ADT 2006 Annual Report Download - page 86

1934 and Rule 10b-5 promulgated thereunder, for common law fraud, aiding and abetting common law
fraud, conspiracy to commit fraud and negligent misrepresentation. Claims are asserted against the
individual defendants under Section 20(a) of the Securities Exchange Act of 1934, Section 15 of the
Securities Act of 1933, Section 24(d) of the New Jersey Uniform Securities Law, Sections
421-B:25(II) & (III) of the New Hampshire Uniform Securities Law, and for breaches of fiduciary
duties. Claims are also asserted against certain of the individual defendants under Section 20A of the
Securities Exchange Act of 1934, and for violation of the New Jersey RICO statute; against Tyco under
Section 12(a)(2) of the Securities Act of 1933, Section 24(c) of the New Jersey Uniform Securities Law,
and for violation of, aiding and abetting violation of, and vicarious liability under the New Jersey RICO
statute; against Tyco and certain of the individual defendants under Section 14(a) of the Securities Act
of 1933 and Rule 14a-9 promulgated thereunder, and for conspiracy to violate the New Jersey RICO
statute; against Tyco, our former auditors, and certain of the individual defendants under Section 11 of
the Securities Act of 1933, and for violation of, and conspiracy to violate the New Jersey RICO statute;
and against our former auditors and certain of the individual defendants for aiding and abetting
violation of the New Jersey RICO statute. Finally, claims are asserted against the individual defendants
and our former auditors for aiding and abetting the individual defendants’ breaches of fiduciary duties.
The Second Amended Complaint asserts that the defendants violated the securities laws and otherwise
engaged in fraudulent acts by making materially false and misleading statements and omissions
concerning, among other things, the following: unauthorized and improper compensation of certain of
our former executives; their improper use of our funds for personal benefit and their improper
self-dealing in real estate. On June 10, 2005, the Company moved to dismiss in part the Second
Amended Complaint, which motion remains pending before the Court.
As previously reported in our periodic filings, the Company appealed to the United States Court
of Appeals for the First Circuit the decision of the United States District Court for the District of New
Hampshire to remand Brazen v. Tyco International Ltd. to the Circuit Court for Cook County, Illinois
and Hromyak v. Tyco International Ltd., Goldfarb v. Tyco International Ltd., Mandel v. Tyco
International Ltd., Myers v. Tyco International Ltd., Rappold v. Tyco International Ltd., and Schuldt v. Tyco
International Ltd. to the Circuit Court for Palm Beach County, Florida. Plaintiffs moved to dismiss the
Company’s appeal. On December 29, 2004, the United States Court of Appeals for the First Circuit
granted plaintiffs’ motion and dismissed the Company’s appeal. On April 28, 2005, the Company moved
in the Circuit Court for Palm Beach County, Florida to stay and to strike the class allegations in
Goldfarb, Mandel, Myers, Rappold, and Schuldt. Also on April 28, 2005, the Company moved in the
Circuit Court for Palm Beach County, Florida to dismiss Hromyak. On July 8, 2005, the Court granted
in part and denied in part the motion to stay and to strike the class allegations in Goldfarb, Mandel,
Myers, Rappold, and Schuldt. On August 23, 2005, the Circuit Court granted Tyco’s motion to dismiss
Hromyak. The Hromyak plaintiffs filed a notice of appeal on September 20, 2005 and briefing has been
completed. On December 6, 2006, the Florida District Court of Appeal affirmed the dismissal.
As previously reported in our periodic filings, on March 10, 2005, plaintiff Lionel I. Brazen filed
an amended class action complaint in the Circuit Court for Cook County, Illinois purporting to
represent a class of purchasers who exchanged shares of Mallinckrodt, Inc. common stock for shares of
Tyco common stock pursuant to the Joint Proxy Statement and Prospectus, and the Registration
Statement in which it was included, in connection with the October 17, 2000 merger of Tyco and
Mallinckrodt, Inc. Plaintiff names as defendants Tyco International Ltd., and certain former Tyco
executives and asserts causes of action under Section 11, 12(a)(2) and 15 of the Securities Act of 1933.
The amended class action complaint alleges that the defendants made statements in the Registration
Statement and the Joint Proxy Statement and Prospectus that were materially false and misleading and
failed to disclose material adverse facts regarding the business and operations of Tyco. On April 21,
2005, the Company moved in the Circuit Court for Cook County, Illinois to dismiss or stay or, in the
alternative, to strike the class allegations. On July 22, 2005, the Court denied the Company’s motion.
Also, on July 22, 2005, the Court granted the motion to dismiss individual defendants Michael A.
24 2006 Financials