Tyco International Ltd. agreed to pay about $3 billion to settle shareholder lawsuits that arose after top executives at the company were found guilty of looting the business and falsely inflating its value.

The settlement now clears the way for Tyco to split into three separate companies.

In addition to setting up the $2.975 billion cash fund, Tyco also agreed to pay out half the money it recovers from lawsuits against former chief executive Dennis Kozlowski , former chief operating officer Mark Swartz and former board member Frank Walsh to the shareholder fund.

Kozlowski and Swartz were found guilty on 22 counts of grand larceny, falsifying business records, securities fraud and conspiracy in connection with looting the company in June 2005, and have been serving prison sentences of up to 25 years. Prosecutors said the men gave themselves more than $150 million in illegal bonuses and loans, in addition to manipulating the company's stock price and making millions more through illegal stock sales.

''With this settlement we are taking an important step to resolve our most significant remaining legacy legal matter,'' said Tyco chairman and chief executive Ed Breen, in a statement. ''Our balance sheet and cash flow remain strong and will allow us to readily absorb these costs while removing much of the uncertainty around legacy legal matters.''

Tyco said that it will take a charge of $2.975 billion during the current quarter.

The settlement covers shareholders from December 1999 to June 2002 and, in some cases, investors who owned stock as early as October 1998.

Shareholder claims against the company's former auditor, PriceWaterhouseCoopers, are still pending.


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