EXHIBIT 10.16

 

 

TYCO ELECTRONICS LTD.
DEFERRED COMPENSATION PLAN FOR DIRECTORS

 

Effective September 26, 2007

 

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ARTICLE 1
PURPOSE

 

1.1          Deferred Compensation Plan for Directors.  Tyco Electronics Ltd.
hereby adopts the Tyco Electronics Ltd. Deferred Compensation Plan for
Directors, effective September 26, 2007, to allow outside directors of the
Company the opportunity to defer the receipt of compensation that would
otherwise be payable to them.  The Company intends that the Plan will at all
times be maintained on an unfunded basis for Federal income tax purposes under
the Code.  The provisions of this Plan shall apply to Compensation Deferrals
beginning on or after September 26, 2007 and to any earnings or dividend
equivalents credited thereon.

 

1.2          Compliance with Code Section 409A.  The terms of this Plan are
intended to, and shall be interpreted and applied so as to comply in all
respects with the provisions of Code Section 409A and regulations and rulings
thereunder.

 

ARTICLE 2
DEFINITIONS

 

The following words and terms shall have the indicated meanings wherever they
appear in the Plan:

 

2.1          “Administrator” means the person or persons named as such by the
Committee or its designee, or if no such designee is named, the Senior Vice
President of Human Resources of the Company.

 

2.2          “Annual Deferral Amount” means that portion of a Participant’s
Compensation for any calendar year that a Participant elects to have deferred
and is actually deferred.  All cash deferrals are made in U.S. dollars.

 

2.3          “Beneficiary” or “Beneficiaries” means the person or persons
designated by the Participant to receive payments under this Plan in the event
of the Participant’s death as provided in Section 4.4.

 

2.4          “Board of Directors,” “Directors,” or “Director” means,
respectively, the Board of Directors, the Directors, or a Director of the
Company.  Director shall also mean any former Director during the period
immediately following service as a Director while he/she is in the role of a
paid advisor.

 

2.5          “Cash Account” means the account maintained on the books of the
Company used solely to calculate the amount payable to each Participant who
defers cash Compensation under this Plan to such account and shall not
constitute a separate fund of assets.

 

2.6          “Code” means the Internal Revenue Code of 1986, as amended.

 

2.7          “Committee” means the Management Development and Compensation
Committee of the Board of Directors.

 

2.8          “Company” means Tyco Electronics Ltd.

 

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2.9          “Compensation” means that portion of a Director’s retainer and/or
meeting fees payable in cash, or DSUs granted to a Director for any reason, but
does not include travel expense allowance or any other expense reimbursement.

 

2.10        “Compensation Deferral(s)” means that portion of Compensation as to
which a Participant has made an annual irrevocable election to defer receipt
pursuant to Article III.

 

2.11        “Deferral Year” means any calendar year commencing on or after
January 1, 2008 for which a Participant elects to have some or all of his/her
Compensation deferred in accordance with Section 3.2.

 

2.12        “Deferred Stock Unit” or “DSU” means an award of deferred stock
units granted under and subject to the terms of the Tyco Electronics Ltd. 2007
Stock and Incentive Plan and any award agreement thereunder.

 

2.13        “Disability” means that a Participant is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months.

 

2.14        “Measurement Funds” means one or more of the independently
established funds or indices that are identified by the Committee and listed in
Appendix A.  These Measurement Funds are used solely to calculate the earnings
that are credited to each Participant’s Cash Account(s) in accordance with
Section 3.3, and do not represent any beneficial interest on the part of the
Participant in any asset or other property of the Company.  The determination of
the increase or decrease in the performance of each Measurement Fund shall be
made by the Administrator in its reasonable discretion.  Measurement Funds may
be replaced, new funds may be added, or both, from time to time in the
discretion of the Committee.

 

2.15        “Notice Form” means the form attached hereto and marked as Appendix
B or any other document which incorporates information substantially similar to
Appendix B.

 

2.16        “Participant” means each non-employee Director of the Company who
participates in the Plan in accordance with its terms and conditions.

 

2.17        “Plan” means the Tyco Electronics Ltd. Deferred Compensation Plan
for Directors as set forth herein, or as it may be amended from time to time by
the Board of Directors.  The effective date of this Plan is September 26, 2007.

 

2.18        “Stock Account” means the account maintained on the books of the
Company used solely to calculate the amount distributable to each Participant
who defers Compensation under this Plan in the form of whole or fractional stock
units and shall not constitute a separate fund of assets.

 

2.19        “Stock Unit” means a unit with an equivalent value to one (1) share
of Company common stock and which is credited to a Participant’s Stock Account.

 

2.20        “Time Certain Payout” means the payout form described in Section
4.1.

 

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2.21        “Trust” shall mean the trust arrangement, if any, between the
Company and the trustee named therein, as amended from time to time.

 

ARTICLE 3
PARTICIPATION

 

3.1          Eligibility.  Each non-employee Director is eligible to participate
in the Plan by filing an election in accordance with Section 3.2.

 

3.2          Notice Form Timing and Duration.  A Director may elect to
participate in the Plan by filing a properly completed Notice Form with the
Administrator.  In order to defer compensation for any Deferral Year, a Notice
Form must be filed with the Administrator on or before December 31st of the year
preceding the Deferral Year and must be irrevocable for the full Deferral Year. 
 Notwithstanding the previous sentence, a newly-appointed Director may elect to
defer Compensation by filing a Notice Form with the Administrator no later than
30 days after the date on which he/she becomes a Director, but such Notice Form
will only be effective for compensation payable on and after the first day of
the calendar quarter following the date on which the Notice Form is filed and
such Notice Form will be irrevocable for the remainder of the Deferral Year. 
 In addition, a Director who received a Founders’ Grant of DSUs on July 2, 2007
may file a Notice Form with the Administrator on or before December 31, 2007
making a deferral election with respect to such DSUs; provided, that no such
election shall be effective until January 1, 2008.  Once filed with the
Administrator, a Notice Form shall remain in effect until the earlier of (i) the
termination of the Participant’s services as a Director, or (ii) the last day of
the Deferral Year.

 

3.3          Compensation Deferral.  A Participant may elect on the Notice Form
that the payment of all or a specified portion of the Compensation otherwise
payable to him/her with respect to a Deferral Year for services as a Director be
deferred until such time as elected by the Participant pursuant to the terms of
this Plan.   Any Compensation earned by a Director that is not deferred under
the Plan shall be paid to the Director in accordance with normal Company policy
and the applicable terms of any Company plan and any grant agreement thereunder.

 

3.4          Investment Measurements.   At the time that a Participant makes an
election to defer cash Compensation under the Plan, the Participant shall elect
the manner in which the Annual Deferral Amount shall be deemed to be invested
under the Plan.   Any Compensation in the form of DSUs for which a deferral
election is made will automatically be credited to the Participant’s Stock
Account at the time shares would have been payable under the terms of such DSU
but for such deferral election.  The Participant may change and/or make new
investment elections in accordance with procedures established by the
Administrator.

 

(a)           A Participant may elect to invest all or a specified portion of
his/her Cash Account in some or all of the Measurement Funds listed in Appendix
A, to the extent the Committee makes such investment alternatives available
under the Plan.  The specified portion of a Cash Account that is deemed invested
in a Measurement Fund shall be adjusted for investment experience (either gains
or losses) in a manner that equals the investment experience attributable to
such investment.  Deemed investments in a Measurement Fund shall be credited and
debited in accordance with procedures established by the Administrator.  In the
event that a

 

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Participant does not submit a complete and accurate investment election, the
Cash Account shall be deemed invested in the Interest Income Measurement Fund
or, if none, as determined by the Administrator. 

 

(b)           A Participant may elect to convert his/her deferred cash
Compensation to Stock Units and to have such Stock Units invested in the
Participant’s Stock Account as of the date on which such cash Compensation would
otherwise have been payable but for the Participant’s deferral election.  The
number of Stock Units credited to the Stock Account in such case shall be equal
to the amount of the cash Compensation so deferred divided by the fair market
value of a share of Company stock on such date.  Once deferred cash Compensation
is converted to Stock Units, it must remain deferred in the form of Stock Units
until payment.

 

(c)           The Company shall not be required to acquire any securities in
connection with deemed investment elections under this Plan.   No Participant
shall have any right to receive a distribution in kind from the Plan with
respect to the Participant’s Cash Account or to have the right to vote any
security in which a Participant’s Cash Account is deemed invested.  All
distributions from a Participant’s Stock Account shall be made in the form of
whole shares of Company stock corresponding to the number of Stock Units to be
distributed (with cash being distributed in lieu of fractional Stock Units).

 

(d)           Each Participant shall receive a statement of the balance of
his/her Cash Account and Stock Account at least annually or within a reasonable
period following the Administrator’s receipt of a request for a statement.

 

3.5          Dividend Equivalents.  As of each date on which a cash dividend is
paid on Company stock, there shall be credited to each Participant’s Stock
Account that number of Stock Units (including fractional units) determined by
(i) multiplying the amount of such dividend (per share) by the number of Stock
Units in such Stock Account on the record date for such dividend; and (ii)
dividing the total so determined by the fair market value of a share of Company
stock on the date of payment of such cash dividend.  The additions to a
Director’s Stock Account pursuant to this Section 3.5 shall continue until the
Director’s Stock Account is fully distributed in accordance with Article 4
below. 

 

ARTICLE 4
PAYMENTS TO PARTICIPANTS

 

4.1          Time and Form of Payment.  (a) At the election of the Participant,
which shall be made on the Notice Form applicable to each Annual Deferral
Amount, payment or distribution of each such Annual Deferral Amount, as adjusted
for the investment results or dividend equivalent accruals thereon, as
applicable, shall be made (i) in substantially equal annual installments over a
number of years not to exceed ten (10) years or (ii) in a lump sum cash payment
or total distribution.  Such payment or distribution will be made or will
commence, as applicable, either (i) within the period that is sixty (60) days
after the end of the calendar year in which the Director terminates service from
the Board or (ii) as a Time Certain Payout within sixty (60) days after the
first day of the calendar year, as elected by the Participant, that is at least
five (5) years after the first day of the calendar year to which the applicable
Annual Deferral Amount election relates.  In no event may the distribution or
commencement of distribution of a

 

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Participant’s Stock Account occur before the participant’s termination of
service from the Board. Notwithstanding the Participant’s election of a Time
Certain Payout (or any change in payment election described in Section 4.2), any
unpaid Annual Deferral Amounts, as adjusted for the investment results or
dividend accruals thereon, as applicable, will be paid to the Participant in a
lump sum cash payment or total distribution, as applicable, within the period
that is sixty (60) days after the end of the calendar year in which occurs the
later of (i) the Participant’s attainment of age seventy and (ii) the
Participant’s termination of service from the Board. 

 

(b)           In the absence of an election as to the time and form of the
payment of an Annual Deferral Amount with respect to a deferral of cash
Compensation, such Annual Deferral Amount shall be paid to the Participant in a
lump sum payment or total distribution, as applicable, within the period that is
sixty (60) days after the first day of the calendar year that is five (5) years
after the first day of the calendar year to which the applicable Annual Deferral
Amount election relates.

 

(c)           In the absence of an election as to the time and form of the
distribution of an Annual Deferral Amount with respect to a deferral of DSUs,
such Annual Deferral Amount shall be distributed to the Participant in
substantially equal annual installments over five (5) years, with the first such
distribution commencing within the period that is sixty (60) days after the
Participant’s termination of service from the Board.

 

4.2          Change in Election.  A Participant may postpone the payment date
for an Annual Deferral Amount, by filing a new payment election, in the form
specified by the Administrator, at least twelve (12) months prior to the
original payment date and twelve (12) months prior to termination.  Under the
new election, the Participant may postpone the payment of the Annual Deferral
Amount so that it will be paid (or commence payment or distribution, as
applicable) (a) within sixty (60) days of the first day of the calendar year
that is at least five (5) years after the original payment date or (b) within
the period that is sixty (60) days after the calendar year in which the Director
terminates service from the Board, provided that in no event may any payment
under such election occur before the date that is at least five (5) years after
the original payment date.

 

4.3          Death or Disability Benefit/Beneficiary Designation.  (a) Upon the
death or Disability of a Participant, the Participant or the Participant’s
Beneficiary, as applicable, shall be paid the balance in his or her Cash Account
or Stock Account in the form of a lump sum payment or total distribution, as
applicable, with such payment to be made as soon as practicable after the
Participant’s death or Disability.

 

(b)           Each Participant may designate in writing a Beneficiary or
Beneficiaries (which Beneficiary may be an entity other than a natural person)
to receive any payments which may be made under the Plan following the
Participant’s death.  No Beneficiary designation shall become effective until it
is in writing and it is filed with the Administrator.  Such designation may be
changed or canceled by the Participant at any time without the consent of any
such Beneficiary.  Any such designation, change or cancellation must be made in
a form approved by the Administrator and shall not be effective until received
by the Administrator, or its designee.  If no Beneficiary has been named, or the
designated Beneficiary or Beneficiaries shall have predeceased the Participant,
the Beneficiary shall be deemed to be the Participant’s estate.  If a

 

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Participant designates more than one Beneficiary, the interests of such
Beneficiaries shall be paid in equal shares, unless the Participant has
specifically designated otherwise.

 

4.4          Valuation of Cash Payments.  Any lump sum cash payment of an Annual
Deferral Amount shall be made in an amount equal to the value of the portion of
the Participant’s Cash Account attributable to such Annual Deferral Amount and
the investment results thereon as of January 1 of the calendar year that
includes the relevant payment date, with the Measurement Funds being deemed to
have been liquidated on that date to make the payment.

 

4.5          Effect of Payment.  The full payment of the Participant’s Cash
Account and Stock Account under this Article IV shall completely discharge all
obligations on the part of the Company to the Participant (and each Beneficiary)
with respect to the operation of this Plan, and the Participant’s (and
Beneficiary’s) rights under this Plan shall terminate.

 

ARTICLE 5
GENERAL

 

5.1          Unsecured Obligation of Company.  The right of any Participant,
beneficiary, or estate to receive payment of any unpaid balance in any Cash
Account or Stock Account of the Participant shall be an unsecured claim against
the general assets of the Company.  No Participant or other person shall have
any right or claim to the payment of any amount that is in any manner superior
or different from the right or claim of a general and unsecured creditor of the
Company.

 

5.2          Nonalienation of Benefits.  During a Participant’s lifetime, any
payment under the Plan shall be made only to him/her.  No sum or other interest
under the Plan shall be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, or charge, and any attempt by a
Participant or any beneficiary under the Plan to do so shall be void.  No
interest under the Plan shall in any manner be liable for or subject to the
debts, contracts, liabilities, engagements, or torts of a Participant or
beneficiary entitled thereto.

 

5.3          Plan Administration.  Except as otherwise provided herein, the Plan
shall be administered by the Administrator which shall have the full
discretionary power and authority to administer the Plan, including without
limitation, the power and authority to:  (i) construe the Plan’s terms; (ii)
make factual determinations; (iii) prepare forms to be used for making elections
under the Plan; (iv) establish rules and procedures for administering and
operating the Plan; (v) evaluate requests made by Participants; (vi) correct
defects under the Plan; (viii) establish the manner in which decisions are made
by the Administrator; (ix) retain such legal, actuarial, accounting, clerical,
and other services as may be necessary to operate and administer the Plan; (x)
establish recordkeeping procedures for the Plan; and (xi) take any and all
similar actions to the extent necessary to administer the Plan.  The
Administrator may delegate all or some of its authority under the Plan to any
other person or entity.  Any findings or determinations made by the
Administrator in the administration of the Plan shall be final, conclusive, and
binding on all parties.

 

5.4          Plan Amendment/Termination.  The Plan may at any time or from time
to time be amended, modified, or terminated by the Board of Directors, provided
that no amendment,

 

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modification, or termination shall adversely affect the balance in a
Participant’s Cash Account or Stock Account without his/her consent.  In
addition, the Plan, and/or the terms of any election made hereunder, may be
amended at any time and in any respect by the Company or by the Plan
Administrator if and to the extent recommended by counsel in order to conform to
the requirements of Code Section 409A and regulations thereunder.  In the event
of any suspension or termination of the Plan, payment of Participants’ Cash
Accounts and Stock Accounts shall be made under and in accordance with the terms
of the Plan and the applicable elections (except that the Plan Administrator may
determine, in its sole discretion, to accelerate payments to all Participants if
and to the extent that such acceleration is permitted under Code Section 409A
and regulations thereunder).

 

5.5          No Additional Rights.  Nothing contained herein shall be deemed to
give any Director the right to be retained in the service of the Company.

 

5.6          Governing Law.  This Plan shall be governed by and construed in
accordance with the laws of the Commonwealth of Bermuda, notwithstanding the
conflict of law rules applicable therein. 

 

5.7          Company’s Right to Offset.  If a Participant becomes entitled to a
distribution of benefits under the Plan, and if at such time the Participant has
outstanding any debt, obligation, or other liability representing an amount
owing to the Company, then the Company may offset such amount owed to it against
the amount of benefits otherwise distributable.

 

ARTICLE 6
TRUST

 

6.1          Establishment of Trust.  The Company may establish a Trust, and the
Company may, at least annually, transfer over to the Trust such assets, if any,
as the Company determines, in its sole discretion, are necessary to provide for
the liabilities created with respect to the Plan for that year.  The trustees of
the Trust shall be selected by the Company from time to time.

 

6.2          Governing Documents.  The provisions of the Plan shall govern the
rights of a Participant to receive distributions pursuant to the Plan.  The
provisions of the Trust, if any, shall govern the rights of the Participant and
the creditors of the Company to any assets transferred to the Trust.  The
Company shall at all times remain liable to carry out its obligations under the
Plan.  The Company’s obligations under the Plan may be satisfied with Trust
assets distributed pursuant to the terms of the Trust.

 

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APPENDIX A

MEASUREMENT FUNDS

(as of September 29, 2007)

 

Interest Income Measurement Fund

 

U.S. Equity Index Commingled Measurement Fund

 

A-1

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