ADT 2005 Annual Report Download - page 101

resumed the Levin action. On September 22, 2005, the Company filed a motion to dismiss the
derivative complaint.
ERISA Litigation and Investigation
As previously reported in our periodic filings, Tyco and certain of our current and former
employees, officers and directors, have been named as defendants in eight class actions brought under
the Employee Retirement Income Security Act. Two of the actions were filed in the United States
District Court for the District of New Hampshire and the six remaining actions were transferred to that
court by the Judicial Panel on Multidistrict Litigation. All eight actions have been consolidated in the
District Court in New Hampshire. The complaints purported to bring claims on behalf of the Tyco
International (US) Inc. Retirement Savings and Investment Plans and the participants therein. On
January 12, 2005, the United States District Court for the District of New Hampshire denied, without
prejudice, the Company’s motion to dismiss certain additional individual defendants from the action.
On January 20, 2005, Plaintiffs filed a motion for class certification. On January 27, 2005, the Company
answered the plaintiffs’ consolidated complaint. Also, on January 28, 2005, the Company and certain
individual defendants filed a motion for reconsideration of the Court’s January 12, 2005 order, insofar
as it related to the Tyco International (US) Inc. Retirement Committee. On May 25, 2005, the Court
denied the motion for reconsideration. On July 11, 2005, the Company and certain individual
defendants opposed plaintiffs’ motion for class certification. That motion is still pending.
In addition, Tyco and certain of our current and former executives have received requests from the
United States Department of Labor for information concerning the administration of the Tyco
International (US) Inc. Retirement Savings and Investment Plans. The current focus of the
Department’s inquiry concerns losses allegedly experienced by the plans due to investments in our
shares. The Department of Labor has authority to bring suit on behalf of the plans and their
participants against those acting as fiduciaries to the plans for recovery of losses and additional
penalties, although it has not informed us of any intention to do so.
Tyco Litigation Against Former Senior Management
Tyco International, Ltd. v. L. Dennis Kozlowski, United States District Court, Southern District of New
York, No. 02-CV-7317, filed September 12, 2002, Amended April 1, 2003. As previously reported in our
periodic filings, we filed a civil complaint against our former Chairman and Chief Executive Officer for
breach of fiduciary duty and other wrongful conduct. The Company amended that complaint on
April 1, 2003. The amended complaint alleges that the defendant misappropriated millions of dollars
from our Key Employee Loan Program and relocation program; awarded millions of dollars in
unauthorized bonuses to himself and certain other Tyco employees; engaged in improper self-dealing
real estate transactions involving our assets; and conspired with certain other former Tyco employees in
committing these acts. The amended complaint alleges causes of action for breach of fiduciary duty,
fraud, unjust enrichment, breach of contract, conversion, constructive trust, and other wrongful conduct.
The amended complaint seeks recovery for all of the losses suffered by us as a result of the former
Chairman and Chief Executive Officer’s conduct, and of all remuneration, including restricted and
unrestricted shares and options, obtained by Mr. Kozlowski during the course of this conduct. The
Judicial Panel on Multidistrict Litigation transferred this action to the United States District Court for
the District of New Hampshire. On October 6, 2003, Mr. Kozlowski filed a motion to dismiss or stay
the case and compel arbitration, which was denied on March 16, 2004, with one exception relating to
the arbitration of a claim asserting the fraudulent inducement of Mr. Kozlowski’s retention agreement.
On April 9, 2004, Mr. Kozlowski filed an Answer, Affirmative Defenses and Counterclaims, seeking
amounts allegedly due pursuant to his purported retention agreement, life insurance policies, and other
arrangements. Tyco filed its Reply to the Counterclaims on April 29, 2004.
2005 Financials 25