in consol -------------- 98,193,931.99 ============== 85,080,931.99 bill out to 41, charge out
99.8-130 Analysis of TyCom Offering Expenses 30-Sep-00 Corp payroll entries 56,415,037.59 Less Reclass corr to expense (7,207,814.57) -------------- Total Mortgages 49,207,223.02 Total Corp Cash Bonuses - ----------------------- Other Corp payroll entries 11,932,071.19 Restricted Stock Vesting 28,551,667.03 TyCom Bonus 13,113,000.00 -------------- 102,803,961.24 ==============
99.8-131 TYCO(US) JOURNAL ENTRY DATE: 09/30/00 BATCH: TLC TYCOM GAIN 56,415,037.59 MORTGAGE NOTES - 160300-900 20,854,363.73 NOTE A - 160010-900 19,439,392.00 NOTE C - 160020-900 9,792,000.00 BOCA NOTES RECEIVABLE 1,553,094.00 FIRE NOTES RECEIVABLE 603,871.20 BRIDGE LOANS S/T NOTES REC Dick Powers/ Scott McAttley 1,035,000.00 TIME-FIXED ASSETS NBV Michael Robinson P Prue 1,362,966.05 / 3,137,316.16 TME 101015 \ 1,774,350.61 ------------- ------------- 56,415,037.59 56,415,037.59 ============= =============
99.8-132 TYCOM MANAGEMENT INC. JOURNAL ENTRY DATE: 09/29/00 PAYROLL - SEPT - BONUS RST I/C TYCO 215255 9,360,000.00 EMPLOYEE ADVANCE 215255 44,871.19 DEF COMPENSATION (i/c tyco) 215255 4,493,750.00 FIT W/H 203000 1,393,282.92 FICA W/H 203010 206,802.59 SIT W/H 203005 90,852.06 SUI 206010 152.25 CITY TAX 206020 25,432.57 401K W/H 203060 23,237.50 MELLON P/R 101040 3,171,361.30 ------------ ------------ 9,404,871.19 9,404,871.19 ============ ============
99.8-133 EXHIBIT 16 99.8-134 Redacted [LETTERHEAD OF TYCO] [ILLEGIBLE] (561) 988-3607 (561) 988-0913 (FAX) INTEROFFICE MEMORANDUM DATE November 7, 2000 TO Patty Prue FROM Dennis Kozlowski RE Restricted Stock Awards On October 31, 2000, the individuals listed below vested in shares of restricted stock in conjunction with work related to the sale of ADT Automotive. Prior to the vesting, the amounts listed below were reviewed and approved by Phil Hampton, Chairman of Tyco's Compensation Committee. The FMV of shares on that day was $56.612.
Name Number L. Dennis Kozlowski 148,000 M: 74,000 L: 7,500 J: Redacted 7,500 S: 7,500 M: 7,500 P: - 7,500 M: 2,000
------------------------------- Dennis Kozlowski CC: LINDA AUGER TOMMY CROSS 99.8-135 EXHIBIT 17 99.8-136 [LETTERHEAD OF TYCO] L. Dennis Kozlowski [ILLEGIBLE] Chairman Chief Executive Officer November 13, 2000 Mark Swartz 5001 Egret Point Circle Boca Raton, FL 33431 Dear Mark, Thank you for your many contributions towards the successful divestiture of Tyco's ADT Automotive business. In recognition of your many contributions, enclosed are your bonus and relocation payments. Communication regarding your vested restricted shares has already been previously communicated to you. Again, thank you for your support and leadership. Regards, /s/ L. Dennis Kozlowski 99.8-137 EXHIBIT 18 99.8-138 ADT AUTOMOTIVE BONUS
BONUS RESTRICTED TYCOM ADT 1/2 1/2 1/2 NAME AMOUNT SHARES TOTAL W2 LOAN MORTAGE GROSS-UP F $ 100,000 2,000 844,360 422,180 246,875 173,305 G $ 500,000 5,275,609 2,637,804 1,554,986 1,082,819 M $ 312,500 7,500 1,399,491 699,746 412,500 267,246 M $ 500,000 7,500 3,294,362 1,647,161 971,013 676,168 M $ 200,000 P $ 312,500 7,500 1,269,397 634,698 374,155 250,544 Redacted R $ 312,500 7,500 1,803,826 901,913 531,678 370,235 S $ 312,500 7,500 1,434,893 717,447 422,935 294,512 C $ 100,000 489,794 B $ 76,000 F $ 50,000 G $ 50,000 828,562 G $ 50,000 602,304 S $ 350,000 74,000 16,610,687 8,305,344 4,896,000 3,409,344 Kozlowski, Dennis $ 700,000 148,000 32,978,058 16,488,034 9,719,696 6,768,335 C $ 15,000 Redacted K 379,983 189,992 112,000 77,992 Total $ $ 3,940,000 $ 261,500 $67,209,335 $32,644,338 $19,243,837 $13,400,501 Average Weighted Volume 10/01/00 $ 56,6120
Note - ---- MHS - Shares also illegible memo from LDK LDK/(P. Hampton) 11/1/00 99.8-139 EXHIBIT 19 99.8-140 [LETTERHEAD OF TYCO] Tyco International (US) Inc. P.O. Box 5035 Boca Raton, FL 33431-0835 Writer's Direct: 561-988-3683 Writer's Fax: 561-988-3639 INTEROFFICE MEMORANDUM [ILLEGIBLE] DATE December 15, 2000 TO Files FROM Mark Swartz SUBJECT Special ADT Automotive related bonuses In October 2000, Tyco successfully completed the sale of ADT Automotive. The automotive business was sold for $1 billion and generated a one-time gain in excess of $400 million on the books of Tyco. We have decided to award special bonuses to various Tyco employees for their efforts over the past few years in enhancing the value of the Automotive business, and thereby contributing to this gain. Selected employees will receive their bonus in the form of Cash, forgiveness of relocation loans, and/or Tyco Common shares under Tyco's restricted stock program. These bonus payments are NOT in lieu of a normal yearend bonus, nor an advance of the FY01 yearend bonus, rather the amounts represent an incremental payment to reward selected employees for the successful sale of the Automotive business and the generation of a gain in excess of $400 million. Cc: L.D Kozlowski P Prue 99.8-141
Reimbursement Reimbursement of Working of Fixed Sale of Capital Assets Business Total ----------------------------------------------------------- Cash Received 11,000 10,000 1,000,000 1,021,000 Net Asset Adjustment (Estimated) 34,000 0 0 34,000 Direct Selling Costs (see below) 0 0 (68,390) (68,390) ----------------------------------------------------------- Net Cash Proceeds 45,000 10,000 931,610 986,610 Net Assets Sold 45,000 10,000 418,000 473,000 ----------------------------------------------------------- Gain on Sale 0 0 513,610 513,610 Additional Legal Accrual 0 0 (5,000) (5,000) Additional Insurance Accrual 0 0 (7,500) (7,500) Additional Environmental Accrual 0 0 (2,500) (2,500) ----------------------------------------------------------- Net Gain on Sale of ADT Automotive 0 0 498,610 498,610 Mueiler/Grinnell Loss (28,829) (28,829) Keystone Investment Loss (8,600) (8,600) ------------------------ Net Non-recurrring Gain 461,181 461,181 ========================
Direct Selling Costs Broker (DLJ) Fees 3,000,000 Tyco Cash Bonuses 3,979,000 Tyco Cash Bonuses 32,009,641 Tyco Restricted Stock Bonus 14,804,038 Tyco Cash Bonuses 634,698 Tyco Restricted Stock Bonus 3,962,840 Other Deferred Costs 10,000,000 ---------- 68,390,217 ==========
99.8-142
CO FILE# NAME AMT CODE GROSS DATE - -- ----- -------- --- ---- ----- ---- 8JK 330027 Redacted 75,000.00 41 75,000.00 11/9/00 0.00 9JK 25946 Redacted 100,000.00 41 100,000.00 11/9/00 0.00 8JK 30001 Redacted 4,000.00 41 4,000.00 11/9/00 0.00 8JK 330045 Redacted 50,000.00 41 50,000.00 11/9/00 0.00 9JK 38116 Redacted 100,000.00 41 100,000.00 11/9/00 0.00 8JK 52638 Redacted 50,000.00 41 50,000.00 11/9/00 0.00 8JK 54251 Redacted 50,000.00 41 50,000.00 11/9/00 0.00 8JK 59093 Redacted 500,000.00 41 500,000.00 11/9/00 0.00 8JK 73006 Kozlowski, L. Dennis 700,000.00 41 700,000.00 11/9/00 0.00 8JK 74301 Redacted 50,000.00 41 50,000.00 11/9/00 0.00 8JK 78870 Redacted 312,500.00 41 312,500.00 11/9/00 0.00 8JK 79726 Redacted 500,000.00 41 500,000.00 11/9/00 0.00 9JK 81279 Redacted 200,000.00 41 200,000.00 11/9/00 0.00 8JK 7672 Redacted 312,500.00 41 312,500.00 11/14/00 0.00 8JK 330028 Redacted 312,500.00 41 312,500.00 11/9/00 0.00 8JK 91226 Redacted 312,500.00 41 312,500.00 11/9/00 0.00 8JK 91602 Redacted 350,000.00 41 350,000.00 11/9/00 0.00 3,979,000.00 3,979,000.00 8J- 38118 Redacted 422,180.00 R 422,180.00 11/8/00 0.00 8J- 59093 Redacted 2,637,804.00 R 2,637,804.00 11/8/00 0.00 8J- 64201 Redacted 189,992.00 R 189,992.00 11/8/00 0.00 8J- 73008 Kozlowski, L. Dennis 7,488,034.00 R 7,488,034.00 11/8/00 0.00 8J- 73008 Kozlowski, L. Dennis 9,000,000.00 R 9,000,000.00 11/8/00 0.00 8J- 73370 Redacted 699,746.00 R 699,746.00 11/8/00 0.00 8J- 79726 Redacted 1,647,181.00 R 1,647,181.00 11/8/00 0.00 8J- 330028 Redacted 901,913.00 R 901,913.00 11/8/00 0.00 8J- 91226 Redacted 717,447.00 R 717,447.00 11/8/00 0.00 8J- 91602 Redacted 8,305,344.00 R 8,305,344.00 11/8/00 0.00 32,009,641.00 32,009,641.00 8JK 38116 Redacted 113,224.00 V 113,224.00 11/22/00 0.00 8JK 73009 Kozlowski, L. Dennis 8,378,576.00 V 8,378,576.00 11/22/00 0.00 8JK 78870 Redacted 424,590.00 V 424,590.00 11/22/00 0.00 8JK 79726 Redacted 424,590.00 V 424,590.00 11/22/00 0.00 8JK 7672 Redacted 424,590.00 V 424,590.00 11/22/00 0.00 8JK 330028 Redacted 424,590.00 V 424,590.00 11/22/00 0.00 8JK 91226 Redacted 424,590.00 V 424,590.00 11/22/00 0.00 8JK 91602 Redacted 4,189,288.00 V 4,189,288.00 11/22/00 0.00 14,804,038.00 54,919,702.85 50,792,879.00 50,792,679.00 0.00 50,792,679.00 P 853,825.00 (Non Cash) P Redacted 594,563.00 (Cash) B 3,713,788.00 ------------- 55,954,455.00
r. Redacted 99.8-143 EXHIBIT 20 99.8-144
PAGE 1 - ------------------------------------------------------------------------ 1 WAGES, TIPS, OTHER COMP. 2 FEDERAL INCOME TAX WITHHELD 87605358.94 24818483.73 - ------------------------------------------------------------------------ 3 SOCIAL SECURITY WAGES 4 SOCIAL SECURITY TAX WITHHELD 76200.00 4724.40 - ------------------------------------------------------------------------ 5 MEDICARE WAGES AND TIPS 6 MEDICARE TAX WITHHELD 87928511.16 1274963.40 - ------------------------------------------------------------------------ A CONTROL NUMBER DEPT. CORP. EMPLOYER USE ONLY 073007 8JK 851 A 127 - ------------------------------------------------------------------------ C EMPLOYER'S NAME, ADDRESS, AND ZIP CODE TME MANAGEMENT CORP 1 TOWN CENTER RD BOCA RATON FL 33486 BATCH #01463 - ------------------------------------------------------------------------ B EMPLOYER'S FED ID NUMBER D EMPLOYEE'S SSA NUMBER 02-0493878 ###-##-#### - ------------------------------------------------------------------------ 7 SOCIAL SECURITY TIPS 8 ALLOCATED TIPS - ------------------------------------------------------------------------ 9 ADVANCE EIC PAYMENT 10 DEPENDENT CARE BENEFITS - ------------------------------------------------------------------------ 11 NONQUALIFIED PLANS 12 BENEFITS INCLUDED IN BOX 1 113822.39 - ------------------------------------------------------------------------ 13 SEE INSTRS. FOR BOX 13 14 OTHER C 2725.80 16558700.93 NQSOP D 10500.00 - ------------------------------------------------------------------------ 15 STRT CMP. DECREASED PENSION PLAN LEGAL REP. DEFERRED COMP. X X - ------------------------------------------------------------------------ C/O EMPLOYEE'S NAME, ADDRESS AND ZIP CODE L. DENNIS KOZLOWSKI ONE TOWN CENTER ROAD BOCA RATON,FL 33486 - ------------------------------------------------------------------------ 16 STATE EMPLOYEE'S STATE ID NO. 17 STATE WAGES, TIPS, ETC. - ------------------------------------------------------------------------ 18 STATE INCOME TAX 19 LOCALITY NAME - ------------------------------------------------------------------------ 20 LOCAL WAGES, TIPS, ETC. 21 LOCAL INCOME TAX - ------------------------------------------------------------------------ E M P L O Y E E R E F E R E N C E C O P Y W A G E A N D T A X W-2 S T A T E M E N T 2000 CMB NO. 1545-0000 COPY C FOR EMPLOYEE'S RECORDS - ------------------------------------------------------------------------
THIS BLUE EARNINGS SUMMARY SECTION IS INCLUDED WITH YOUR W-2 TO HELP DESCRIBE PORTIONS IN MORE DETAIL. THE REVERSE SIDE INCLUDES GENERAL INFORMATION THAT YOU MAY ALSO FIND HELPFUL.
1. THE FOLLOWING INFORMATION REFLECTS YOUR FINAL 2000 PAY STUB PLUS ANY ADJUSTMENTS SUBMITTED BY YOUR EMPLOYER. --------------------------------------------------------------------------------------------------------------------------------- GROSS PAY 87927856.36 SOCIAL SECURITY 4724.40 FL. STATE INCOME TAX TAX WITHHELD BOX 18 OF W-2 BOX 4 OF W-2 LOCAL INCOME TAX BOX 21 OF W-2 FED INCOME 24818483.73 MEDICARE TAX 1274963.40 TAX WITHHELD WITHHELD SUI/SDI BOX 2 OF W-2 BOX 5 OF W-2 BOX 14 OF W-2 2. YOUR GROSS PAY WAS ADJUSTED AS FOLLOWS TO PRODUCE YOUR W-2 STATEMENT. --------------------------------------------------------------------------------------------------------------------------------- WAGES, TIPS, OTHER SOCIAL SECURITY MEDICARE FL. STATE WAGES, COMPENSATION WAGES WAGES TIPS, ETC. BOX 1 OF W-2 BOX 3 OF W-2 BOX 5 OF W-2 BOX 17 OF W-2 GROSS PAY 87,927,856.36 87,927,856.36 87,927,856.36 PLUS GTL (C-BOX 13) 2,725.80 2,725.80 2,775.80 LESS MISC. NON TAXABLE COMP. 312,652.22 N/A N/A LESS 401(k) (D-BOX 13) 10,500.00 N/A N/A LESS OTHER CAFE 125 2,071.00 2,071.00 2,071.00 WAGES OVER LIMIT N/A 87,852,311.16 N/A REPORTED W-2 WAGES 87,605,358.94 76,200.00 87,928,511.16 3. EMPLOYEE W-4 PROFILE. TO CHANGE YOUR EMPLOYEE W-4 PROFILE INFORMATION, FILE A NEW W-4 WITH YOUR PAYROLL DEPT. --------------------------------------------------------------------------------------------------------------------------------- L. DENNIS KOZLOWSKI SOCIAL SECURITY NUMBER: ###-##-#### ONE TOWN CENTER ROAD TAXABLE MARITAL STATUS: SINGLE BOCA RATON,FL 33486 EXEMPTIONS/ALLOWANCES: FEDERAL: 0 TAX BLOCKED STATE: NO STATE INCOME TAX (C) 2000 AUTOMATIC DATA PROCESSING INC.
- ------------------------------------------------------------------------ 1 WAGES, TIPS, OTHER COMP. 2 FEDERAL INCOME TAX WITHHELD 87605358.94 24818483.73 - ------------------------------------------------------------------------ 3 SOCIAL SECURITY WAGES 4 SOCIAL SECURITY TAX WITHHELD 76200.00 4724.40 - ------------------------------------------------------------------------ 5 MEDICARE WAGES AND TIPS 6 MEDICARE TAX WITHHELD 87928511.16 1274963.40 - ------------------------------------------------------------------------ A CONTROL NUMBER DEPT. CORP. EMPLOYER USE ONLY 073007 8JK 851 A 127 - ------------------------------------------------------------------------ C EMPLOYER'S NAME, ADDRESS, AND ZIP CODE TME MANAGEMENT CORP 1 TOWN CENTER RD BOCA RATON FL 33486 - ------------------------------------------------------------------------ B EMPLOYER'S FED ID NUMBER D EMPLOYEE'S SSA NUMBER 02-0493878 ###-##-#### - ------------------------------------------------------------------------ 7 SOCIAL SECURITY TIPS 8 ALLOCATED TIPS - ------------------------------------------------------------------------ 9 ADVANCE EIC PAYMENT 10 DEPENDENT CARE BENEFITS - ------------------------------------------------------------------------ 11 NONQUALIFIED PLANS 12 BENEFITS INCLUDED IN BOX 1 113822.39 - ------------------------------------------------------------------------ 13 SEE INSTRS. FOR BOX 13 14 OTHER C 2725.80 16558700.93 NQSOP D 10500.00 - ------------------------------------------------------------------------ 15 STRT CMP. DECREASED PENSION PLAN LEGAL REP. DEFERRED COMP. X X - ------------------------------------------------------------------------ C/O EMPLOYEE'S NAME, ADDRESS AND ZIP CODE L. DENNIS KOZLOWSKI ONE TOWN CENTER ROAD BOCA RATON,FL 33486 - ------------------------------------------------------------------------ 16 STATE EMPLOYER'S STATE ID NO. 17 STATE WAGES, TIPS, ETC. - ------------------------------------------------------------------------ 18 STATE INCOME TAX 19 LOCALITY NAME - ------------------------------------------------------------------------ 20 LOCAL WAGES, TIPS, ETC. 21 LOCAL INCOME TAX - ------------------------------------------------------------------------ F E D E R A L F I L I N G C O P Y W A G E A N D T A X W-2 S T A T E M E N T 2000 CMB NO. 1545-0000 COPY B TO BE FILED WITH EMPLOYEE'S FEDERAL INCOME TAX RETURN - ------------------------------------------------------------------------
- ------------------------------------------------------------------------ 1 WAGES, TIPS, OTHER COMP. 2 FEDERAL INCOME TAX WITHHELD 87605358.94 24818483.73 - ------------------------------------------------------------------------ 3 SOCIAL SECURITY WAGES 4 SOCIAL SECURITY TAX WITHHELD 76200.00 4724.40 - ------------------------------------------------------------------------ 5 MEDICARE WAGES AND TIPS 6 MEDICARE TAX WITHHELD 87928511.16 1274963.40 - ------------------------------------------------------------------------ A CONTROL NUMBER DEPT. CORP. EMPLOYER USE ONLY 073007 8JK 851 A 127 - ------------------------------------------------------------------------ C EMPLOYER'S NAME, ADDRESS, AND ZIP CODE TME MANAGEMENT CORP 1 TOWN CENTER RD BOCA RATON FL 33486 BATCH #01463 - ------------------------------------------------------------------------ B EMPLOYER'S FED ID NUMBER D EMPLOYEE'S SSA NUMBER 02-0493878 ###-##-#### - ------------------------------------------------------------------------ 7 SOCIAL SECURITY TIPS 8 ALLOCATED TIPS - ------------------------------------------------------------------------ 9 ADVANCE EIC PAYMENT 10 DEPENDENT CARE BENEFITS - ------------------------------------------------------------------------ 11 NONQUALIFIED PLANS 12 BENEFITS INCLUDED IN BOX 1 113822.39 - ------------------------------------------------------------------------ 13 SEE INSTRS. FOR BOX 13 14 OTHER C 1196.16 16558700.93 NQSOP - ------------------------------------------------------------------------ 15 STRT CMP. DECREASED PENSION PLAN LEGAL REP. DEFERRED COMP. X X - ------------------------------------------------------------------------ C/O EMPLOYEE'S NAME, ADDRESS AND ZIP CODE L. DENNIS KOZLOWSKI ONE TOWN CENTER ROAD BOCA RATON,FL 33486 - ------------------------------------------------------------------------ 16 STATE EMPLOYEE'S STATE ID NO. 17 STATE WAGES, TIPS, ETC. - ------------------------------------------------------------------------ 18 STATE INCOME TAX 19 LOCALITY NAME - ------------------------------------------------------------------------ 20 LOCAL WAGES, TIPS, ETC. 21 LOCAL INCOME TAX - ------------------------------------------------------------------------ F L S T A T E R E F E R E N C E C O P Y W A G E A N D T A X W-2 S T A T E M E N T 2000 CMB NO. 1545-0000 COPY 2 TO BE FILED WITH EMPLOYEE'S STATE INCOME TAX RETURN - ------------------------------------------------------------------------
- ------------------------------------------------------------------------ 1 WAGES, TIPS, OTHER COMP. 2 FEDERAL INCOME TAX WITHHELD 87605358.94 24818483.73 - ------------------------------------------------------------------------ 3 SOCIAL SECURITY WAGES 4 SOCIAL SECURITY TAX WITHHELD 76200.00 4724.40 - ------------------------------------------------------------------------ 5 MEDICARE WAGES AND TIPS 6 MEDICARE TAX WITHHELD 87928511.16 1274963.40 - ------------------------------------------------------------------------ A CONTROL NUMBER DEPT. CORP. EMPLOYER USE ONLY 073007 8JK 851 A 127 - ------------------------------------------------------------------------ C EMPLOYER'S NAME, ADDRESS, AND ZIP CODE TME MANAGEMENT CORP 1 TOWN CENTER RD BOCA RATON FL 33486 BATCH #01463 - ------------------------------------------------------------------------ B EMPLOYER'S FED ID NUMBER D EMPLOYEE'S SSA NUMBER 02-0493878 ###-##-#### - ------------------------------------------------------------------------ 7 SOCIAL SECURITY TIPS 8 ALLOCATED TIPS - ------------------------------------------------------------------------ 9 ADVANCE EIC PAYMENT 10 DEPENDENT CARE BENEFITS - ------------------------------------------------------------------------ 11 NONQUALIFIED PLANS 12 BENEFITS INCLUDED IN BOX 1 113822.39 - ------------------------------------------------------------------------ 13 SEE INSTRS. FOR BOX 13 14 OTHER C 1196.16 16558700.93 NQSOP - ------------------------------------------------------------------------ 15 STRT CMP. DECREASED PENSION PLAN LEGAL REP. DEFERRED COMP. X X - ------------------------------------------------------------------------ C/O EMPLOYEE'S NAME, ADDRESS AND ZIP CODE L. DENNIS KOZLOWSKI ONE TOWN CENTER ROAD BOCA RATON,FL 33486 TY-CR 0000414 - ------------------------------------------------------------------------ 16 STATE EMPLOYEE'S STATE ID NO. 17 STATE WAGES, TIPS, ETC. - ------------------------------------------------------------------------ 18 STATE INCOME TAX 19 LOCALITY NAME - ------------------------------------------------------------------------ 20 LOCAL WAGES, TIPS, ETC. 21 LOCAL INCOME TAX - ------------------------------------------------------------------------ F L S T A T E F I L I N G C O P Y W A G E A N D T A X W-2 S T A T E M E N T 2000 CMB NO. 1545-0000 COPY 2 TO BE FILED WITH EMPLOYEE'S STATE INCOME TAX RETURN - ------------------------------------------------------------------------
TY-XX 0400046 CONFIDENTIAL GRAND JURY MATERIAL 99.8-145
PAGE 1 - ------------------------------------------------------------------------ 1 WAGES, TIPS, OTHER COMP. 2 FEDERAL INCOME TAX WITHHELD 49464101.85 17675172.37 - ------------------------------------------------------------------------ 3 SOCIAL SECURITY WAGES 4 SOCIAL SECURITY TAX WITHHELD - ------------------------------------------------------------------------ 5 MEDICARE WAGES AND TIPS 6 MEDICARE TAX WITHHELD 49464101.85 717229.47 - ------------------------------------------------------------------------ A CONTROL NUMBER DEPT. CORP. EMPLOYER USE ONLY 073008 8J- T 60 - ------------------------------------------------------------------------ C EMPLOYER'S NAME, ADDRESS, AND ZIP CODE TME MANAGEMENT CORP 1 TOWN CENTER RD BOCA RATON FL 33486 BATCH #01414 - ------------------------------------------------------------------------ B EMPLOYER'S FED ID NUMBER D EMPLOYEE'S SSA NUMBER 02-0493878 ###-##-#### - ------------------------------------------------------------------------ 7 SOCIAL SECURITY TIPS 8 ALLOCATED TIPS - ------------------------------------------------------------------------ 9 ADVANCE EIC PAYMENT 10 DEPENDENT CARE BENEFITS - ------------------------------------------------------------------------ 11 NONQUALIFIED PLANS 12 BENEFITS INCLUDED IN BOX 1 - ------------------------------------------------------------------------ 13 SEE INSTRS. FOR BOX 13 14 OTHER 49464101.85 TXREL - ------------------------------------------------------------------------ 15 STRT CMP. DECREASED PENSION PLAN LEGAL REP. DEFERRED COMP. X - ------------------------------------------------------------------------ C/O EMPLOYER'S NAME, ADDRESS AND ZIP CODE L. DENNIS KOZLOWSKI ONE TOWN CENTER ROAD BOCA RATON,FL 33486 - ------------------------------------------------------------------------ 16 STATE EMPLOYER'S STATE ID NO. 17 STATE WAGES, TIPS, ETC. - ------------------------------------------------------------------------ 18 STATE INCOME TAX 19 LOCALITY NAME - ------------------------------------------------------------------------ 20 LOCAL WAGES, TIPS, ETC. 21 LOCAL INCOME TAX - ------------------------------------------------------------------------ E M P L O Y E E R E F E R E N C E C O P Y W A G E A N D T A X W-2 S T A T E M E N T 2000 CMB NO. 1545-0000 COPY C FOR EMPLOYEE'S RECORDS - ------------------------------------------------------------------------
THIS BLUE EARNINGS SUMMARY SECTION IS INCLUDED WITH YOUR W-2 TO HELP DESCRIBE PORTIONS IN MORE DETAIL. THE REVERSE SIDE INCLUDES GENERAL INFORMATION THAT YOU MAY ALSO FIND HELPFUL.
1. THE FOLLOWING INFORMATION REFLECTS YOUR FINAL 2000 PAY STUB PLUS ANY ADJUSTMENTS SUBMITTED BY YOUR EMPLOYER. --------------------------------------------------------------------------------------------------------------------------------- GROSS PAY 49464101.85 SOCIAL SECURITY FL. STATE INCOME TAX TAX WITHHELD BOX 18 OF W-2 BOX 4 OF W-2 LOCAL INCOME TAX BOX 21 OF W-2 FED INCOME 17675172.37 MEDICARE TAX 717229.47 TAX WITHHELD WITHHELD SUI/SDI BOX 2 OF W-2 BOX 5 OF W-2 BOX 14 OF W-2 2. YOUR GROSS PAY WAS ADJUSTED AS FOLLOWS TO PRODUCE YOUR W-2 STATEMENT. --------------------------------------------------------------------------------------------------------------------------------- WAGES, TIPS, OTHER SOCIAL SECURITY MEDICARE FL. STATE WAGES, COMPENSATION WAGES WAGES TIPS, ETC. BOX 1 OF W-2 BOX 3 OF W-2 BOX 5 OF W-2 BOX 17 OF W-2 GROSS PAY 49,464,101.85 49,464,101.85 49,464,101.85 REPORTED W-2 WAGES 49,464,101.85 0.00 49,464,101.85 3. EMPLOYEE W-4 PROFILE. TO CHANGE YOUR EMPLOYEE W-4 PROFILE INFORMATION, FILE A NEW W-4 WITH YOUR PAYROLL DEPT. --------------------------------------------------------------------------------------------------------------------------------- L. DENNIS KOZLOWSKI SOCIAL SECURITY NUMBER: ###-##-#### ONE TOWN CENTER ROAD TAXABLE MARITAL STATUS: SINGLE BOCA RATON,FL 33486 EXEMPTIONS/ALLOWANCES: FEDERAL: 0 STATE: NO STATE INCOME TAX (C) 2000 AUTOMATIC DATA PROCESSING INC.
- ------------------------------------------------------------------------ 1 WAGES, TIPS, OTHER COMP. 2 FEDERAL INCOME TAX WITHHELD 49464101.85 17675172.37 - ------------------------------------------------------------------------ 3 SOCIAL SECURITY WAGES 4 SOCIAL SECURITY TAX WITHHELD - ------------------------------------------------------------------------ 5 MEDICARE WAGES AND TIPS 6 MEDICARE TAX WITHHELD 49464101.85 717229.47 - ------------------------------------------------------------------------ A CONTROL NUMBER DEPT. CORP. EMPLOYER USE ONLY 073007 8J- T 60 - ------------------------------------------------------------------------ C EMPLOYER'S NAME, ADDRESS, AND ZIP CODE TME MANAGEMENT CORP 1 TOWN CENTER RD BOCA RATON FL 33486 - ------------------------------------------------------------------------ B EMPLOYER'S FED ID NUMBER D EMPLOYEE'S SSA NUMBER 02-0493878 ###-##-#### - ------------------------------------------------------------------------ 7 SOCIAL SECURITY TIPS 8 ALLOCATED TIPS - ------------------------------------------------------------------------ 9 ADVANCE EIC PAYMENT 10 DEPENDENT CARE BENEFITS - ------------------------------------------------------------------------ 11 NONQUALIFIED PLANS 12 BENEFITS INCLUDED IN BOX 1 113822.39 - ------------------------------------------------------------------------ 13 SEE INSTRS. FOR BOX 13 14 OTHER 49464101.85 TXREL - ------------------------------------------------------------------------ 15 STRT CMP. DECREASED PENSION PLAN LEGAL REP. DEFERRED COMP. X - ------------------------------------------------------------------------ C/O EMPLOYEE'S NAME, ADDRESS AND ZIP CODE L. DENNIS KOZLOWSKI ONE TOWN CENTER ROAD BOCA RATON,FL 33486 - ------------------------------------------------------------------------ 16 STATE EMPLOYER'S STATE ID NO. 17 STATE WAGES, TIPS, ETC. - ------------------------------------------------------------------------ 18 STATE INCOME TAX 19 LOCALITY NAME - ------------------------------------------------------------------------ 20 LOCAL WAGES, TIPS, ETC. 21 LOCAL INCOME TAX - ------------------------------------------------------------------------ F E D E R A L F I L I N G C O P Y W A G E A N D T A X W-2 S T A T E M E N T 2000 CMB NO. 1545-0000 COPY B TO BE FILED WITH EMPLOYEE'S FEDERAL INCOME TAX RETURN - ------------------------------------------------------------------------
- ------------------------------------------------------------------------ 1 WAGES, TIPS, OTHER COMP. 2 FEDERAL INCOME TAX WITHHELD 49464101.85 17675172.37 - ------------------------------------------------------------------------ 3 SOCIAL SECURITY WAGES 4 SOCIAL SECURITY TAX WITHHELD - ------------------------------------------------------------------------ 5 MEDICARE WAGES AND TIPS 6 MEDICARE TAX WITHHELD 49464101.85 717229.47 - ------------------------------------------------------------------------ A CONTROL NUMBER DEPT. CORP. EMPLOYER USE ONLY 073007 8J- T 60 - ------------------------------------------------------------------------ C EMPLOYER'S NAME, ADDRESS, AND ZIP CODE TME MANAGEMENT CORP 1 TOWN CENTER RD BOCA RATON FL 33486 BATCH #01463 - ------------------------------------------------------------------------ B EMPLOYER'S FED ID NUMBER D EMPLOYEE'S SSA NUMBER 02-0493878 ###-##-#### - ------------------------------------------------------------------------ 7 SOCIAL SECURITY TIPS 8 ALLOCATED TIPS - ------------------------------------------------------------------------ 9 ADVANCE EIC PAYMENT 10 DEPENDENT CARE BENEFITS - ------------------------------------------------------------------------ 11 NONQUALIFIED PLANS 12 BENEFITS INCLUDED IN BOX 1 113822.39 - ------------------------------------------------------------------------ 13 14 OTHER 49464101.85 TXREL - ------------------------------------------------------------------------ 15 STRT CMP. DECREASED PENSION PLAN LEGAL REP. DEFERRED COMP. X - ------------------------------------------------------------------------ C/O EMPLOYEE'S NAME, ADDRESS AND ZIP CODE L. DENNIS KOZLOWSKI ONE TOWN CENTER ROAD BOCA RATON,FL 33486 - ------------------------------------------------------------------------ 16 STATE EMPLOYEE'S STATE ID NO. 17 STATE WAGES, TIPS, ETC. FL - ------------------------------------------------------------------------ 18 STATE INCOME TAX 19 LOCALITY NAME - ------------------------------------------------------------------------ 20 LOCAL WAGES, TIPS, ETC. 21 LOCAL INCOME TAX - ------------------------------------------------------------------------ F L . S T A T E R E F E R E N C E C O P Y W A G E A N D T A X W-2 S T A T E M E N T 2000 CMB NO. 1545-0000 COPY 2 TO BE FILED WITH EMPLOYEE'S STATE INCOME TAX REFUND - ------------------------------------------------------------------------
- ------------------------------------------------------------------------ 1 WAGES, TIPS, OTHER COMP. 2 FEDERAL INCOME TAX WITHHELD 49464101.85 17675172.37 - ------------------------------------------------------------------------ 3 SOCIAL SECURITY WAGES 4 SOCIAL SECURITY TAX WITHHELD - ------------------------------------------------------------------------ 5 MEDICARE WAGES AND TIPS 6 MEDICARE TAX WITHHELD 49464101.85 717229.47 - ------------------------------------------------------------------------ A CONTROL NUMBER DEPT. CORP. EMPLOYER USE ONLY 073007 8J- T 60 - ------------------------------------------------------------------------ C EMPLOYER'S NAME, ADDRESS, AND ZIP CODE TME MANAGEMENT CORP 1 TOWN CENTER RD BOCA RATON FL 33486 BATCH #01463 - ------------------------------------------------------------------------ B EMPLOYER'S FED ID NUMBER D EMPLOYEE'S SSA NUMBER 02-0493878 ###-##-#### - ------------------------------------------------------------------------ 7 SOCIAL SECURITY TIPS 8 ALLOCATED TIPS - ------------------------------------------------------------------------ 9 ADVANCE EIC PAYMENT 10 DEPENDENT CARE BENEFITS - ------------------------------------------------------------------------ 11 NONQUALIFIED PLANS 12 BENEFITS INCLUDED IN BOX 1 113822.39 - ------------------------------------------------------------------------ 13 SEE INSTRS. FOR BOX 13 14 OTHER 49464101.85 TXREL - ------------------------------------------------------------------------ 15 STRT CMP. DECREASED PENSION PLAN LEGAL REP. DEFERRED COMP. X X - ------------------------------------------------------------------------ C/O EMPLOYEE'S NAME, ADDRESS AND ZIP CODE L. DENNIS KOZLOWSKI ONE TOWN CENTER ROAD BOCA RATON,FL 33486 TY-CR 0000416 - ------------------------------------------------------------------------ 16 STATE EMPLOYEE'S STATE ID NO. 17 STATE WAGES, TIPS, ETC. FL - ------------------------------------------------------------------------ 18 STATE INCOME TAX 19 LOCALITY NAME - ------------------------------------------------------------------------ 20 LOCAL WAGES, TIPS, ETC. 21 LOCAL INCOME TAX - ------------------------------------------------------------------------ F L . S T A T E F I L I N G C O P Y W A G E A N D T A X W-2 S T A T E M E N T 2000 CMB NO. 1545-0000 COPY 2 TO BE FILED WITH EMPLOYEE'S STATE INCOME TAX REFUND - ------------------------------------------------------------------------
TY-XX 0400047 CONFIDENTIAL GRAND JURY MATERIAL 99.8-146
PAGE 1 - ------------------------------------------------------------------------ 1 WAGES, TIPS, OTHER COMP. 2 FEDERAL INCOME TAX WITHHELD 98740.38 19151.41 - ------------------------------------------------------------------------ 3 SOCIAL SECURITY WAGES 4 SOCIAL SECURITY TAX WITHHELD 76200.00 4724.40 - ------------------------------------------------------------------------ 5 MEDICARE WAGES AND TIPS 6 MEDICARE TAX WITHHELD 98740.38 1431.74 - ------------------------------------------------------------------------ A CONTROL NUMBER DEPT. CORP. EMPLOYER USE ONLY 073006 8JX 851 A 52 - ------------------------------------------------------------------------ C EMPLOYER'S NAME, ADDRESS, AND ZIP CODE TYCOM MANAGEMENT INC 1 TOWN CENTER RD BOCA RATON FL 33486 BATCH #01315 - ------------------------------------------------------------------------ B EMPLOYER'S FED ID NUMBER D EMPLOYEE'S SSA NUMBER 65-1000313 ###-##-#### - ------------------------------------------------------------------------ 7 SOCIAL SECURITY TIPS 8 ALLOCATED TIPS - ------------------------------------------------------------------------ 9 ADVANCE EIC PAYMENT 10 DEPENDENT CARE BENEFITS - ------------------------------------------------------------------------ 11 NONQUALIFIED PLANS 12 BENEFITS INCLUDED IN BOX 1 - ------------------------------------------------------------------------ 13 SEE INSTRS. FOR BOX 13 14 OTHER - ------------------------------------------------------------------------ 15 STRT CMP. DECREASED PENSION PLAN LEGAL REP. DEFERRED COMP. - ------------------------------------------------------------------------ C/O EMPLOYEE'S NAME, ADDRESS AND ZIP CODE L. DENNIS KOZLOWSKI ONE TOWN CENTER BOCA RATON,FL 33486 - ------------------------------------------------------------------------ 16 STATE EMPLOYER'S STATE ID NO. 17 STATE WAGES, TIPS, ETC. - ------------------------------------------------------------------------ 18 STATE INCOME TAX 19 LOCALITY NAME - ------------------------------------------------------------------------ 20 LOCAL WAGES, TIPS, ETC. 21 LOCAL INCOME TAX - ------------------------------------------------------------------------ E M P L O Y E E R E F E R E N C E C O P Y W A G E A N D T A X W-2 S T A T E M E N T 2000 CMB NO. 1545-0000 COPY C FOR EMPLOYEE'S RECORDS - ------------------------------------------------------------------------
THIS BLUE EARNINGS SUMMARY SECTION IS INCLUDED WITH YOUR W-2 TO HELP DESCRIBE PORTIONS IN MORE DETAIL. THE REVERSE SIDE INCLUDES GENERAL INFORMATION THAT YOU MAY ALSO FIND HELPFUL.
1. THE FOLLOWING INFORMATION REFLECTS YOUR FINAL 2000 PAY STUB PLUS ANY ADJUSTMENTS SUBMITTED BY YOUR EMPLOYER. --------------------------------------------------------------------------------------------------------------------------------- GROSS PAY 98740.38 SOCIAL SECURITY 4724.40 FL. STATE INCOME TAX TAX WITHHELD BOX 18 OF W-2 BOX 4 OF W-2 LOCAL INCOME TAX BOX 21 OF W-2 FED INCOME 19151.41 MEDICARE TAX 1431.74 TAX WITHHELD WITHHELD SUI/SDI BOX 2 OF W-2 BOX 6 OF W-2 BOX 14 OF W-2 2. YOUR GROSS PAY WAS ADJUSTED AS FOLLOWS TO PRODUCE YOUR W-2 STATEMENT. --------------------------------------------------------------------------------------------------------------------------------- WAGES, TIPS, OTHER SOCIAL SECURITY MEDICARE COMPENSATION WAGES WAGES BOX 1 OF W-2 BOX 3 OF W-2 BOX 5 OF W-2 GROSS PAY 98,740.38 98,740.38 98,740.38 WAGES OVER LIMIT N/A 22,540.35 N/A REPORTED W-2 WAGES 98,740.38 76,200.00 98,740.38 3. EMPLOYEE W-4 PROFILE. TO CHANGE YOUR EMPLOYEE W-4 PROFILE INFORMATION, FILE A NEW W-4 WITH YOUR PAYROLL DEPT. --------------------------------------------------------------------------------------------------------------------------------- L. DENNIS KOZLOWSKI SOCIAL SECURITY NUMBER: ###-##-#### ONE TOWN CENTER ROAD TAXABLE MARITAL STATUS: SINGLE BOCA RATON,FL 33486 EXEMPTIONS/ALLOWANCES: FEDERAL: 0 TAX BLOCKED (C) 2000 AUTOMATIC DATA PROCESSING INC.
- ------------------------------------------------------------------------ 1 WAGES, TIPS, OTHER COMP. 2 FEDERAL INCOME TAX WITHHELD 98740.38 19151.41 - ------------------------------------------------------------------------ 3 SOCIAL SECURITY WAGES 4 SOCIAL SECURITY TAX WITHHELD 76200.00 4724.40 - ------------------------------------------------------------------------ 5 MEDICARE WAGES AND TIPS 6 MEDICARE TAX WITHHELD 98740.38 1431.74 - ------------------------------------------------------------------------ A CONTROL NUMBER DEPT. CORP. EMPLOYER USE ONLY 073006 8JX 851 A 52 - ------------------------------------------------------------------------ C EMPLOYER'S NAME, ADDRESS, AND ZIP CODE TYCOM MANAGEMENT INC 1 TOWN CENTER RD BOCA RATON FL 33486 - ------------------------------------------------------------------------ B EMPLOYER'S FED ID NUMBER D EMPLOYEE'S SSA NUMBER 65-1000313 ###-##-#### - ------------------------------------------------------------------------ 7 SOCIAL SECURITY TIPS 8 ALLOCATED TIPS - ------------------------------------------------------------------------ 9 ADVANCE EIC PAYMENT 10 DEPENDENT CARE BENEFITS - ------------------------------------------------------------------------ 11 NONQUALIFIED PLANS 12 BENEFITS INCLUDED IN BOX 1 - ------------------------------------------------------------------------ 13 SEE INSTRS. FOR BOX 13 14 OTHER - ------------------------------------------------------------------------ 15 STRT CMP. DECREASED PENSION PLAN LEGAL REP. DEFERRED COMP. - ------------------------------------------------------------------------ C/O EMPLOYEE'S NAME, ADDRESS AND ZIP CODE L. DENNIS KOZLOWSKI ONE TOWN CENTER ROAD BOCA RATON,FL 33486 - ------------------------------------------------------------------------ 16 STATE EMPLOYEE'S STATE ID NO. 17 STATE WAGES, TIPS, ETC. - ------------------------------------------------------------------------ 18 STATE INCOME TAX 19 LOCALITY NAME - ------------------------------------------------------------------------ 20 LOCAL WAGES, TIPS, ETC. 21 LOCAL INCOME TAX - ------------------------------------------------------------------------ F E D E R A L F I L I N G C O P Y W A G E A N D T A X W-2 S T A T E M E N T 2000 CMB NO. 1545-0000 COPY B TO BE FILED WITH EMPLOYEE'S FEDERAL INCOME TAX RETURN - ------------------------------------------------------------------------
- ------------------------------------------------------------------------ 1 WAGES, TIPS, OTHER COMP. 2 FEDERAL INCOME TAX WITHHELD 98740.38 19151.41 - ------------------------------------------------------------------------ 3 SOCIAL SECURITY WAGES 4 SOCIAL SECURITY TAX WITHHELD 76200.00 4724.40 - ------------------------------------------------------------------------ 5 MEDICARE WAGES AND TIPS 6 MEDICARE TAX WITHHELD 98740.38 1431.74 - ------------------------------------------------------------------------ A CONTROL NUMBER DEPT. CORP. EMPLOYER USE ONLY 073006 8JX 851 A 52 - ------------------------------------------------------------------------ C EMPLOYER'S NAME, ADDRESS, AND ZIP CODE TYCOM MANAGEMENT INC 1 TOWN CENTER RD BOCA RATON FL 33486 BATCH #01463 - ------------------------------------------------------------------------ B EMPLOYER'S FED ID NUMBER D EMPLOYEE'S SSA NUMBER 65-1000313 ###-##-#### - ------------------------------------------------------------------------ 7 SOCIAL SECURITY TIPS 8 ALLOCATED TIPS - ------------------------------------------------------------------------ 9 ADVANCE EIC PAYMENT 10 DEPENDENT CARE BENEFITS - ------------------------------------------------------------------------ 11 NONQUALIFIED PLANS 12 BENEFITS INCLUDED IN BOX 1 - ------------------------------------------------------------------------ 13 14 OTHER - ------------------------------------------------------------------------ 15 STRT CMP. DECREASED PENSION PLAN LEGAL REP. DEFERRED COMP. - ------------------------------------------------------------------------ C/O EMPLOYEE'S NAME, ADDRESS AND ZIP CODE L. DENNIS KOZLOWSKI ONE TOWN CENTER ROAD BOCA RATON,FL 33486 - ------------------------------------------------------------------------ 16 STATE EMPLOYEE'S STATE ID NO. 17 STATE WAGES, TIPS, ETC. - ------------------------------------------------------------------------ 18 STATE INCOME TAX 19 LOCALITY NAME - ------------------------------------------------------------------------ 20 LOCAL WAGES, TIPS, ETC. 21 LOCAL INCOME TAX - ------------------------------------------------------------------------ S T A T E R E F E R E N C E C O P Y W A G E A N D T A X W-2 S T A T E M E N T 2000 CMB NO. 1545-0000 COPY 2 TO BE FILED WITH EMPLOYEE'S STATE INCOME TAX RETURN - ------------------------------------------------------------------------
- ------------------------------------------------------------------------ 1 WAGES, TIPS, OTHER COMP. 2 FEDERAL INCOME TAX WITHHELD 98740.38 19151.41 - ------------------------------------------------------------------------ 3 SOCIAL SECURITY WAGES 4 SOCIAL SECURITY TAX WITHHELD 76200.00 4724.40 - ------------------------------------------------------------------------ 5 MEDICARE WAGES AND TIPS 6 MEDICARE TAX WITHHELD 98740.38 1431.74 - ------------------------------------------------------------------------ A CONTROL NUMBER DEPT. CORP. EMPLOYER USE ONLY 073006 8JX 851 A 52 - ------------------------------------------------------------------------ C EMPLOYER'S NAME, ADDRESS, AND ZIP CODE TYCOM MANAGEMENT INC 1 TOWN CENTER RD BOCA RATON FL 33486 BATCH #01463 - ------------------------------------------------------------------------ B EMPLOYER'S FED ID NUMBER D EMPLOYEE'S SSA NUMBER 65-1000313 ###-##-#### - ------------------------------------------------------------------------ 7 SOCIAL SECURITY TIPS 8 ALLOCATED TIPS - ------------------------------------------------------------------------ 9 ADVANCE EIC PAYMENT 10 DEPENDENT CARE BENEFITS - ------------------------------------------------------------------------ 11 NONQUALIFIED PLANS 12 BENEFITS INCLUDED IN BOX 1 - ------------------------------------------------------------------------ 13 14 OTHER - ------------------------------------------------------------------------ 15 STRT CMP. DECREASED PENSION PLAN LEGAL REP. DEFERRED COMP. - ------------------------------------------------------------------------ C/O EMPLOYEE'S NAME, ADDRESS AND ZIP CODE L. DENNIS KOZLOWSKI ONE TOWN CENTER ROAD BOCA RATON,FL 33486 TY-CR 0000413 - ------------------------------------------------------------------------ 16 STATE EMPLOYEE'S STATE ID NO. 17 STATE WAGES, TIPS, ETC. - ------------------------------------------------------------------------ 18 STATE INCOME TAX 19 LOCALITY NAME - ------------------------------------------------------------------------ 20 LOCAL WAGES, TIPS, ETC. 21 LOCAL INCOME TAX - ------------------------------------------------------------------------ C I T Y O R L O C A L R E F E R E N C E C O P Y W A G E A N D T A X W-2 S T A T E M E N T 2000 CMB NO. 1545-0000 COPY 2 TO BE FILED WITH EMPLOYEE'S CITY OR LOCAL INCOME TAX RETURN - ------------------------------------------------------------------------
TY-XX 0400048 CONFIDENTIAL GRAND JURY MATERIAL 99.8-147 EXHIBIT 21 99.8-148 TYCO INTERNATIONAL LTD. COMPENSATION COMMITTEE MEETING January 22, 2001 A meeting of the Compensation Committee of the Board of Directors of Tyco International Ltd. was held on January 22, 2001. Present: P. M. Hampton, Chairman S. W. Foss W. P. Slusser J. S. Pasman, Jr. In Attendance: L. Dennis Kozlowski Mark H. Swartz Patricia Prue 1. EXECUTIVE RETENTION AGREEMENTS Mr. Hampton presented summaries of key points of executive retention agreements for L. Dennis Kozlowski and Mark H. Swartz, which each Committee member had received prior to the meeting and which include specified equity awards. After discussion, all members of the Committee voted to approve the retention agreements and passed the following resolutions: RESOLVED, that the executive retention agreements for L. Dennis Kozlowski and Mark H. Swartz, summaries of which are presented in Exhibit A, are hereby approved; and further RESOLVED, that the Committee award to L. Dennis Kozlowski 800,000 shares of common stock of the Company, with vesting of 100,000 shares each year on the anniversary of the grant date and with such other terms as are contained in Mr. Kozlowski's retention agreement; and further RESOLVED, that the Committee award to Mark H. Swartz 500,000 shares of common stock of the Company, with 100% vesting on the fifth anniversary of the grant date and with such other terms as are contained in Mr. Swartz's retention agreement; and further RESOLVED, that the appropriate officers of the Company are, and each of them hereby is, authorized and directed to take or cause to be taken all such further actions in order to carry into effect the foregoing resolutions. Mr. Hampton requested that Ms. Prue employ independent outside counsel to draft the agreements and present them for review at the Committee's next meeting. 2. FISCAL YEAR 2001 UPDATE Next Mr. Swartz led a discussion on Tyco's financial performance detailing specifically current forecast for pre-tax income, operating cash flow and earnings per share. Mr. Swartz further detailed each of the operating division's performance. Current forecasted performance results and correlating compensation is shown on Exhibit B. 99.8-149 All Committee members concurred that holding quarterly meetings, whether in the format of a formal meeting or an informal discussion session, to review forecasted performance is a good process to continue. 3. TYCOM SUPPLEMENTAL BONUS PLAN AND EQUITY AWARD Mr. Swartz and Mr. Kozlowski discussed that TyCom's financial targets and critical projects are on schedule. Mr. Kozlowski discussed the rational for the extra incentive compensation for TyCom's management team with regards to the completion of the TyCom Global Network - Atlantic link, as well as recording some capacity sales by the end of the third quarter of fiscal 2001. The Committee members ratified the additional TyCom cash bonus and options (detailed in Exhibit C) that were approved by the TyCom Compensation Committee on January 10, 2001, as follows: RESOLVED, that the Committee hereby approves and ratifies the additional incentive plan and Tyco stock option awards approved by the TyCom Compensation Committee on January 10, 2001 for senior members of the TyCom management team, as outlined on Exhibit C; and further RESOLVED, that the appropriate officers of the Company are, and each of them hereby is, authorized and directed to take or cause to be taken all such further actions in order to carry into effect the foregoing resolutions. There being no further business, the discussion session was adjourned. /s/ Philip M. Hampton -------------------------------- Philip M. Hampton, Chairman, Compensation Committee 99.8-150 EXHIBIT A EXECUTIVE AGREEMENT FOR L. DENNIS KOZLOWSKI The Purpose of this Executive Retention Agreement is to ensure the continued leadership by Tyco's CEO until retirement and solidify his commitment towards succession planning. PROVIDE ONGOING COMPENSATION & BENEFITS FOR THREE YEARS FOLLOWING AGE 62 WITH THE ABILITY TO TRIGGER PRIOR TO AGE 62. THIS INCLUDES: *Salary & Proxy Bonus *The continuation of all applicable benefits such as welfare, relocation, perquisites including New York city gross-up for state and city taxes. ADDITIONAL RETENTION BENEFITS AND EQUITY AWARD Lifetime welfare benefits and access to Company facilities and services comparable to those provided while CEO. *Financial planning (tax, accounting, and legal) *Use of Company plane, car and services *Office, secretarial and administrative support Equity Retention Plan 800,000 Shares which vest pro-rata through age 62 AGREEMENT PROVISIONS Executive shall provide the Company with annual consulting services of at least a minimum of 30 days per year as a condition of receiving pay and benefits described above. Executive will provide a viable "successor nomination" for Board consideration. Change of Control provision, which includes the vesting of Share Grant and all benefits described in the Executive Agreement. Upon early retirement, provided a successor is named and with Board consent, Executive will receive all benefits described in the Executive Agreement including accelerated vesting of the Share Grant. If Executive terminates employment due to permanent disability at any time, Executive will receive all benefits described in the Executive Agreement including accelerated vesting of the Share Grant. Upon Executive's death, if Executive has a surviving spouse or domestic partner who is covered by company health benefits, she will be eligible to continue to receive health benefits, as provided prior to the Executive's death. Non-compete, non-solicitation, non-disparagement (mutual) provision. 99.8-151 EXECUTIVE AGREEMENT FOR MARK SWARTZ The Purpose of this Executive Retention Agreement is to ensure the continued leadership by Tyco's CFO for a five year period. EQUITY RETENTION GRANT Grant 500,000 Restricted Shares Vesting Schedule: Vest 100% after five years CHANGE IN CONTROL OR CHANGE IN REPORTING RELATIONSHIP BENEFITS Provide ongoing Compensation & Benefits for three years following a CC or CRR. This includes: *Salary & Proxy Bonus *The continuation of all applicable benefits such as welfare, relocation, perquisites including New York city gross-up for state and city taxes. *Access to Company facilities and services comparable to those provided while CFO *Financial planning (tax, accounting, and legal) *Use of Company plane, car and services *0ffice, secretarial and administrative support AGREEMENT PROVISIONS Change of Control provision, which includes for the vesting of Share Grant and all benefits described in the Executive Agreement. Change in Reporting Relationship provision, which includes the vesting of Share Grant and all benefits, described in the Agreement provided Executive continues in his role as CFO for at least one year following a change in the Reporting Relationship. Executive shall provide the Company with annual consulting services of at least a minimum of 30 days per year for three years following his termination as a condition of receiving pay and benefits described above. At the end of the three year period following a CC or CRR, Executive shall have the ability to purchase from the company the benefits described above. If Executive terminates employment due to permanent disability at any time, Executive will receive all benefits described in the Executive Agreement including accelerated vesting of the Share Grant. Upon Executive's death, if Executive has a surviving spouse or domestic partner who is covered by company health benefits, she will be eligible to continue to receive health benefits, as provided prior to the Executive's death. Non-compete, non-solicitation, non-disparagement (mutual) provision. 99.8-152 EXHIBIT B FY 2001 EXECUTIVE BONUS PLAN (DECEMBER FORECAST)
MEASUREMENT L. D. KOZLOWSKI M. H. SWARTZ - ------------------------------------------------------------------------ Pre-Tax Income 6.634 (B) $ 9,076,000 $ 4,538,000 Operating Cash Flow 5.944 (B) $ 1,419,000 $ 709,500 Earnings Per Share $ 2.70 304,000 shares 152,000 shares - ------------------------------------------------------------------------
FY 2001 OPERATING PRESIDENTS' BONUS PLANS (DECEMBER FORECAST WITH ACQUISITIONS THROUGH 12/15/00)
EBIT ($B) CASH BONUS SHARE BONUS - ---------------------------------------------------------------- Juergen Gromer 3.279 $ 3,992,032 59,920 - ---------------------------------------------------------------- Rich Meelia 1.488 $ 538,384 19,849 - ---------------------------------------------------------------- Jerry Boggess 1.100 $ 608,636 18,091 - ---------------------------------------------------------------- Steve McDonough 1.073 $ 1,178,344 23,439 - ---------------------------------------------------------------- Neil Garvey* .550 $ 1,000,000 10,000 (TyCom) - ----------------------------------------------------------------
*Excludes special incentive bonus based on completion of TGN - Atlantic by end of Q3. 99.8-153 EXHIBIT C TYCOM LTD. FISCAL YEAR 2001 - SUPPLEMENTAL PERFORMANCE BONUS AND EXECUTIVE EQUITY AWARDS It is critical to the continued success of the company to have Phase I of the network completed with TGN - Atlantic "lit" and with capacity sales recognized in fiscal Q3. As an extra incentive, the TyCom Compensation Committee approved special compensation for senior executives of TyCom with oversight and responsibility for completion of the project.
EXECUTIVE CASH BONUS TYCO STOCK OPTIONS* - ---------------- ------------- ------------------- Neil Garvey $ 3.0 Million 200,000 Claire Calandra $ 1.8 Million 100,000 Peter Runge $ 1.5 Million 90,000 David Van Rossum $ 1.5 Million 90,000 William Jackson $1.05 Million 90,000
Cash will be earned at the end of Q3 if TyCom Global Network - Atlantic is "lit" and capacity sales have been recognized by the end of Q3. Option grant date is January 10, 2001, with cliff vesting on the third anniversary of the grant date or, if earlier, upon a "change in control". *USE OF TYCO OPTIONS TO HIGHLIGHT HOW THE VALUE OF TYCO IS TIED IN WITH THE VALUE OF TYCOM. 99.8-154 EXHIBIT 22 99.8-155 TYCO INTERNATIONAL LTD. MINUTES OF THE COMPENSATION COMMITTEE MEETING October 1, 2001 A meeting of the Compensation Committee of the Board of Directors of Tyco International Ltd. that was held in Montreal, Canada on October 1, 2001. Present: S. W. Foss, Chairman W. P. Slusser J. S. Pasman, Jr. In Attendance: Patricia Prue ADOPTION OF RESOLUTIONS The Compensation Committee reviewed then adopted the resolutions that it had discussed and recommended at the Committee's discussion session held on September 19, 2001, a copy of which are attached hereto and which contain Exhibits A, B, C and D. EXECUTIVE MATTERS The Committee acknowledged that Messrs. Kozlowski and Swartz declined the TyCom stock option grants and the Tyco retention shares granted during fiscal 2001, however the Committee feels it is necessary to make long-term incentive compensation awards to Messrs. Kozlowski and Swartz. After discussion, the Committee passed the following resolutions: RESOLVED, that, the Committee hereby award to L. Dennis Kozlowski and Mark H. Swartz grants of 800,000 and 500,000 shares of restricted stock, respectively, with a grant date of January 22, 2002, with vesting as described in to the amendment each of their retention agreements, and with the terms and conditions as described in each of their retention agreements; and further RESOLVED, that for the purpose of exempting the transaction under Rule 16b-3(e), the disposition by Messrs. Kozlowski or Swartz of any restricted shares, share bonus, and/or shares acquired upon option exercise to the company at the fair market value on the date of the sale is approved; and further RESOLVED, that the appropriate officers of the Company are, and each of them hereby is, authorized and directed to take or cause to be taken all such further actions in order to carry into effect the foregoing resolutions. BOARD UPDATE Following the meeting, Mr. Foss informed the Board of the adjustment made to the remuneration package for Board members for FY 2002. Mr. Foss then informed the Board that, subject to verification by the year-end financial audit, the Compensation Committee ratified the FY 2001 incentive compensation payments to executive management and that the proposed FY 2002 compensation plans, including the proposed stock option and equity grants to senior management, were approved by the Committee. The Board approved a resolution adopting the recommended remuneration package for the Board. /s/ Stephen Foss -------------------------------- Stephen Foss Chairman, Compensation Committee 99.8-156 COMPENSATION COMMITTEE RESOLUTIONS ADOPTED OCTOBER 1, 2001 BOARD REMUNERATION RESOLVED, that the Committee hereby approve the increase in the cash remuneration for fiscal year 2002 to $80,000 for non-employee directors of Tyco International Ltd, as shown on Exhibit A; and further RESOLVED, that the Committee hereby approve the increase in the stock option award for non-employee directors for fiscal year 2002 to options to purchase 20,000 common shares of Tyco, as shown on Exhibit A; and further RESOLVED, that the appropriate officers of the Company be, and each of them hereby is, authorized and directed to take or cause to be taken all such further actions in order to carry into effect the foregoing resolutions. FY 2001 INCENTIVE PLAN PROJECTED PAYMENTS RESOLVED, that, subject to verification by the year-end financial audit, the Committee hereby certify that performance measurements as set forth on Exhibit B were achieved for the fiscal year ending September 30, 2001 ("FY 01"); and further RESOLVED, that the Committee award cash bonuses to the executives listed below in recognition of their satisfaction of the performance goals established for fiscal year 2001: L. Dennis Kozlowski: $4,000,000; Mark H. Swartz: $2,000,000; Jerry Boggess: $6,078,510; Albert Gamper: $2,002,040; Neil Garvey: $3,000,000; Juergen Gromer: $1,750,000; Richard Meelia: $7,553,350; Robert Mead: $1,500,000; and Steve McDonough: $1,000,000; and further RESOLVED, that, the Committee hereby certify that shares of stock for the executives listed below vested on June 20, 2001 in conjunction with the gain on the sale of TyCom shares: L. Dennis Kozlowski: 262,935; and Mark H. Swartz: 131,467. RESOLVED, that, on October 1, 2001, the Committee hereby award share bonuses and/or vest shares of restricted stock of Tyco International Ltd. for the executives listed below in accordance with the satisfaction of the performance goals established for FY 01: L. Dennis Kozlowski: 189,065; Mark H. Swartz: 94,533 restricted shares to vest and a stock bonus of 11,186 shares; Jerry Boggess: 41,796; Albert Gamper: 25,020; Richard Meelia: 96,970; Robert Mead: 20,000; and Steve McDonough: 11,403; and further RESOLVED, that, contingent upon the successful integration of C1T, L. Dennis Kozlowski and Mark H. Swartz shall vest in 194,935 and 97,467 shares, respectively, on January 1, 2002; and further RESOLVED, that Juergen Gromer shall vest in 35,000 shares on January 30, 2002, provided Mr. Gromer remains an employee of the Company on such date; and further 99.8-157 RESOLVED, that, in recognition for his effectively managing a significant cost reduction program for his business, Dr. Gromer shall receive a special nonrecurring bonus of $4 million, to be paid on November 30, 2001; and further RESOLVED, that for the purpose of exempting the transaction under Rule 16b-3(e), the disposition of shares awarded to executive officers may be made to the Company (or any subsidiary thereof) pursuant to procedures previously established for sales by executive officers at the fair market value on the sale date; and further RESOLVED, that the appropriate officers of the Company be and they hereby are authorized to take such action as they deem necessary or desirable to carry out the intent of the foregoing resolutions. EXECUTIVE BENEFIT PLANS RESOLVED, that in recognition of Mr. Kozlowski's contributions to the financial success of the Company, $26,719,552 be and it hereby is authorized to be contributed to the Executive Life Insurance Policy for Mr. Kozlowski for fiscal year 2001, such amount to be funded in the rabbi trust set up for making premium payments to the insurance policy, and that funding in a similar amount be and it hereby is also approved for fiscal year 2002; and further RESOLVED, that in recognition of Mr. Swartz's contributions to the financial success of the Company, $13,600,342 be and it hereby is authorized to be contributed to the Executive Life Insurance Policy for Mr. Swartz for fiscal year 2001, such amount to be funded in the rabbi trust set up for making premium payments to the insurance policy, and that funding in a similar amount be and it hereby is also approved for fiscal year 2002; and further RESOLVED, that the appropriate officers of the Company be, and each of them hereby is, authorized and directed to take or cause to be taken all such further actions, and to execute and deliver or cause to be delivered all such further instruments and documents in the name and on behalf of the Company (where necessary, under the common seal of the Company) and to incur all such fees and expenses, all as in his or her judgment is deemed necessary or advisable in order to carry into effect each of the foregoing resolutions. 2001 COMPENSATION AND PROPOSED INCENTIVE PLANS RESOLVED, that effective October 1, 2001, the base salary of L. Dennis Kozlowski be and it hereby is increased to $1,770,000, the base salary of Mark H. Swartz be and it hereby is increased to $1,025,000, and the base salary for each Operating President be and it hereby is increased as presented in the meeting (shown on Exhibit C); and further RESOLVED, that the incentive plans for Fiscal Year 2002 as shown on Exhibit D (for L. Dennis Kozlowski and Mark H. Swartz) and Exhibit C (for Operating Presidents) be and they hereby are approved; and further RESOLVED, that as of October 1, 2001, L. Dennis Kozlowski and Mark H. Swartz be awarded 600,000 and 300,000 shares of restricted stock respectively as of the date of this 99.8-158 meeting, such shares to vest in accordance with performance criteria established under the annual incentive plans; and further RESOLVED, that as of October 1, 2001, L. Dennis Kozlowski and Mark H. Swartz be awarded options to purchase 3,000,000 and 1,500,000 shares of common stock respectively as of the date of this meeting, such options to vest one-third on each anniversary of the grant date; and further RESOLVED, that the stock option and restricted stock awards presented at the meeting and summarized on Exhibit C for the Operating Presidents be and they hereby are approved; and further RESOLVED, that the appropriate officers of the Company be and they hereby are authorized to take such actions as they deem necessary or desirable to carry out the intent of the foregoing resolutions, including the adjustment of the FY 2002 target levels to account for mergers and acquisitions as described therein. 99.8-159 EXHIBIT A TYCO BOARD OF DIRECTORS' COMPENSATION The Compensation Committee approved the following changes to the Tyco Board of Directors' compensation - - Effective September 19, 2001, the 10,000 TyCom options granted on July 12, 2001 to Directors were rescinded. - - Effective October 1, 2001, the Tyco Directors' Compensation will increase to $80,000 cash and 20,000 Tyco Stock Options. - Directors continue to have the choice of receiving remuneration in cash, converting it into additional options, purchasing shares under the Directors' Trust, or deferring fees under the Deferred Compensation Plan. - If directors choose to convert the full amount of cash to Tyco options, the number of options granted would be 4,660, based on a Black-Scholes value of $17.17. 99.8-160 EXHIBIT B CERTIFICATION OF FISCAL YEAR 2001 FINANCIAL RESULTS Tyco International Ltd. had the following results for the fiscal year October 1, 2000 - September 30, 2001 based on internal financial statements: EARNINGS PER SHARE $ 2.81 PRE-TAX INCOME $ 6,755,438 (BEFORE MINORITY INTEREST (NET OF TAX) OF $51.1M) NET INCOME GROWTH $ 5,200,284 (BEFORE MINORITY INTEREST OF $51.1M) OPERATING CASH FLOW $ 6,925,500 (EXCLUDES CIP FOR TGN AND CASH FLOW FOR TYCO CAPITAL) EBIT Tyco Electronics $ 2,792,144 ($2,856,891 W/FX ADJ.) Tyco Capital (Pre-Tax Income) $ 444,651 (AFTER MINORITY INTEREST) Tyco Fire & Security Services $ 1,306,587 ($1,347,l50 W/FX ADJ.) Tyco Flow Control $ 673,275 ($693,788 W/FX ADJ.) Tyco HealthCare Group $ 1,563,910 ($1,634,257 W/FX ADJ.) Tyco Plastics & Adhesives $ 300,579 ($302,105 W/FX ADJ.) TyCom Ltd. $ 406,758 (AFTER MINORITY INTEREST)
- ------------------------------------ Mark Swartz Chief Financial Officer Tyco International Ltd. - ------------------------------------ Mark Foley SVP, Finance Tyco International (US) Inc. 99.8-161 CERTIFICATION OF FISCAL YEAR 2001 BONUS PAYMENTS AND RESTRICTED STOCK/STOCK BONUS VESTING We certify that the bonus payments and restricted stock/stock bonus vesting listed below for Fiscal Year 2001 have been determined in accordance with the terms of the FY 2001 Bonus Plan and the internal financial statements for the fiscal year October 1, 2000 - September 30, 2001, the latter as certified by the Chief Financial Officer and the SVP, Finance.
NAME CASH BONUS RESTRICTED SHARES STOCK BONUS L. Dennis Kozlowski $ 4,000,000 539,000(l) Mark H. Swartz $ 2,000,000 269,500(2) 11,186 Jerry Boggess $ 6,078,510 41,796 Albert Gamper $ 2,002,040 25,020 Neil Garvey $ 3,000,000(3) Juergen Gromer(4) $ 1,750,000 Richard Meelia $ 7,553,350 96,970 Robert Mead $ 1,500,000 20,000 Steve McDonough $ 1,000,000 11,403
(1) INCLUDES 155,000 TYCOM RELATED SHARE VESTING AND 194,935 SHARES TO VEST 1/2/02 (2) INCLUDES 77,500 TYCOM RELATED SHARE VESTING AND 97,467 SHARES TO VEST 1/2/02 (3) BONUS FOR PHASE I OF TGN (4) BONUS PAID ON 4TH QTR EBIT; INCLUDES DISCRETIONARY BONUS; RECEIVED TIME-BASED RESTRICTED SHARES - ------------------------------------ Mark H. Swartz Chief Financial Officer Tyco International Ltd. - ------------------------------------ Mark Foley SVP, Finance Tyco International (US) Inc. - ------------------------------------ Patricia Prue SVP, Human Resources Tyco International (US) Inc. 99.8-162 EXHIBIT C PROPOSED FY 2002 COMPENSATION OPERATING PRESIDENTS SUMMARY
LEVEL 1 GROWTH OVER % SALARY SHARE FY01 SALARY INCREASE EBIT ($B)(1) BONUS BONUS OPTIONS(2) - ------------------------------------------------------------------------------------------------------------------------------- J 7.5% $ 650,000 8.3% 1,602,000 $ 325,000 10,000 400,000 - ------------------------------------------------------------------------------------------------------------------------------- A 7.0% $ 1,000,000 n/a 1,510,700 $ 500,000 0 400,000 - ------------------------------------------------------------------------------------------------------------------------------- N $ 577,500 5.0% TO BE DETERMINED 500,000 - ------------------------------------------------------------------------------------------------------------------------------- J Redacted -4.8% 1,545,906 GDM 5.4% 620,000 $ 150,000 4,000 400,000 $ (695,500) (Q1) - ------------------------------------------------------------------------------------------------------------------------------- S 7.6% $ 580,000 5.5% 372,000 $ 165,000 4,000 400,000 - ------------------------------------------------------------------------------------------------------------------------------- B 7.5% $ 550,000 9.1% 831,000 $ 250,000 4,000 400,000 - ------------------------------------------------------------------------------------------------------------------------------- R 7.5% $ 670,000 7.2% 1,844,000 $ 325,000 10,000 400,000 - ------------------------------------------------------------------------------------------------------------------------------- LEVEL 2 GROWTH OVER SHARE FY01(1) SALARY EBIT ($B) BONUS BONUS OPTIONS(2) - ----------------------------------------------------------------------------------------------------------------- J 10.1% $ 650,000 1,640,000 $ 1,250,000 20,000 400,000 - ----------------------------------------------------------------------------------------------------------------- A 15.0% $ 1,000,000 1,624,000 $ 3,000,000 10,000 400,000 - ----------------------------------------------------------------------------------------------------------------- N $ 577,500 TO BE DETERMINED 500,000 - ----------------------------------------------------------------------------------------------------------------- J Redacted -0.2% 1,545,906 GDM 650,000(Q1) $ 500,000 8,000 400,000 $ (695,500) - ----------------------------------------------------------------------------------------------------------------- S 9.9% $ 580,000 380,000 $ 400,000 10,000 400,000 - ----------------------------------------------------------------------------------------------------------------- B 11.8% $ 550,000 864,000 $ 925,000 20,000 400,000 - ----------------------------------------------------------------------------------------------------------------- R 11.9% $ 670,000 1,920,000 $ 1,250,000 25,000 400,000 - ----------------------------------------------------------------------------------------------------------------- LEVEL 3 GROWTH OVER SHARE FY01(1) SALARY EBIT ($B) BONUS BONUS OPTIONS(2) - ----------------------------------------------------------------------------------------------------------------- J 26.6% $ 650,000 1,886,000 $ 3,500,000 45,000 400,000 - ----------------------------------------------------------------------------------------------------------------- A 23.2% $ 1,000,000 1,740,000 $ 4,000,000 25,000 400,000 - ----------------------------------------------------------------------------------------------------------------- N $ 577,500 TO BE DETERMINED 500,000 - ----------------------------------------------------------------------------------------------------------------- J Redacted 9.8% 1,545,906 GDM 715,000(Q1) $ 1,000,000 12,000 400,000 $ (695,500) - ----------------------------------------------------------------------------------------------------------------- S 20.1% $ 580,000 415,000 $ 1,000,000 20,000 400,000 - ----------------------------------------------------------------------------------------------------------------- B 25.0% $ 550,000 966,000 $ 2,000,000 40,000 400,000 - ----------------------------------------------------------------------------------------------------------------- R 20.0% $ 670,000 2,059,000 $ 3,000,000 50,000 400,000 - ----------------------------------------------------------------------------------------------------------------- LEVEL 4 GROWTH OVER SHARE FY01(1) SALARY EBIT ($B) BONUS BONUS OPTIONS (2) - ----------------------------------------------------------------------------------------------------------------- R Redacted 28.6% $ 670,000 2,206,000 $ 4,000,000 90,000 400,000 - -----------------------------------------------------------------------------------------------------------------
(1) TYCO CAPITAL (GAMPER) BONUS IS BASED ON PRE-TAX INCOME TARGET. TYCO ELECTRONICS (GROMER) WILL HAVE QUARTERLY BONUS PLANS. (2) GAMPER RECEIVED 1.2 MILLION OPTIONS THAT VEST 1/3 OVER 3 YEARS ON 06/01/01; THE 400,000 SHOWN VEST ON 6/1/02; GARVEY RECEIVED 500,000 TYCOM OPTIONS ON 07/12/01; OTHERS - RECOMMENDED TYCO OPTIONS AS OF 10/01/01. 99.8-163 EXHIBIT D FISCAL YEAR 2001 & FISCAL YEAR 2002 COMPENSATION SUMMARY L. DENNIS KOZLOWSKI AND MARK H. SWARTZ FISCAL YEAR 2001
Net Income Growth Operating Cash Flow ------------------------------------- -------------------------------------- Total Base % over FY 00 Income ($M) Bonus(1) % over FY 00 Income ($M) Bonus(1) Cash Bonus ----------- ------------ ----------- ---------- ------------ ----------- ---------- ---------- L. Dennis Kozlowski $ 1,650,000 38.9% $5,200.30 $2,000,000 31.3% $6,925.50 $2,000,000 $4,000,000 [ILLEGIBLE] $ 775,000 38.9% $5,200.30 $1,000,000 31.3% $6,925.50 $1,000,000 $2,000,000 Redacted ------------------------------------- -------------------------------------- Earnings Per Share ------------------------------------- % over FY 00 EPS # Shares(1) ------------ ----- ----------- L. Dennis Kozlowski 28.9% $2.81 189,065 262,935(2) 194,935(3) [ILLEGIBLE] 28.9% $2.81 94,533 Redacted 131,467(2) 97,467(3) -------------------------------------
[ILLEGIBLE] also received a stock bonus of 11,186 shares, valued at $500,014. (1) THE COMPENSATION COMMITTEE USED ITS DISCRETION TO LOWER CASH BONUS AND SHARE AMOUNTS. (2) INCLUDES TYCOM AND TAX-RELATED VESTING ON 6/20/01 (3) SHARES TO VEST 1/1/02 UPON THE SUCCESSFUL INTEGRATION OF CIT (TYCO CAPITAL). ADDITIONAL FUNDING OF EXECUTIVE LIFE INSURANCE POLICIES WILL ALSO BE PROVIDED TO THE EXECUTIVES. FISCAL YEAR 2002 PLAN (ESTIMATE)
Net Income Growth Operating Cash Flow -------------------------------------- ------------------------------------ Total Base(4) % over FY 01 Income ($M) Bonus % over FY 01 Income ($M) Bonus Cash Bonus ----------- ------------ ----------- ----------- ------------- ----------- ---------- ------------ L. Dennis Kozlowski $ 1,770,000 15.0% 5,980.3 $ 0 7.5% 7,444.9 $ 0 $ 0 16.0% 6,034.2 $ 1,045,933 15.0% 7,964.3 $ 5,193,875 $ 6,239,808 20.0% 6,237.5 $ 5,040,235 20.0% 8,310.6 $ 8,656,875 $ 13,697,110 FY02 BUDGET 40.3% 7,298.5 $ 25,835,838 17.0% 8,086.0 $ 6,410,875 $ 32,246,713 -------------------------------------- ------------------------------------- Earnings Per Share ----------------------------------------------- % over FY 01 EPS # Shares ------------ --------------- -------- L. Dennis Kozlowski LESS THAN 19% LESS THAN $3.34 0 19.0% $3.34 379,000 25.0% $3.51 475,000 31.5% $3.70 579,000 ----------------------------------------------- Net Income Growth Operating Cash Flow -------------------------------------- ------------------------------------- Total Base(4) % over FY 01 Income ($M) Bonus % over FY 01 Income ($M) Bonus Cash Bonus ----------- ------------ ----------- ------------ ------------ ----------- ----------- ------------ [ILLEGIBLE] Redacted $ 1,025,000 15.0% 5,980.3 $ 0 7.5% 7,444.9 $ 0 $ 0 16.0% 6,034.2 $ 522,967 15.0% 7,964.3 $ 2,596,938 $ 3,119,904 20.0% 6,237.5 $ 2,520,118 20.0% 8,310.6 $ 4,328,438 $ 6,848,555 FY02 BUDGET 40.3% 7,298.5 $ 12,917,919 17.0% 8,086.0 $ 3,205,438 $ 16,123,357 -------------------------------------- ------------------------------------- Earnings Per Share ---------------------------------------------- % over FY 01 EPS # Shares ------------ --------------- -------- [ILLEGIBLE] Redacted LESS THAN 19% LESS THAN $3.34 0 19.0% $3.34 189,500 25.0% $3.51 237,500 31.5% $3.70 289,500 ---------------------------------------------- Recommended equity awards:- Perf Rest. Shares Tyco Stock Options ----------------- ------------------ LDK 600,000 3,000,000 M 300,000 1,500,000 Redacted
(4) Messrs. Kozlowski and Swartz will not receive Board fees. 99.8-164 RESOLVED, that, as of the end of the 2002 fiscal year, the Committee hereby award and/or vest common shares of Tyco International Ltd. for the executives listed below in accordance with the satisfaction of the performance goals established for the first quarter of fiscal year 2002, provided that each such award is subject to the executive being employed at the end of the fiscal year: Jerry Boggess: 5,625; Albert Gamper: 1,259; Neil Garvey: 403; Richard Meelia: 6,357; Robert Mead: 574; and Steve McDonough: 2,529; and further RESOLVED, that for the purpose of exempting the transaction under Rule 16b-3(e), the disposition by any Division President of any restricted shares or share bonus to the company at the fair market value on the date of the sale is approved; and further RESOLVED, that the appropriate officers of the Company be and they hereby are authorized to take such action as they deem necessary or desirable to carry out the intent of the foregoing resolutions. Ms. Prue then presented and the Committee reviewed the performance plans for the second quarter of fiscal year 2002 for the Division Presidents. Ms. Prue then presented and the Committee reviewed the annual performance plans for L. Dennis Kozlowski and Mark H. Swartz. EQUITY PLAN REVIEW. Ms. Prue presented information on the number of shares available for future grants under Tyco's stock option and restricted share plans. /s/ Stephen Foss -------------------------------- Stephen Foss Chairman, Compensation Committee 99.8-165 EXHIBIT 23 99.8-166 Booked in 1/2002 [LETTERHEAD OF TYCO] Interoffice Memorandum THIS CORRESPONDENCE MAY CONTAIN CONFIDENTIAL INFORMATION INTENDED FOR THE USE OF THE INDIVIDUAL OR ENTITY TO WHOM IT IS ADDRESSED. IF THE READER IS NOT THE INTENDED RECIPIENT, OR THE EMPLOYEE OR AGENT RESPONSIBLE TO DELIVER IT TO THE INTENDED RECIPIENT, YOU ARE HEREBY NOTIFIED THAT ANY DISSEMINATION OR COPYING IS STRICTLY PROHIBITED. DATE 01/08/2002 TO Linda Auger FROM Mark Swartz SUBJECT KIV Linda, Please credit Dennis Kozlowski's. Key Employee Loan account for the following amounts paid to White Mountain Films on Tyco's behalf. 10/11/00 200,000.00 04/16/01 300,000.00 04/19/01 200,000.00
Dennis pd to make film The Endurance Shakleton's Antarctic expedition 99.8-167 ASSIGNMENT AND ASSUMPTION AGREEMENT THIS ASSIGNMENT AND ASSUMPTION AGREEMENT ("Assignment"), is made as of the 19th day of November 2001, by and between L. Dennis Kozlowski, One Town Center Road, Boca Raton, Florida ("Assignor"), and Tyco International (US) Inc., One Tyco Park, Exeter, New Hampshire 03833 ("Assignee"). W I T N E S S E T H: WHEREAS, Assignor, for and on behalf of Assignee, and White Mountain Films, LLC, entered into that certain Agreement (the "Agreement"), dated as of April 6, 2001, under which, among other things Assignor agreed to make certain investments for the purposes stated in the Agreement; and WHEREAS, Assignor made such investments for and on behalf of Assignee; and WHEREAS, Assignor wishes to assign to Assignee all of Assignor's interest in and to the Agreement and to all investments made thereunder, and Assignee agrees to accept such assignment and assume all obligations of Assignor under the Agreement. NOW THEREFORE, in consideration of the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, Assignor and Assignee hereby agree as follows: 1. Assignor hereby assigns, sets over and transfers to Assignee all of Assignor's right, title and interest in, to and under the Agreement and all of Assignor's rights to any benefits thereunder. 2. Assignee hereby accepts the within assignment and agrees to assume, perform and comply with and to be bound by all of the terms, covenants, agreements, provisions and conditions of the Agreement to be' performed from and after the date hereof. 3. Assignor hereby assigns, sets over and transfers to Assignee all of Assignor's right, title and interest in and to the following investments: October 11, 2001, $200,000; April 16, 2001, $300,000; and April 19, 2001, $200,000, amounting to a total of $700,000 (collectively, the "Investments"), and the rights and benefits associated therewith: 4. This Assignment and the obligations of Assignor and Assignee hereunder shall be binding upon and inure to the benefit of Assignor and Assignee and their respective successors and assigns, shall be governed by and construed in accordance with the laws of the State of New York and may not be modified or amended in any manner other than by a written agreement signed by the party to be charged therewith. Assignor and Assignee agree to execute any and all other assignments, documents, certificates and other instruments as may at any time be deemed reasonably necessary to further evidence or consummate this Assignment. 99.8-168 IN WITNESS WHEREOF, Assignor and Assignee have duly executed this Assignment as of the day and year first above written. ASSIGN0R: ASSIGNEE: Tyco International (US) Inc. /s/ L. Dennis Kozlowski By: [ILLEGIBLE] - ------------------------------ ---------------------------------- L. Dennis Kozlowski Title: Secretary ------------------------------- Receipt acknowledged this 19 day of November, 2001 WHITE MOUNTAIN FILMS, LLC By: [ILLEGIBLE] ------------------------------------- Title: President ---------------------------------- 99.8-169 TYCO INTERNATIONAL US JOURNAL ENTRY LISTING
BATCH CO JE CD PERIOD DATE STATUS SRC REF COMMENT CO ACCT SUB OEP TY - ----------------------------------------------------------------------------------------------------------------------- s30126a BOCA40 11847 200204 01/28/02 Posted JE Reclass Shakleton BOCA40 160000 0001 900 F Reclass Shakleton BOCA40 209000 0006 900 F ACCOUNT DESCRIPTION DEBIT AMOUNT CREDIT AMOUNT - -------------------------------------------------------------- NOTES RECEIVABLE KEY EMPLOYEES 0.00 700,000.00 ACCRUED CHARITABLE CONTRIBUTION 700,000.00 0.00 ------------ ------------- $ 700,000.00 $ 700,000.00 ============ =============
99.8-170 EXHIBIT 24 99.8-171 PACITTI, BETH - -------------------------------------------------------------------------------- From: Pacitti, Beth Sent: Monday, April 23, 2001 12:23 PM To: 'eharris@carlson.com'; 'fdt@pronet.it'; 'jimmy@micronet.it'; Jacques, Barbara Subject: Birthday Bash - June 14, 2001 BJ, Ellen, Herni, & Jimmy: Guests arrive at the club starting at 7:15 p.m. The van pulls up to the main entrance. Two gladiators are standing next to the door, one opens the door, the other helps the guests. We have a lion or horse with a chariot for the shock value. The guests proceed through the two rooms. We have gladiators standing guard every couple feel and they are lining the way. The guests come into the pool area, the band is playing, they are dressed in elegant chic. Big ice sculpture of David, lots of shellfish and caviar at his feet. A waiter is pouring stoll vodka into his back so it comes out his penis into a crystal glass. Waiters are passing cocktails in chalices. They are dressed in linen togas with fig wreath on head. A full bar with fabulous linens. The pool has floating candles and flowers. We have rented fig trees with tiny lights everywhere to fill some space, 8:30 the waiters instruct that dinner is served. We all walk up to the loggia. The tables are all family style with the main table in front. The tables have incredible linens with chalices as wineglasses. The food is brought out course by course, family style, lots of wine, and it's starting to get dark. Everyone is nicely buzzed, LDK gets up and has a toast for K. Everyone is jumping from table to table. E Cliff has continued to play light music through dinner. They kick it up a bit. We start the show of pictures on the screen, great background music in sync with the slides. At the end Elvis is on the screen wishing K a Happy Birthday and apologizing that he could not make it. It starts to fade and Elvis is on stage and starts singing happy birthday with the Swingdogs. A huge cake is brought out with the waiters in togas singing and holding the cake up for all to see. The tits explode, Elvis kicks it in full throttle. Waiters are passing wine, after dinner drinks, and there is dancing. 11:30 light show starts. HBK is displayed on mountain, fireworks coming from both ends of the golf course in sync with music. Swingdogs start up and the night is young. Here is the invitation: Ottima Festa Ottima Amici Our summer party is moving from Nantucket to Sardinia. Please join us in the celebration of friendships and Karen's 40th birthday in the scenic Costa Smeralda. Accommodations have been arranged at the Hotel Cala dl Volpe Resort. We look forward to seeing you there - the fun begins the evening of June 10th. Buon viaggio e felice arrivo - a prestol Karen & Dennis The best present for my birthday is your company so please, no gifts. 99.8-172 GUEST LIST FOR KAREN'S BIRTHDAY BASH Dennis Kozlowski and Karen Mayo Gary and Valerie Fagin Dan and Jenifer McDougal Sally and Dave Lurie Irving and Barbara Gutin Mark and Karen Swartz Jeff and Beth Maltfolk Todd McCabe and Allison Barber Kathy and Burton Richardson Rita and Peter Carey Sally Bates and Brook Pete and Thea Kaizer Pete and Hilary Musser Marion and Sonny Mandell Wendy Valliere and Billy Rowe Hal and Woodic Mayo Steve and Brenda McDonouna (Sp.7) Brad and Terri McGee Lou and Minni Cheisa Peter Wiedenman and Beth Riungu James Bartle Barbara Jacques Cheryl Kozlowski Sandy Kozlowski and guest Bermie & Maria [Mucci] Michael & [Pascale Castania] Endeavor Crew 9 99.8-173 ADDRESSES FOR INVITEES Lord Michael Ashcroft (Susie Ashcroft) Redacted James Bartle Redacted Sally Bates Hall (Brooks Chapman Hall) Redacted Peter C. Gary (Rita V. Lapas) Redacted Michael Castania (Pascale Castania) Redacted Lou Chiesa (Mimi Chiesa) Redacted Christina Cuccia Redacted Robert R. DeCosta (Debra P. DeCosta) Redacted Jill Garrison Evarts (Douglas E. Hawkes) Redacted 99.8-174 Gary Fagin (Valerie Ann Fagin) Redacted Karin Finegin (Tony Jalbert) Redacted Irving Gutin (Barbara Gutin) Redacted Barbara Jacques Redacted Peter H. Kaizer, Jr. (Thea K. Kaizer) Redacted Spanky Kania (Kitty) - Cancelled Cheryl Kozlowski Redacted Sandy Kozlowski Dave Lurie (Sally Lurie) Redacted Sonny Mandell (Miriam Mandell) Redacted Jeff Mattfolk (Beth Mattfolk) Redacted Hal Mayo (Woodie Mayo) 99.8-175 Todd McCabe (Allison Barber) Redacted Stephen B. McDonough (Brenda McDonough) Redacted Daniel R. McDougall (Jennifer McDougall) Redacted Brad McGee (ILLEGIBLE) Redacted Bernard M. Mucci (Maria Mucci) Redacted Hillary Grinker (Warren Musser) Redacted Burton Richardson (Kathy) Redacted William T. Rowe (Sharron W. Valliere) Redacted Rob Sharpe (Maria Sharpe) Redacted Mark Swartz (Karen Swartz) Redacted Joe Curcio (Paula) Redacted 99.8-176 Tom Landry (Coach) Nelson Cantave (Peggy) Redacted Pete Musser Dennis (Karen) Endeavor Crew Joseph Rapier 99.8-177 EXHIBIT 25 99.8-178 [LETTERHEAD OF TYCO] L. DENNIS KOZLOWSKI CHAIRMAN CHIEF EXECUTIVE OFFICER [ILLEGIBLE] January 4, 2001 Nantucket Conservation Foundation, Inc. 118 Cliff Road Nantucket, MA 02554-0013 Attn: James F. Lentowski Dear James: I am pleased to enclose a check in the amount of $650,000.00 which represents our first installment of a two year pledge to the Nantucket Conservation Foundation, Inc. Sincerely, /s/ L. Dennis Kozlowski L. Dennis Kozlowski enclosure 99.8-179 [LETTERHEAD OF TYCO] L. DENNIS KOZLOWSKI CHAIRMAN CHIEF EXECUTIVE OFFICER [ILLEGIBLE] December 21, 2001 Nantucket Conservation Foundation, Inc: 118 Cliff Road Nantucket, MA 02554-0013 Attn: James F. Lentowski Dear James, I am pleased to enclose a check in the amount of $650,000 which represents our second installment of a two year pledge to the Nantucket Conservation Foundation, Inc. Sincerely, /s/ L. Dennis Kozlowski L. Dennis Kozlowski enclosure 99.8-180 EXHIBIT 26 99.8-181 [LETTERHEAD OF TYCO INTERNATIONAL LTD.] L. DENNIS KOZLOWSKI CHAIRMAN CHIEF EXECUTIVE OFFICER $5,000,000 Total $8,100,000 Payout S of S cc: Bernie Mucci VIA FEDERAL EXPRESS August 5, 1997 Mr. John H Shannon Vice President - University Affairs Seton Hall University South Orange, NJ [ILLEGIBLE] Dear Jack Congratulations on your new appointment as Vice President of University Affairs. I believe you are an outstanding choice and Seton Hall is fortunate to have you. To get you started on the right foot, I have enclosed a check for $1 million in payment toward my pledge to Seton Hall University. We should discuss my commitment to insure a mutual understanding in your new role. Best regards, /s/ L. Dennis Kozlowski cc Reverend Thomas Peterson Monsignor Robert Sheeran [LETTERHEAD OF TYCO INTERNATIONAL LTD.] [ILLEGIBLE]
DATE CHECK NO AMOUNT ------------------------------------------ 08/05/97 1694 ****$1,000,000.00 ------------------------------------------
ONE MILLION AND 00/100 DOLLARS SETON HALL UNIVERSITY /s/ [ILLEGIBLE] PAY OFFICE OF UNIVERSITY AFFAIRS ----------------------------- TO THE SOUTH ORANGE, NJ 07079 [ILLEGIBLE] /s/ [ILLEGIBLE] ----------------------------- [ILLEGIBLE] 99.8-182 EXHIBIT 27 99.8-183 [LETTERHEAD OF TYCO INTERNATIONAL LTD.] L. DENNIS KOZLOWSKI CHAIRMAN July 1, 1999 CHIEF EXECUTIVE OFFICER Luke I. O'Neill President Shackleton Schools, Inc. 36 Bromfield Street, Suite 500 Boston, MA 02108 Dear Luke: Just after your New York event, my daughter Cheryl introduced me to the good work you are doing with young people at Shackleton Schools. The short video, One Leader at a Time, and the printed materials impressed me a great deal. It appears that you have built an effective program as well as a remarkable team of committed individuals who will guide the organization towards your educational vision. I would like to see you realize your vision. To this end, I hereby pledge $1,000,000.00 to Shackleton Schools, Inc. Enclosed is a check for $200,000.00 representing the first payment toward our pledge. The remaining payments will be paid in four (4) equal annual installments according to the following schedule: Second Payment July 1, 2000 Third Payment July 1, 2001 Fourth Payment July 1, 2002 Fifth Payment July 1, 2003 Provided, however, that prior to making the second, third, fourth, and fifth payments, Shackleton Schools will provide me with a report demonstrating that the school has succeeded in maintaining a total enrollment that is not less than ten percent (10%) of its current enrollment targets. The current enrollment targets are contained in the attached report. Finally, Shackleton Schools, Inc. may use the proceeds of my gift for whatever purpose it wishes. It is my intention to see the organization grow to serve more and more students who deserve the chance to learn in a supportive, caring environment. I wish you well on your bold expedition. Sincerely, /s/ L. Dennis Kozlowski L. Dennis Kozlowski cc: Cheryl Kozlowski Enclosure THE GIBBONS BUILDING, 10 QUEEN STREET, SUITE 301, HAMILTON HM 11, BERMUDA (441)292-8674 99.8-184 EXHIBIT 28 99.8-185 [MIDDLEBURY LOGO] October 4, 2000 PERSONAL & CONFIDENTIAL Mr. L. Dennis Kozlowski 3 Tyco Plaza Exeter, NH 09833-1108 Dear Dennis: I am so very grateful to you for your additional commitment to the Bicentennial Campaign in support of our child care initiative. The particulars of that initiative were described in my letter of July 31. They remain unchanged, and I attach a copy of that letter for your reference. I am sending along a commitment form, which I hope you will sign and return at your earliest convenience. As we discussed, your commitment is for $2.5 million, which will create an endowment fund to support the College's annual contribution to United Way and the [ILLEGIBLE] Community Foundation, through which we are supporting the creation of additional child care slots. I would suggest we define the endowment fund as follows. THE KOZLOWSKI FUND Created in 2000 by L. Dennis Kozlowski [ILLEGIBLE] and [ILLEGIBLE] and member of the Board of Trustees. To be used at the discretion of the President to support the College's efforts to meet employees' child care or other parental needs. Income from the fund will be used initially to help meet the College's annual contribution to support a community effort to increase the number of available child care slots and will be devoted in full to that purpose. At the discretion of the President, or if the circumstances that determined the initial allocation of fund income should change, some or all of the income may, on occasion or over time, be directed to meet other College employee parental needs as may be defined by the President. I have tried in this wording, Dennis, both to address the current needs and also to acknowledge that over time specific needs may change. I hope it provides the flexibility our successors may require as well as the assurance our contemporaries need. Please let me know if you prefer alternative or additional wording. Finally, I thank you for permission to announce this commitment, and to launch the challenge it makes to raise the balance of the funds we will need annually. I know that many of my colleagues will want to express their gratitude to you personally. Your support for this effort is deeply appreciated. I am grateful as well for your willingness to direct your giving to areas of most acute need and to entrust us with the responsibility to be wise and faithful stewards of so generous a gift, and its spirit, now and for all time to come. Sincerely, /s/ John M. McCardell, Jr. John M. McCardell, Jr. JMM. [ILLEGIBLE] [ILLEGIBLE] Enclosure 99.8-186 [LOGO] [ILLEGIBLE] STATEMENT OF INTENTION I/we intend to give to Middlebury College, for the Bicentennial Campaign, a gift totaling $ 2,500,000 Enclosed is my/our check for $_____________. I/we hereby intend to give to Middlebury College $2,500,000 payable over 5 years according to the following payment schedule. Payment schedule: 2000-2001 500,000 2002-2003 500,000 2004-2005 500,000 2001-2002 500,000 2003-2004 500,000
Please remind me / / annually (November) / / semi-annually (May/November) /s/ [ILLEGIBLE] October 12, 2000 - ------------------------------ --------------------------- Signature Date - ------------------------------ --------------------------- Signature Date NAME(s) L. DENNIS KOZLOWSKI STREET ADDRESS c/o Tyco - 1 Tyco [ILLEGIBLE] CITY/STATE/ZIP EXETER, N.H. 03837 My/our gift is designated for: % to the Annual Fund ---- % for unrestricted Campaign purposes ---- % for other purposes as follows: ---- __________________________________ __________________________________ PLEASE RETURN TO: External Affairs Munford House Middlebury College Middlebury, Vermont [ILLEGIBLE] (802)443-5181 I reserve the right to alter these gift plans as I [ILLEGIBLE] unforeseen circumstances so warrant. This is an intent and not to be construed to be legally enforceable. 99.8-187 [LETTERHEAD OF TYCO] L. DENNIS KOZLOWSKI [ILLEGIBLE] CHAIRMAN CHIEF EXECUTIVE OFFICER November 15, 2000 Office of the President Middlebury College Middlebury, VT 05753 Attn: John M. McCardell, Jr. Dear John: I am pleased to enclose a check in the amount of $500,000.00 which represents our first payment of a five-year pledge to the Bicentennial Campaign in support of the child care initiative. We wish you much success with your fundraising efforts. Sincerely, /s/ L. Dennis Kozlowski L. Dennis Kozlowski enclosure 99.8-188 EXHIBIT 29 99.8-189 [LETTERHEAD OF TYCO INTERNATIONAL LTD.] [ILLEGIBLE] L. DENNIS KOZLOWSKI CHAIRMAN CHIEF EXECUTIVE OFFICER December 30, 1997 Mr. Richard Ridgway Berwick Academy Academy Street South Berwick, ME 03908 Dear Hap: Enclosed is a check for $300,000 which represents Tyco's final payment toward the "Koz Plex" pledge. Hope you and your family enjoyed the holiday season and may 1998 be the best year yet! Sincerely, /s/ L. Dennis Kozlowski [TYCO INTERNATIONAL LTD. LOGO] ONE TYCO PARK EXETER, NEW HAMPSHIRE 03833-1108 [ILLEGIBLE]
DATE CHECK NO. AMOUNT --------------------------------------- 12/30/97 5418 *$300.000.00 ---------------------------------------
THREE HUNDRED THOUSAND AND 00/100 DOLLARS [ILLEGIBLE] BERWICK ACADEMY ACADEMY STREET /s/ [ILLEGIBLE] SOUTH BERWICK, ME 03908 ------------------ [ILLEGIBLE] /s/ [ILLEGIBLE] PITTSBURGH, PENNSYLVANIA. ------------------ 99.8-190 EXHIBIT 30 99.8-191 [LETTERHEAD OF TYCO INTERNATIONAL LTD.] L. DENNIS KOZLOWSKI CHAIRMAN CHIEF EXECUTIVE OFFICER March 6, 1996 Dr. John M. Driscoll, Jr. Acting Chairman Department of Pediatrics and Acting Director of Pediatric Service Babies & Children's Hospital of New York 630 West 168th Street Room BHS-102 New York, NY 10032-3784 Suspense October 1996 Dear John, As you know I've committed to a pledge of $1 million over the next four years to Babies & Children's Hospital Lung and Cystic Fibrosis Center. The gift will commence with the enclosed check for $200,000. An additional $200,000 will be forwarded in October of this year, and then $200,000 a year in October 1997, 1998 and 1999. I am sure we can discuss at our mutual convenience your offer of a naming opportunity. In the meantime I look forward to seeing you on April 25th at the Beach Boys (they must be Beach "Men" by now), with my sunglasses. Sincerely, /s/ L. Dennis Kozlowski LDK/lac Enclosure ONE TYCO PARK, EXETER, NEW HAMPSHIRE 03833-1108 (603) 778-9700 FAX: (603) 778-7330 LDK will write cover letter 99.8-192 EXHIBIT 31 99.8-193 TEAM DENNIS CONNER [STARS & STRIPES AMERICA'S CUP 2003 LOGO] 2525 SHELTER ISLAND DRIVE, SUITE E SAN DIEGO, CA 92106 UNITED STATES OF AMERICA 619/523-5131 619/523-5279 FAX EMAIL 102735 3645@COMPUSERVE.COM September 26, 2000 Ms. Geri Kierstead Tyco International US, Inc. One Tyco Park Exeter, NH 03833 Dear Geri: Dennis requested that I forward on to you the enclosed information on California International Sailing Association (CISA) the 50l(c)(3) tax deductible foundation that our America's Cup effort uses for donations to the team to fund the program. Dennis' donation should be made payable to CISA but mailed to our office here in San Diego at: Team Dennis Conner 2525 Shelter Island Drive, Suite E San Diego, CA 92106 We will deliver the check to CISA and they will provide you with a letter in return authenticating your donation. If you have any questions regarding CISA, you can speak to Dale Snider Team Dennis Conner's CFO at our San Diego office. Telephone (619) 523-5131. The first donation check was to be $1,000,000.00 sent in October 2000, with the same amount being sent each quarter for ten quarters. We very much appreciate your help in expediting Dennis expression of support to the Stars & Stripes team in our quest to return the America's Cup to the United States where it belongs. Warm regards, /s/ Dennis Conner Dennis Conner 99.8-194 [LETTERHEAD OF TYCO] L. DENNIS KOZLOWSKI [ILLEGIBLE] CHAIRMAN CHIEF EXECUTIVE OFFICER November 2, 2000 Team Dennis Conner 2525 Shelter Island Drive Suite E San Diego, CA 92106 Attn: Dennis Conner Dear Dennis: I am pleased to enclose a check in the amount of $1,000,000.00 which represents our first payment to the California International Sailing Association. Sincerely, /s/ L. Dennis Kozlowski L. Dennis Kozlowski enclosure 99.8-195 EXHIBIT 32 99.8-196 [LETTERHEAD OF TYCO] [ILLEGIBLE] [ILLEGIBLE] August 14, 2001 John J. Bowen Vice President Development and External Affairs MSPCA Angell Memorial 350 South Huntington Avenue Boston, MA 03130 Dear John On behalf of L. Dennis Kozlowski and Tyco International, I am pleased to confirm the additional $1.5 million pledge to fund the [ILLEGIBLE] Care Center at Angell Memorial Hospital bringing the total donation to $2.5 million. Payments will be made in the amount of $300,000 each year for a period of five years commencing August 2002. John, if you have any questions or need any further assistance, please do not hesitate to contact me. Sincerly, /s/ [ILLEGIBLE] 99.8-197 EXHIBIT 33 99.8-198 [LETTERHEAD OF TYCO INTERNATIONAL (US) INC.] L. DENNIS KOZLOWSKI CHAIRMAN CHIEF EXECUTIVE OFFICER October 5, 1999 Nantucket Historical Association P.O. Box 1016 Nantucket, MA 02554-1016 Attn: Jean Grimmer Dear Jean: Enclosed is a check in the amount of $250,000 which represents L. Dennis Kozlowski's and Tyco International's first payment of a four year pledge to the Capital Campaign. Best wishes for a successful campaign! Sincerely, /s/ [ILLEGIBLE] Enclosure ONE TYCO PARK, EXETER, NEW HAMPSHIRE 03833-1108 (603) 778-9700 FAX: (603) 778-7330 A TYCO INTERNATIONAL LTD COMPANY 99.8-199 -----END PRIVACY-ENHANCED MESSAGE-----