Exhibit 10.1

 

AMENDED AND RESTATED
EXECUTIVE EMPLOYMENT AGREEMENT

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”) dated as of
December 19, 2008 (the “Effective Date”), between Tyco International Ltd. (the
“Company”) , and Edward D. Breen (the “Executive”).

 

W I T N E S S E T H:

 

WHEREAS, the Company desires to continue to employ the Executive as President
and Chief Executive Officer of the Company and to have the Executive continue
also to serve as Chairman, President and Chief Executive Officer of the Company;
WHEREAS, the Company and the Executive desire to enter into the Agreement as to
the continued terms of his employment by the Company;

 

NOW THEREFORE, in consideration of the foregoing, of the mutual promises
contained herein and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:

 

1.             Position/Duties.

 

(a)           During the Employment Term (as defined in Section 2 below), the
Executive shall serve as the Chairman (subject to the provisions of
Section 1(c) below), President and Chief Executive Officer of the Company.  In
these capacities the Executive shall have such duties, authorities and
responsibilities commensurate with the duties, authorities and responsibilities
of persons in similar capacities in similarly sized companies and such other
duties and responsibilities as the Board of Directors of the Company (the
“Board”) shall designate that are consistent with the Executive’s positions as
Chairman, President and Chief Executive Officer of the Company.  The Executive
shall report exclusively to the Board.

 

(b)           During the Employment Term, the Executive shall devote
substantially all of his business time (excluding periods of vacation and other
approved leaves of absence) to the performance of his duties with the Company,
provided the foregoing shall not prevent the Executive from (i) participating in
charitable, civic, educational, professional, community or industry affairs or,
with prior written approval of the Board, serving on the board of directors or
advisory boards of other companies; and (ii) managing his and his family’s
personal investments so long as such activities do not materially interfere with
the performance of his duties hereunder or create a potential business conflict
or the appearance thereof.  If at any time service on any board of directors or
advisory board would, in the good faith judgment of the Board, conflict with the
Executive’s fiduciary duties to the Company or create any appearance thereof,
the Executive shall promptly resign from such other board of directors or
advisory board after written notice of the conflict is received from the Board. 
Service on the boards of directors and/or advisory boards disclosed by the
Executive to the Company as of the Effective Date are hereby approved.

 

(c)           During the Employment Term, the Board shall nominate the Executive
for re-election as a member of the Board at the expiration of his then current
term.

 

--------------------------------------------------------------------------------

 

(d)           The Executive acknowledges and agrees that he shall be on the
Company’s payroll and that the Company is his employer, as well as the payer and
obligor with respect to the payment or provision of compensation and benefits
under this Agreement, subject to the provisions of Section 25.  The Executive
further agrees that as part of his employment by the Company, he shall serve
without additional compensation as an officer and director of any of the
Company’s subsidiaries or affiliates and agrees that any amounts received from
such corporation may be offset against the amounts due hereunder.  In addition,
it is agreed that the Company may assign the Executive to one of its
subsidiaries for payroll purposes.

 

2.             Employment Term.  The Executive’s term of employment under this
Agreement (such term of employment, as it may be extended or terminated, is
herein referred to as the “Employment Term”) shall be for a term commencing on
the Effective Date and, unless terminated earlier as provided in Section 7
hereof, ending on July 25, 2009 (the “Original Employment Term”), provided that
the Employment Term shall be automatically extended, subject to earlier
termination as provided in Section 7 hereof, for successive one (1) year periods
(the “Additional Terms”), unless, at least 30 days prior to the end of the
Original Employment Term or the then Additional Term, the Company or the
Executive has notified the other in writing that the Employment Term shall
terminate at the end of the then current term.

 

3.             Base Salary.  The Company agrees to pay the Executive a base
salary (the “Base Salary”) at an annual rate of not less than US $1,625,000,
payable in accordance with the regular payroll practices of the Company, but not
less frequently than monthly.  The Executive’s Base Salary shall be subject to
annual review by the Board (or a committee thereof) and may be increased, but
not decreased, from time to time by the Board.  No increase to Base Salary shall
be used to offset or otherwise reduce any obligations of the Company to the
Executive hereunder or otherwise.  The base salary as determined herein from
time to time shall constitute “Base Salary” for purposes of this Agreement.

 

4.             Annual Bonus.  During the Employment Term the Executive shall be
eligible to participate in the bonus and other incentive compensation plans and
programs for the Company’s senior executives at a level commensurate with his
position.  The Executive shall have the opportunity to earn an annual target
bonus measured against objective financial criteria to be determined by the
Board (or a committee thereof) of at least 100% of Base Salary.

 

5.             Equity Awards.

 

(a)           Equity Awards.  At the sole discretion of the Board or the
Committee, the Executive shall be eligible for annual grants of the Company’s
stock options and other equity awards.

 

(b)           Acceleration Events.  If (i) the Executive’s employment by the
Company is terminated by the Company other than for Cause or Disability or by
the Executive for Good Reason or (ii) Change in Control (as defined in Exhibit A
hereto) occurs, all then outstanding unvested equity awards shall be fully
vested and, in the case of (i), any Company stock option then held by the
Executive shall remain exercisable until the expiration of the initial 10 year
term, subject to earlier termination in accordance with the terms of the
applicable Company

 

2

--------------------------------------------------------------------------------

 

equity incentive plan under which such stock option was granted and related
terms and conditions (other than those related to termination of employment).

 

6.             Employee Benefits.

 

(a)           Benefit Plans.  The Executive shall be entitled to participate in
all employee benefit plans covering Company senior executives and other salaried
employees including, but not limited to, equity, pension, thrift, profit
sharing, medical coverage, education, or other retirement or welfare benefits
that the Company has adopted or may adopt, maintain or contribute to for the
benefit of its senior executives at a level commensurate with his positions
subject to satisfying the applicable eligibility requirements.  Such benefits,
in the aggregate, shall be no less favorable than the level of benefits in
effect on the Effective Date; provided, however, that in the event there is a
reduction of employee benefits applicable to senior executives generally,
nothing herein shall preclude the Company’s ability to reduce the Executive’s
benefits consistent with such reduction.  Without limiting the generality of the
foregoing, during the Employment Term, the Company will pay the annual scheduled
level premium on a variable universal life insurance policy on the Executive’s
life owned by the Executive with a face amount of at least U.S. $3,000,000.

 

(b)           Supplemental Retirement Benefit.

 

(i)            Subject to the provisions of this Section 6(b), the Executive
shall be entitled to receive an annual supplemental retirement benefit (the
“Supplemental Retirement Benefit”) payable at the later of age 60 and Separation
from Service (as defined below) in the form of a joint and 50% spousal
survivor’s annuity (based on the Executive’s current spouse’s then actual or
would have been age) equal to 50% of the Executive’s Final Average Earnings (as
defined below), reduced by (A) benefits from any defined benefit pension plans
(whether or not tax-qualified) maintained (or formerly maintained) by the
Company or its affiliates or by benefits from any defined benefit pension plans
(whether or not tax-qualified) maintained (or formerly maintained) by any
previous employers (in each case converted into a joint and 50% spousal
survivor’s annuity (based on the Executive’s current spouse’s then actual or
would have been age) commencing on the date of commencement of benefits
hereunder, if necessary) and (B) benefits attributable to employer
contributions, including, without limitation, matching contributions but not
salary reduction contributions, to any defined contribution plans maintained by
the Company or its affiliates (whether or not tax-qualified) based on
theoretical annual earnings after July 25, 2002 equal in each year to the prime
rate (as reported in The Wall Street Journal) on the first business day of each
year and on July 25, 2002 for 2002.

 

(ii)           In the event of the Executive’s voluntary termination of
employment without Good Reason or the Executive’s termination for Cause prior to
age 60, the Supplemental Retirement Benefit shall be reduced by .25% for each
month or partial month the termination date is prior to age 60.

 

(iii)          Due to the Executive’s service with the Company since July 25,
2002, he is fully vested in his Supplemental Retirement Benefit under this
subsection (b).

 

3

--------------------------------------------------------------------------------

 

(iv)          The Executive shall receive an immediate lump sum distribution of
his Supplemental Retirement Benefit upon the occurrence of a Change in Control
that is also a change in the ownership or effective control of the Company, or
in the ownership of a substantial portion of the assets of the Company (as such
terms are defined in Treasury Regulation Sections 1.409A-3(i)(5)(v), (vi) and
(vii)).  Such distribution shall be actuarially adjusted using the then current
PBGC interest rate and mortality table for immediate annuities.  Upon such
distribution, the Executive shall accrue no further benefits under this
Section 6(b).  In addition, the Executive shall receive at such time and in such
form all benefits payable to the Executive under any deferred compensation plan
subject to Code Section 409A if such benefits are used as an offset in
calculating the Supplemental Retirement Benefit payable under the terms of
subsection (b)(i) (including, without limitation, the Executive’s benefits
payable under the Company’s Supplemental Executive Retirement Plan and
Supplemental Savings and Retirement Plan).

 

(v)           Except as otherwise provided in subsection (b)(iv) above, the
Executive shall receive his Supplemental Retirement Benefit in a lump sum
distribution (determined on the basis of the then prevailing PBGC interest and
mortality table rate for immediate annuities) upon the later to occur of (A) the
Executive’s 60th birthday or (B) the Executive’s Separation from Service, other
than as a result of death (subject to any applicable 6-month delay pursuant to
Code Section 409A).  In addition, the Executive shall receive at such time and
in such form all benefits payable to the Executive under any deferred
compensation plan subject to Code Section 409A if such benefits are used as an
offset in calculating the Supplemental Retirement Benefit payable under the
terms of subsection (b)(i) (including, without limitation, the Executive’s
benefits payable under the Company’s Supplemental Executive Retirement Plan and
Supplemental Savings and Retirement Plan).

 

(vi)          In the event of the Executive’s death while an employee of the
Company prior to the date of commencement of benefits, a lump sum death benefit
shall be paid to the Executive’s surviving spouse, if any, within 90 days of the
date of the Executive’s death, with the amount of such lump sum death benefit
being the actuarial equivalent of the benefit which would have been payable to
the spouse assuming the Executive had terminated the day preceding the date of
death, commenced receiving benefits in the form of a joint and 50% spousal
survivor’s annuity and then died (determined on the basis of the then prevailing
PBGC interest and mortality table rate for immediate annuities and without
regard to any reduction for the Executive’s termination prior to attainment of
age 60 under subsection (b)(ii)).

 

(vii)         The calculation of the adjustments for the offset or alternative
forms of benefits payable pursuant to this Section 6(b) (except as provided in
subsections (iv), (v) and (vi) above) shall be based upon actuarial assumptions
selected by an independent actuary selected by the Company and reasonably
acceptable to the Executive (or his surviving spouse, if applicable).  The
calculation of the actuary shall be final and binding on all persons provided it
was made in good faith.  The benefits payable pursuant to this
Section 6(b) shall be unfunded and the Executive will not be considered to have
received a taxable economic benefit prior to the time at which benefits are
actually payable hereunder.  Accordingly, the Company or its affiliates shall
not be

 

4

--------------------------------------------------------------------------------

 

required to segregate any of their assets for the benefit of the Executive and
the Executive shall have only a contractual right against the Company for the
benefits payable hereunder.  The benefits payable pursuant to this
Section 6(b) shall not be subject to alienation, transfer, assignment,
garnishment, execution or levy of any kind, including without limitation under
any domestic relations order, and any attempt to cause any benefits to be so
subjected shall not be recognized and shall be null and void.

 

(viii)        “Final Average Earnings” shall mean the Executive’s highest
average of the sum of the Executive’s monthly base salary and actual annual
bonus (spread equally over the bonus period for which it is paid) during any
consecutive 36 month period (or lesser period of actual employment) during the
period of 60 complete months (or lesser period of actual employment) immediately
preceding the Executive’s termination of employment, but in no event less than
the sum of the Executive’s initial Base Salary and initial target bonus.

 

(ix)           “Separation from Service” shall mean the Executive’s death,
retirement or other termination of employment with the Company and all
affiliates.  For purposes of this definition, a “termination of employment”
shall occur when the facts and circumstances indicate that the Company and the
Executive reasonably anticipate that no further services would be performed by
the Executive for the Company and any affiliate after a certain date or that the
level of bona fide services the Executive would perform after such date (whether
as an employee or as an independent contractor) would permanently decrease to no
more than 20% of the average level of bona fide services performed (whether as
an employee or as an independent contractor) over the immediately preceding
36-month period.

 

(c)           Vacations.  The Executive shall be entitled to an annual paid
vacation in accordance with the Company’s policy applicable to senior
executives, but in no event less than four weeks per year (as prorated for
partial years), which vacation may be taken at such times as the Executive
elects with due regard to the needs of the Company.

 

(d)           Perquisites.  The Company shall provide to the Executive, at the
Company’s cost, all perquisites which other senior executives of the Company are
generally entitled to receive.  To the extent that the Executive’s permanent
residence is outside of New York and to the extent that the Executive becomes
subject to New York City or New York State taxes because of temporary assignment
or other performance of his duties, the Company shall gross-up the Executive for
tax purposes so that he is in the same position as if he were not subject to
such taxes.

 

(e)           Business and Entertainment Expenses.  Upon presentation of
appropriate documentation, the Executive shall be reimbursed in accordance with
the Company’s expense reimbursement policy for all reasonable and necessary
business and entertainment expenses incurred in connection with the performance
of his duties hereunder.

 

(f)            Travel.  The Company shall provide the Executive and his family
with personal safety and security protection as appropriate and reasonable under
the circumstances.  The parties recognize that such security protection may
include use by the Executive and his

 

5

--------------------------------------------------------------------------------

 

family of private transportation methods, including private air travel, for both
business and personal purposes.  Without limiting the foregoing, the Executive
shall have access to first class commercial air travel or use of private
aircraft for business travel.

 

7.             Termination.  The Executive’s employment and the Employment Term
shall terminate on the first of the following to occur:

 

(a)           Disability.  Upon written notice by the Company to the Executive
of termination due to Disability, while the Executive remains Disabled.  For
purposes of this Agreement, “Disability” shall be defined as the inability of
the Executive to have performed his material duties hereunder due to a physical
or mental injury, infirmity or incapacity for 180 days (including weekends and
holidays) in any 365-day period.  The existence or nonexistence of a Disability
shall be determined by an independent physician selected by the Company and
reasonably acceptable to Executive.

 

(b)           Death.  Automatically on the date of death of the Executive.

 

(c)           Cause.  Immediately upon written notice by the Company to the
Executive of a termination for Cause.  “Cause” shall mean:

 

(i)            The Executive shall have been indicted for a felony other than
one based on Limited Vicarious Liability, or

 

(ii)           The termination is evidenced by a resolution adopted in good
faith by at least two-thirds of the members of the Board concluding that
Executive:

 

(A)          intentionally and continually failed substantially to perform his
reasonably assigned duties with the Company (other than a failure resulting from
Executive’s incapacity due to physical or mental illness or from the assignment
to Executive of duties that would constitute Good Reason), which failure has
continued for a period of at least 30 days after a written notice of demand for
substantial performance, signed by a duly authorized member of the Board, has
been delivered to Executive specifying the manner in which Executive has failed
substantially to perform, or

 

(B)           intentionally engaged in conduct which is demonstrably and
materially injurious to the Company; provided, however, that no termination of
Executive’s employment shall be for Cause as set forth in subsection (B) until
(1) there shall have been delivered to Executive a copy of a written notice,
signed by a duly authorized member of the Board, stating that Executive was
guilty of the conduct set forth in subsection (B) and specifying the particulars
thereof in detail, and (2) Executive shall have been provided an opportunity to
be heard in person by the Board (with the assistance of Executive’s counsel if
Executive so desires).

 

(iii)          Notwithstanding anything in the foregoing to the contrary, if the
Executive has been terminated ostensibly for Cause because he has been indicted
for a felony (other than one involving Limited Vicarious Liability), and he is
not convicted of,

 

6

--------------------------------------------------------------------------------

 

or does not plead guilty or nolo contendere to, such felony or a lesser offense
(based on the same operative facts), such termination shall be deemed to be a
termination without Cause as of the date of the termination; provided, however,
that, in the event that the Executive has been terminated ostensibly for Cause
because he has been indicted for a felony (other than one involving Limited
Vicarious Liability) (A) the Executive’s ability to exercise outstanding stock
options shall be suspended and stock options will only be forfeited in the event
that the Executive is convicted of or pleads guilty or nolo contendere to a
felony or a lesser offense and any vesting shall be suspended until a final
determination in such proceeding is reached; (B) unvested deferred stock units
shall only be forfeited in the event that the Executive is convicted of or
pleads guilty or nolo contendere to a felony or a lesser offense and any vesting
or distribution shall be suspended until a final determination in such
proceeding is reached; (C) any cash payments shall be paid after a final
determination in such proceeding is reached and no later than the end of the
calendar year in which such final determination is reached; and (D) the Company
will pay the Executive an amount equal to the value of health and welfare
benefits that would otherwise been provided to the Executive as a result of the
termination, if any, after a final determination in such proceeding is reached
and no later than the end of the calendar year in which such final determination
is reached.  The Company shall gross up for tax purposes the amount paid
pursuant to subsection (D) hereof, so that the economic benefit is the same to
the Executive as if such payment or benefits were provided on a non-taxable
basis to the Executive.

 

(iv)          For purposes of the foregoing, the term Limited Vicarious
Liability shall mean any liability which is based on acts of the Company for
which Executive is responsible solely as a result of his office(s) with the
Company; provided that (A) he was not directly involved in such acts and either
had no prior knowledge of such intended actions or, upon obtaining such
knowledge, promptly acted reasonably and in good faith to attempt to prevent the
acts causing such liability or (B) after consulting with the Company’s counsel,
he reasonably believed that no law was being violated by such acts.

 

(d)           Without Cause.  Upon written notice by the Company to the
Executive of an involuntary termination without Cause, other than for death or
Disability.

 

(e)           Good Reason.  Upon written notice by the Executive to the Company
of a termination for Good Reason, unless such events are corrected in all
material respects by the Company within 30 days following written notification
by the Executive to the Company that he intends to terminate his employment
hereunder for one of the reasons set forth below.  “Good Reason” shall mean,
without the express written consent of the Executive, the occurrence of any of
the following events:

 

(i)            assignment to the Executive of any duties inconsistent in any
material respect with the Executive’s position (including titles and reporting
relationships), authority, duties or responsibilities as contemplated by this
Agreement, or any other action by the Company which results in a significant
diminution in such position, authority, duties or responsibilities;

 

7

--------------------------------------------------------------------------------

 

(ii)           any failure by the Company to comply with any of the material
provisions regarding Executive’s Base Salary, bonus, annual equity incentive,
benefits and perquisites, retirement benefit, relocation, and other benefits and
amounts payable to Executive under this Agreement;

 

(iii)          the Executive being required to relocate to a principal place of
employment more than 60 miles from his principal place of employment with the
Company;

 

(iv)          the delivery by the Company of a notice of non-renewal pursuant to
Section 2 hereof;

 

(v)           the failure by the Company to reelect the Executive as a Director
and as Chairman of the Board, or the removal of the Executive from either such
position; or

 

(vi)          any termination by the Executive during the 30-day period
immediately following the first anniversary of the date of any Change in
Control.

 

(f)            Without Good Reason.  Upon 30 days’ prior written notice by the
Executive to the Company of the Executive’s voluntary termination of employment
without Good Reason (which the Company may, in its sole discretion, make
effective earlier than any notice date).

 

8.             Consequences of Termination.  Any termination payments made and
benefits provided under this Agreement to the Executive shall be in lieu of any
termination or severance payments or benefits for which the Executive may be
eligible under any of the plans, policies or programs of the Company or its
affiliates.  Subject to Section 9, the following amounts and benefits shall be
due to the Executive.

 

(a)           Disability.  Upon such termination, the Company shall pay or
provide the Executive (i) any unpaid Base Salary through the date of termination
and any accrued vacation in accordance with Company policy; (ii) any unpaid
bonus earned with respect to any fiscal year ending on or preceding the date of
termination; (iii) reimbursement for any unreimbursed expenses incurred through
the date of termination; and (iv) all other payments, benefits or fringe
benefits to which the Executive may be entitled under the terms of any
applicable compensation arrangement or benefit, equity or fringe benefit plan or
program or grant or this Agreement (collectively, “Accrued Amounts”).

 

(b)           Death.  In the event the Employment Term ends on account of the
Executive’s death, the Executive’s estate shall be entitled to any Accrued
Amounts.

 

(c)           Termination for Cause or Without Good Reason.  If the Executive’s
employment should be terminated (i) by the Company for Cause, or (ii) by the
Executive without Good Reason, the Company shall pay to the Executive any
Accrued Amounts.

 

(d)           Termination Without Cause or for Good Reason.  If, prior to a
Change in Control, the Executive’s employment by the Company is terminated by
the Company other than

 

8

--------------------------------------------------------------------------------

 

for Cause (other than a termination for Disability) or by the Executive for Good
Reason, the Company shall pay or provide the Executive with (i) Accrued Amounts;
(ii) a pro-rata portion of the Executive’s bonus for the performance year in
which the Executive’s termination occurs at the time that annual bonuses are
paid to other senior executives (determined by multiplying the amount the
Executive would have received, based on actual performance, had employment
continued through the end of the performance year by a fraction, the numerator
of which is the number of days during the performance year of termination that
the Executive is employed by the Company and the denominator of which is 365);
(iii) a lump sum in cash in an amount equal to the product of (A) the sum of
(1) the then Base Salary and (2) the then target annual bonus or, if higher, the
most recent annual bonus payment multiplied by (B) two (one-and-one-half if the
Executive is age 62; one if the Executive is age 63 or older); and (iv) subject
to the Executive’s continued copayment of premiums, continued participation in
all health and welfare plans which cover the Executive (and eligible dependents)
for that period of time over which severance is payable upon the same terms and
conditions (except for the requirements of the Executive’s continued employment)
in effect on the date of termination.  In the event the Executive obtains other
employment that offers substantially similar or improved benefits, as to any
particular health or welfare plan, such continuation of coverage by the Company
for such similar or improved benefit under such plan under this subsection shall
immediately cease.  In the case of group medical benefits, (i) the continuation
of such benefits under this subsection shall reduce and count against the
Executive’s rights under the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended (“COBRA”) and (ii) medical benefit continuation under this
subparagraph shall be limited to a period not to exceed 18 months, with the
Executive entitled to a lump-sum cash payment (“Medical Payment”) equal to the
then-applicable COBRA monthly premium cost of such coverage multiplied by the
number of months (if any) by which the severance period exceeds 18 months, such
payment to be made within 30 days after the end of such 18-month period, plus a
tax gross-up payment in an amount sufficient such that the economic benefit is
the same to the Executive as if the Medical Payment were provided on a
non-taxable basis to the Executive.  Executive shall thereafter have the
opportunity, through the remainder of the severance period, to purchase
continued coverage under the Company’s group medical plans at COBRA rates.  If a
termination described in this subsection (d) occurs at or after a Change in
Control, the severance multiplier in subsection (iii)(B) above shall be three
(two if the Executive is age 62, one-and-one-half if the Executive is age 63,
and one if the Executive is age 64 or older).

 

9.             Release.  Any and all amounts payable and benefits or additional
rights provided pursuant to this Agreement beyond Accrued Amounts shall only be
payable if the Executive delivers to the Company a general release of all claims
of the Executive occurring up to the release date in the form of Exhibit B
hereto (with such changes therein as may be necessary to make it valid and
encompassing under applicable law) within 21 days of presentation thereof by the
Company to the Executive (which general release shall be presented within 10
days of the event triggering the right to payment).  Such amounts shall be paid
(or commence being paid) within 60 days following the event that triggers the
right to payment.

 

10.           Excise Tax.  In the event that the Executive becomes entitled to
payments and/or benefits which would constitute “parachute payments” within the
meaning of Section 280G(b)(2) of the Code, the provisions of Exhibit C shall
apply.

 

9

--------------------------------------------------------------------------------

 

11.           (a)           Confidentiality.  The Executive agrees that he shall
not, directly or indirectly, use, make available, sell, disclose or otherwise
communicate to any person, other than in the course of the Executive’s assigned
duties and for the benefit of the Company, either during the period of the
Executive’s employment or at any time thereafter, any nonpublic, proprietary or
confidential information, knowledge or data relating to the Company, or any of
its subsidiaries, affiliated companies or businesses, which shall have been
obtained by the Executive during the Executive’s employment by the Company.  The
foregoing shall not apply to information that (i) was known to the public prior
to its disclosure to the Executive; (ii) becomes known to the public subsequent
to disclosure to the Executive through no wrongful act of the Executive or any
representative of the Executive; or (iii) the Executive is required to disclose
by applicable law, regulation or legal process (provided that the Executive
provides the Company with prior notice of the contemplated disclosure and
reasonably cooperates with the Company at its expense in seeking a protective
order or other appropriate protection of such information).  Notwithstanding
clauses (i) and (ii) of the preceding sentence, the Executive’s obligation to
maintain such disclosed information in confidence shall not terminate where only
portions of the information are in the public domain.

 

(b)           Nonsolicitation.  During the Executive’s employment with the
Company and for the one year period thereafter, the Executive agrees that he
will not, directly or indirectly, individually or on behalf of any other person,
firm, corporation or other entity, knowingly solicit, aid or induce (i) any
managerial level employee of the Company or any of its subsidiaries or
affiliates to leave such employment in order to accept employment with or render
services to or with any other person, firm, corporation or other entity
unaffiliated with the Company or knowingly take any action to materially assist
or aid any other person, firm, corporation or other entity in identifying or
hiring any such employee or (ii) any customer of the Company or any of its
subsidiaries or affiliates to purchase goods or services then sold by the
Company or any of its subsidiaries or affiliates from another person, firm,
corporation or other entity or assist or aid any other persons or entity in
identifying or soliciting any such customer.

 

(c)           Noncompetition.  The Executive acknowledges that he performs
services of a unique nature for the Company that are irreplaceable, and that his
performance of such services to a competing business will result in irreparable
harm to the Company.  Accordingly, during the Executive’s employment hereunder
and for the one year period thereafter (two years for a competing business that
generates more than 30% of its gross revenues from the security business), the
Executive agrees that the Executive will not, directly or indirectly, own,
manage, operate, control, be employed by (whether as an employee, consultant,
independent contractor or otherwise, and whether or not for compensation) or
render services to any person, firm, corporation or other entity, in whatever
form, engaged in any business of the same type as any business in which the
Company or any of its subsidiaries or affiliates is engaged on the date of
termination or in which they have proposed, on or prior to such date, to be
engaged in on or after such date and in which the Executive has been involved to
any extent (other than DE MINIMIS) at any time during the 12-month period ending
with the date of termination, in any locale of any country in which the Company
conducts business.  This Section 11(c) shall not prevent the Executive from
owning not more than one percent of the total shares of all classes of stock
outstanding of any publicly held entity engaged in such business, nor will it
restrict the Executive from rendering services to charitable organizations, as
such term is defined in Section 501(c) of the Code.

 

10

--------------------------------------------------------------------------------

 

(d)           Nondisparagment.  Each of the Executive and the Company (for
purposes hereof, the Company shall mean only the executive officers and
directors thereof and not any other employees) agrees not to make any public
statements that disparage the other party, or in the case of the Company, its
respective affiliates, employees, officers, directors, products or services. 
Notwithstanding the foregoing, statements made in the course of sworn testimony
in administrative, judicial or arbitral proceedings (including, without
limitation, depositions in connection with such proceedings) shall not be
subject to this Section 11(d).

 

(e)           Equitable Relief and Other Remedies.  The Executive acknowledges
and agrees that the Company’s remedies at law for a breach or threatened breach
of any of the provisions of this Section would be inadequate and, in recognition
of this fact, the Executive agrees that, in the event of such a breach or
threatened breach, in addition to any remedies at law, the Company, without
posting any bond, shall be entitled to obtain equitable relief in the form of
specific performance, temporary restraining order, a temporary or permanent
injunction or any other equitable remedy which may then be available.

 

(f)            Reformation.  If it is determined by a court of competent
jurisdiction in any state that any restriction in this Section 11 is excessive
in duration or scope or is unreasonable or unenforceable under the laws of that
state, it is the intention of the parties that such restriction may be modified
or amended by the court to render it enforceable to the maximum extent permitted
by the law of that state.

 

(g)           Survival of Provisions.  The obligations contained in this
Section 11 shall survive the termination or expiration of the Executive’s
employment with the Company and shall be fully enforceable thereafter.

 

12.           Attorney’s Fees.

 

(a)           In the event of any dispute arising out of or under this Agreement
or the Executive’s employment with the Company, if the arbitrator or court of
competent jurisdiction, whichever is hearing the matter, determines that the
Executive has prevailed on the issues in the arbitration or court proceeding, as
the case may be, the Company shall, upon presentment of appropriate
documentation, at the Executive’s election, pay or reimburse the Executive for
all reasonable legal and other professional fees, costs of arbitration and other
reasonable expenses incurred in connection therewith by the Executive.

 

(b)           The Company shall promptly pay the Executive’s reasonable costs of
entering into this Agreement, including the reasonable fees and expenses of his
counsel and other professionals, up to a maximum of US $25,000 (based on such
counsel’s and professionals’ standard hourly rates).  The Company shall gross up
for tax purposes any deemed income to the Executive arising pursuant to the
payments provided under this Section 12(b), so that the economic benefit is the
same to the Executive as if such payments were provided on a non-taxable basis
to the Executive.

 

11

--------------------------------------------------------------------------------

 

13.           No Assignments.

 

(a)           This Agreement is personal to each of the parties hereto.  Except
as provided in Section 13(b) below, no party may assign or delegate any rights
or obligations hereunder without first obtaining the written consent of the
other party hereto.

 

(b)           The Company may assign this Agreement to any successor to all or
substantially all of the business and/or assets of the Company provided the
Company shall require such successor to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the Company would
be required to perform it if no such succession had taken place.

 

14.           Notice.  For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given (i) on the date of delivery if delivered by hand,
(ii) on the date of transmission, if delivered by confirmed facsimile, (iii) on
the first business day following the date of deposit if delivered by guaranteed
overnight delivery service, or (iv) on the fourth business day following the
date delivered or mailed by United States registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:

 

If to the Executive:

 

At the address (or to the facsimile number)
shown on the records of the Company

 

 

 

If to the Company:

 

Tyco International Ltd.
9 Roszel Road
Princeton, NJ 08540-6205
Attention: General Counsel

 

 

 

with a copy to:

 

Tyco International Ltd.
The Zurich Centre
Second Floor
90 Pitts Bay Road
Pembroke, HMO8, Bermuda
Attention: Corporate Secretary

 

or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.

 

15.           Section Headings; Inconsistency.  The section headings used in
this Agreement are included solely for convenience and shall not affect, or be
used in connection with, the interpretation of this Agreement.  In the event of
any inconsistency between the terms of this Agreement and any form, award, plan
or policy of the Company, the terms of this Agreement shall control.

 

16.           Severability.  The provisions of this Agreement shall be deemed
severable and the invalidity of unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.

 

12

--------------------------------------------------------------------------------

 

17.           Counterparts.  This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instruments.

 

18.           Arbitration.  Any dispute or controversy arising under or in
connection with this Agreement, other than injunctive relief under
Section 11(e) hereof or damages for breach of Section 11, shall be settled
exclusively by arbitration, conducted before a single arbitrator in New York,
New York in accordance with the J*A*M*S/ENDISPUTE Streamlined Arbitration
Rules and Procedures or J*A*M*S/ENDISPUTE Comprehensive Arbitration Rules and
Procedures, as applicable, but expressly excluding Rule 28 of the
J*A*M*S/ENDISPUTE Streamlined Rules (Final Offer (or Baseball) Arbitration
Option) and Rule 33 of the J*A*M*S/ENDISPUTE Comprehensive Rules (Final Offer
(or Baseball) Arbitration Option), as the case may be (or any successor
provisions).  The arbitrator will be a former or retired judge selected from a
list of those affiliated with J*A*M*S/ ENDISPUTE.  The arbitrator will have the
authority to permit discovery and to follow the procedures that he or she
determines to be appropriate.  The arbitrator will have no power to award
consequential (including lost profits), punitive or exemplary damages.  The
decision of the arbitrator will be final and binding upon the parties hereto. 
Judgment may be entered on the arbitrator’s award in any court having
jurisdiction.  Subject to Section 12, each party shall bear its own legal fees
and costs and equally divide the forum fees and cost of the arbitrator.

 

19.           Indemnification.  The Company hereby agrees to indemnify the
Executive and hold him harmless to the fullest extent permitted by law and under
the by-laws of the Company against and in respect to any and all actions, suits,
proceedings, claims, demands, judgments, costs, expenses (including reasonable
attorney’s fees), losses, and damages resulting from the Executive’s good faith
performance of his duties and obligations with the Company.  With respect to any
expenses that are subject to reimbursement under the Indemnification Provisions
or otherwise under this Agreement and that are subject to Code Section 409A, the
following shall apply:  (a) the amount of the expenses that are eligible for
reimbursement during one calendar year may not affect the amount of
reimbursements to be provided in any subsequent calendar year, (b) the
reimbursement of an eligible expense shall be made on or before the last day of
the calendar year following the calendar year in which the expense was incurred,
and (c) the right to reimbursement of the expenses shall not be subject to
liquidation or exchange for any other benefit.

 

20.           Liability Insurance.  The Company shall cover the Executive under
directors and officers liability insurance both during and, while potential
liability exists, after the term of this Agreement in the same amount and to the
same extent as the Company covers its officers and directors.

 

21.           Miscellaneous.  No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and such officer or director as may be
designated by the Board.  No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time.  This Agreement together with all exhibits hereto sets
forth the entire

 

13

--------------------------------------------------------------------------------

 

agreement of the parties hereto in respect of the subject matter contained
herein.  No agreements and/or representations, oral or otherwise, express or
implied, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement.  The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of New York without regard to its conflicts of law
principles.

 

22.           Full Settlement.  Except as set forth in this Agreement, the
Company’s obligation to make the payments provided for in this Agreement and
otherwise to perform its obligations hereunder shall not be affected by any
circumstances, including without limitation, set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others, except to the extent any amounts are due the Company or its
subsidiaries or affiliates pursuant to a judgment against the Executive;
provided, that no offset will be permitted in excess of US $5,000 hereunder
against any payment provided for under this Agreement which constitutes deferred
compensation subject to Code Section 409A.  In no event shall the Executive be
obliged to seek other employment or take any other action by way of mitigation
of the amounts payable to the Executive under any of the provisions of this
Agreement, nor shall the amount of any payment hereunder be reduced by any
compensation earned by the Executive as a result of employment by another
employer.

 

23.           Code Section 409A.

 

(a)           This Agreement is intended to comply with Code Section 409A and
the final regulations and interpretative guidance thereunder, including the
exceptions for short-term deferrals, separation pay arrangements,
reimbursements, and in-kind distributions, and shall be administered
accordingly.  The Agreement shall be construed and interpreted with such
intent.  If any provision of this Agreement needs to be revised to satisfy the
requirements of Code Section 409A, then such provision shall be modified or
restricted to the extent and in the manner necessary to be in compliance with
such requirements of the Code and any such modification will attempt to maintain
the same economic results as were intended under this Agreement.  Each payment
under this Agreement is intended to be treated as one of a series of separate
payment for purposes of Code Section 409A and Treas. Reg.
§1.409A-2(b)(2)(iii) (or any similar or successor provisions).  Any
reimbursement, tax gross-up or similar payment required to be paid to the
Executive hereunder shall be paid by the Company no later than the latest date
on which such payment may be made under Code Section 409A and applicable
regulations without causing such payment to be deemed deferred compensation
subject to Code Section 409A.

 

(b)           Notwithstanding any provision to the contrary, to the extent that
the Executive is considered a “specified employee” (as defined in Code
Section 409A and Treas. Reg. §1.409A-1(c)(i) or any similar or successor
provision) and would be entitled to a payment during the six month period
beginning on the Executive’s date of Separation from Service that is not
otherwise excluded under Code Section 409A under the exception for short-term
deferrals, separation pay arrangements, reimbursements, in-kind distributions,
or any otherwise applicable exemption, the payment will not be made to the
Executive until the earlier of the six month anniversary of the Executive’s date
of

 

14

--------------------------------------------------------------------------------

 

Separation from Service or the Executive’s death and will be accumulated and
paid on the first day of the seventh month following the date of termination.

 

24.           Withholding.  The Company may withhold from any and all amounts
payable under this Agreement such federal, state and local taxes as may be
required to be withheld pursuant to any applicable law or regulation.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.

 

 

TYCO INTERNATIONAL LTD.

 

 

 

By:

/s/ Rajiv L. Gupta

 

Name: Rajiv L. Gupta
Its: Director

 

 

 

EDWARD D. BREEN

 

 

 

/s/ Edward D. Breen

 

15

--------------------------------------------------------------------------------

 

EXHIBIT A

 

DEFINITION OF CHANGE IN CONTROL

 

“Change in Control” shall mean the first to occur of any of the following
events:

 

(a)           any “person” (as defined in Section 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)), excluding for
this purpose, (i) the Company or any subsidiary of the Company, or (ii) any
employee benefit plan of the Company or any subsidiary of the Company, or any
person or entity organized, appointed or established by the Company for or
pursuant to the terms of any such plan which acquires beneficial ownership of
voting securities of the Company, is or becomes the “beneficial owner” (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly of
securities of the Company representing more than 40% of the combined voting
power of the Company’s then outstanding securities; provided, however, that no
Change in Control will be deemed to have occurred as a result of a change in
ownership percentage resulting solely from an acquisition of securities by the
Company; or

 

(b)           persons who, as of the Effective Date constitute the Board (the
“Incumbent Directors”) cease for any reason, including without limitation, as a
result of a tender offer, proxy contest, merger or similar transaction, to
constitute at least a majority thereof, provided that any person becoming a
director of the Company subsequent to the Effective Date shall be considered an
Incumbent Director if such person’s election or nomination for election was
approved by a vote of at least 50% of the Incumbent Directors; but provided
further, that any such person whose initial assumption of office is in
connection with an actual or threatened election contest relating to the
election of members of the Board or other actual or threatened solicitation of
proxies or consents by or on behalf of a “person” (as defined in
Section 13(d) and 14(d) of the Exchange Act) other than the Board, including by
reason of agreement intended to avoid or settle any such actual or threatened
contest or solicitation, shall not be considered an Incumbent Director; or

 

(c)           consummation of a reorganization, merger or consolidation or sale
or other disposition of at least 80% of the assets of the Company (a “Business
Combination”), in each case, unless, following such Business Combination, all or
substantially all of the individuals and entities who were the beneficial owners
of outstanding voting securities of the Company immediately prior to such
Business Combination beneficially own, directly or indirectly, more than 50% of
the combined voting power of the then outstanding voting securities entitled to
vote generally in the election of directors, as the case may be, of the company
resulting from such Business Combination (including, without limitation, a
company which, as a result of such transaction, owns the Company or all or
substantially all of the Company’s assets either directly or through one or more
subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the outstanding voting
securities of the Company; or

 

(d)           approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.

 

A-1

--------------------------------------------------------------------------------

 

EXHIBIT B

 

FORM OF RELEASE
AGREEMENT AND GENERAL RELEASE

 

Tyco International Ltd., and its affiliates, subsidiaries, divisions, successors
and assigns and the current, future and former employees, officers, directors,
trustees and agents thereof (collectively referred to throughout this Agreement
as “Employer”) and Edward D. Breen, his heirs, executors, administrators,
successors and assigns (collectively referred to throughout this Agreement as
“Employee”) agree:

 

1.             Last Day of Employment.  Employee’s last day of employment with
Employer is DATE.  In addition, effective as of DATE, Employee resigns from his
positions as Chairman, President and Chief Executive Officer of Tyco
International Ltd. and as President and Chief Executive Officer of Tyco
International Ltd. and will not be eligible for any benefits or compensation
after DATE, other than as specifically provided in Sections 5 and 8 of the
employment agreement between Tyco International Ltd. and Employee dated as of
December 19, 2008 (the “Employment Agreement”), subject to the Employee’s
executing, delivering and not revoking Appendix 1 hereto.  Employee further
acknowledges and agrees that, after DATE, he will not represent himself as being
a director, employee, officer, trustee, agent or representative of the Employer
for any purpose and will not make any public statements relating to the
Employer, other than general statements relating to his position, title or
experience with the Employer, subject to the confidentiality provision under
Section 11(a) of the Employment Agreement and in no event will the Employee make
any statements as an agent or representative of the Employer.  In addition,
effective as of DATE, Employee resigns from all offices, directorships,
trusteeships, committee memberships and fiduciary capacities held with, or on
behalf of, the Employer or any benefit plans of the Employer.  These
resignations will become irrevocable as set forth in Section 3 below.

 

2.             Consideration.  The parties acknowledge that this Agreement and
General Release is being executed in accordance with Section 9 of the Employment
Agreement.

 

3.             Revocation.  Employee may revoke this Agreement and General
Release for a period of seven (7) calendar days following the day he executes
this Agreement and General Release.  Any revocation within this period must be
submitted, in writing, to Tyco International Ltd. and state, “I hereby revoke my
acceptance of our Agreement and General Release.” The revocation must be
personally delivered to SENIOR VICE PRESIDENT OF HUMAN RESOURCES, or his or her
designee, or mailed to Tyco International Ltd., 9 Roszel Road, Princeton, New
Jersey 08540-6205, Attention: SENIOR VICE PRESIDENT OF HUMAN RESOURCES and
postmarked within seven (7) calendar days of execution of this Agreement and
General Release.  This Agreement and General Release shall not become effective
or enforceable until the revocation period has expired.  If the last day of the
revocation period is a Saturday, Sunday, or legal holiday in New York, then the
revocation period shall not expire until the next following day which is not a
Saturday, Sunday, or legal holiday.

 

4.             General Release of Claims.  Employee knowingly and voluntarily
releases and forever discharges Employer from any and all claims, causes of
action, demands, fees and

 

B-1

--------------------------------------------------------------------------------

 

liabilities of any kind whatsoever, whether known and unknown, against Employer,
Employee has, has ever had or may have as of the date of execution of this
Agreement and General Release, including, but not limited to, any alleged
violation of:

 

·                                          The National Labor Relations Act, as
amended;

 

·                                          Title VII of the Civil Rights Act of
1964, as amended;

 

·                                          The Civil Rights Act of 1991;

 

·                                          Sections 1981 through 1988 of Title
42 of the United States Code, as amended;

 

·                                          The Employee Retirement Income
Security Act of 1974, as amended;

 

·                                          The Immigration Reform and Control
Act, as amended;

 

·                                          The Americans with Disabilities Act
of 1990, as amended;

 

·                                          The Age Discrimination in Employment
Act of 1967, as amended;

 

·                                          The Older Workers Benefit Protection
Act of 1990;

 

·                                          The Worker Adjustment and Retraining
Notification Act, as amended;

 

·                                          The Occupational Safety and Health
Act, as amended;

 

·                                          The Family and Medical Leave Act of
1993;

 

·                                          The STATE Civil Rights Act, as
amended;

 

·                                          The STATE Minimum Wage Law, as
amended;

 

·                                          Equal Pay Law for STATE, as amended;

 

·                                          Any other federal, state or local
civil or human rights law or any other local, state or federal law, regulation
or ordinance;

 

·                                          Any public policy, contract, tort, or
common law; or

 

·                                          Any allegation for costs, fees, or
other expenses including attorneys’ fees incurred in these matters.

 

Notwithstanding anything herein to the contrary, the sole matters to which the
Agreement and General Release do not apply are:  (i) the Employee’s rights of
indemnification and directors and officers liability insurance coverage to which
he was entitled immediately prior to DATE with regard to his service as an
officer of the Employer (including, without limitation, under Sections 19 and 20
of the Employment Agreement); (ii) the Employee’s rights under any tax-qualified
pension or claims for accrued vested benefits under any other employee benefit
plan,

 

B-2

--------------------------------------------------------------------------------

 

policy or arrangement maintained by the Employer or under COBRA; (iii) the
Employee’s rights under the provisions of the Employment Agreement which are
intended to survive termination of employment; or (iv) the Employee’s rights as
a stockholder.

 

5.             No Claims Permitted.  Employee waives his right to file any
charge or complaint against Employer arising out of his employment with or
separation from Employer before any federal, state or local court or any state
or local administrative agency, except where such waivers are prohibited by
law.  This Agreement, however, does not prevent Employee from filing a charge
with the Equal Employment Opportunity Commission, any other federal government
agency, and/or any government agency concerning claims of discrimination,
although Employee waives his right to recover any damages or other relief in any
claim or suit brought by or through the Equal Employment Opportunity Commission
or any other state or local agency on behalf of Employee under the Age
Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964 as
amended, the Americans with Disabilities Act, or any other federal or state
discrimination law, except where such waivers are prohibited by law.

 

6.             Affirmations.  Employee affirms he has not filed, has not caused
to be filed, and is not presently a party to, any claim, complaint, or action
against Employer in any forum or form.  Employee further affirms that he has
been paid and/or has received all compensation, wages, bonuses, commissions,
and/or benefits to which he may be entitled and no other compensation, wages,
bonuses, commissions and/or benefits are due to him, except as provided in
Sections 5 and 8 of the Employment Agreement.  Employee also affirms he has no
known workplace injuries.

 

7.             Confidentiality; Cooperation; Return of Property.  Employee
agrees not to disclose any information regarding the circumstances surrounding
the cessation of his employment, or the existence, terms, or conditions of this
Agreement and General Release, to any person or entity whatsoever, including
without limitation, any members of the media (including, but not limited to,
print journalists, newspapers, radio, television, cable, satellite programs, or
Internet media) or any Internet web page or “chat room,” or any other entity or
person, with the exception of Employee’s spouse, accountant, tax advisor, and/or
attorneys.  Notwithstanding the aforementioned provision, nothing herein shall
preclude Employee from divulging any information to any agency of the federal,
state, or local government pursuant to an official request by such government
agency or pursuant to court order (provided that the Executive provides the
Employer with prior notice of the contemplated disclosure and reasonably
cooperates with the Employer at its expense in seeking a protective order or
other appropriate protection of such information).  Employee agrees to
reasonably cooperate with the Employer and its counsel in connection with any
investigation, administrative proceeding or litigation relating to any matter
that occurred during his employment in which he was involved or of which he has
knowledge.  The Employer will reimburse the Employee for any reasonable
pre-approved out-of-pocket travel, delivery or similar expenses incurred in
providing such service to the Employer.  Employee represents that he has
returned to the Employer all property belonging to the Employer, including but
not limited to any leased vehicle, laptop, cell phone, keys, access cards, phone
cards and credit cards.

 

8.             Governing Law and Interpretation.  This Agreement and General
Release shall be governed and conformed in accordance with the laws of the State
of New York without regard to

 

B-3

--------------------------------------------------------------------------------

 

its conflict of laws provision.  In the event Employee or Employer breaches any
provision of this Agreement and General Release, Employee and Employer affirm
either may institute an action to specifically enforce any term or terms of this
Agreement and General Release.  Should any provision of this Agreement and
General Release be declared illegal or unenforceable by any court of competent
jurisdiction and should the provision be incapable of being modified to be
enforceable, such provision shall immediately become null and void, leaving the
remainder of this Agreement and General Release in full force and effect. 
Nothing herein, however, shall operate to void or nullify any general release
language contained in the Agreement and General Release.

 

9.             Nonadmission of Wrongdoing.  Employee agrees neither this
Agreement and General Release nor the furnishing of the consideration for this
Release shall be deemed or construed at any time for any purpose as an admission
by Employer of any liability or unlawful conduct of any kind.

 

10.           Amendment.  This Agreement and General Release may not be
modified, altered or changed except upon express written consent of both parties
wherein specific reference is made to this Agreement and General Release.

 

11.           Entire Agreement.  This Agreement and General Release sets forth
the entire agreement between the parties hereto and fully supersedes any prior
agreements or understandings between the parties; provided, however, that
notwithstanding anything in this Agreement and General Release, the provisions
in the Employment Agreement which are intended to survive termination of the
Employment Agreement, including but not limited to those contained in Section 11
thereof, shall survive and continue in full force and effect.  Employee
acknowledges he has not relied on any representations, promises, or agreements
of any kind made to him in connection with his decision to accept this Agreement
and General Release.

 

EMPLOYEE HAS BEEN ADVISED THAT HE HAS UP TO TWENTY-ONE (21) CALENDAR DAYS TO
REVIEW THIS AGREEMENT AND GENERAL RELEASE AND HAS BEEN ADVISED IN WRITING TO
CONSULT WITH AN ATTORNEY PRIOR TO EXECUTION OF THIS AGREEMENT AND GENERAL
RELEASE.

 

EMPLOYEE AGREES ANY MODIFICATIONS, MATERIAL OR OTHERWISE, MADE TO THIS AGREEMENT
AND GENERAL RELEASE DO NOT RESTART OR AFFECT IN ANY MANNER THE ORIGINAL
TWENTY-ONE (21) CALENDAR DAY CONSIDERATION PERIOD.

 

HAVING ELECTED TO EXECUTE THIS AGREEMENT AND GENERAL RELEASE, TO FULFILL THE
PROMISES SET FORTH HEREIN, AND TO RECEIVE THE SUMS AND BENEFITS IN SET FORTH IN
THE EMPLOYMENT AGREEMENT, EMPLOYEE FREELY AND KNOWINGLY, AND AFTER DUE
CONSIDERATION, ENTERS INTO THIS AGREEMENT AND GENERAL RELEASE INTENDING TO
WAIVE, SETTLE AND RELEASE ALL CLAIMS HE HAS OR MIGHT HAVE AGAINST EMPLOYER.

 

B-4

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the parties hereto knowingly and voluntarily executed this
Agreement and General Release as of the date set forth below:

 

 

 

 

TYCO INTERNATIONAL LTD.

 

 

 

 

Date:

 

 

By:

 

 

 

 

 

Senior Vice President of Human Resources

 

 

 

 

 

 

 

 

 

Date:

 

 

By:

 

 

 

 

 

EDWARD BREEN

 

B-5

--------------------------------------------------------------------------------

 

Mr. Edward D. Breen

 

Re:          Agreement and General Release

 

Dear Ed:

 

This letter confirms that on DATE, I personally sent to you the enclosed
Agreement and General Release.  You have until DATE to consider this Agreement
and General Release, in which you waive important rights, including those under
the Age Discrimination in Employment Act of 1967.  To this end, we advise you to
consult with an attorney of your choosing prior to executing this Agreement and
General Release.

 

 

Regards,

 

 

 

Senior Vice President of Human Resources

 

Tyco International Ltd.

 

B-6

--------------------------------------------------------------------------------

 

APPENDIX 1

 

SENIOR VICE PRESIDENT OF
HUMAN RESOURCES

 

Tyco International Ltd.

 

Re:  Agreement and General Release

 

Dear NAME,

 

On [date] I executed an Agreement and General Release between Tyco International
Ltd. and me.  I was advised by Tyco International Ltd., in writing, to consult
with an attorney of my choosing, prior to executing this Agreement and General
Release.

 

More than seven (7) calendar days have expired since I executed the
above-mentioned Agreement and General Release.  I have at no time revoked my
acceptance or execution of that Agreement and General Release and hereby
reaffirm my acceptance of it.  Therefore, in accordance with the terms of our
Agreement and General Release, I request payment of the monies and benefits
described in Sections 5 and 8 of the Employment Agreement.

 

 

Regards,

 

 

 

Signed:

 

 

 

Edward D. Breen

 

B-7

--------------------------------------------------------------------------------

 

EXHIBIT C

 

GROSS-UP PROVISIONS

 

(a)           Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that the Executive shall become entitled to
payments and/or benefits provided by this Agreement or any other amounts in the
“nature of compensation” (whether pursuant to the terms of this Agreement or any
other plan, arrangement or agreement with the Company or any affiliate, any
person whose actions result in a change of ownership or effective control of the
Company covered by Section 280G(b)(2) of the Code or any person affiliated with
the Company or such person) as a result of such change in ownership or effective
control of the Company (a “Payment”) would be subject to the excise tax imposed
by Section 4999 of the Code or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
“Excise Tax”), then the Executive shall be entitled to receive an additional
payment (a “Gross-Up Payment”) in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and Excise Tax imposed upon
the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.

 

(b)           Subject to the provisions of paragraph (c), all determinations
required to be made under this Exhibit C, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by a nationally
recognized accounting firm (the “Accounting Firm”) which shall provide detailed
supporting calculations both to the Company and the Executive within 15 business
days of the receipt of notice from the Executive that there has been a Payment,
or such earlier time as is requested by the Company.  The Accounting Firm shall
be jointly selected by the Company and the Executive and shall not, during the
two years preceding the date of its selection, have acted in any way on behalf
of the Company or its affiliated companies.  If the Company and the Executive
cannot agree on the firm to serve as the Accounting Firm, then the Company and
the Executive shall each select a nationally recognized accounting firm and
those two firms shall jointly select a nationally recognized accounting firm to
serve as the Accounting Firm.  All fees and expenses of the Accounting Firm
shall be borne solely by the Company.  Any Gross-Up Payment, as determined
pursuant to this Exhibit C, shall be paid by the Company to the Executive within
five days of the receipt of the Accounting Firm’s determination.  If the
Accounting Firm determines that no Excise Tax is payable by the Executive, it
shall furnish the Executive with a written opinion, based upon “substantial
authority” (within the meaning of Section 6230 of the Code), that failure to
report the Excise Tax on the Executive’s applicable federal income tax return
would not result in the imposition of a negligence or similar penalty.  Any
determination by the Accounting Firm shall be binding upon the Company and the
Executive, absent manifest error.  As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by the Company should have been made (“Underpayment”),
consistent with the calculations required to be made hereunder.  In the event
that the Company exhausts its remedies pursuant to paragraph (c) hereof and the
Executive thereafter is required to make a payment of any Excise

 

E-1

--------------------------------------------------------------------------------

 

Tax, the Accounting Firm shall determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly paid by the Company to or
for the benefit of the Executive.

 

(c)           The Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment by
the Company of a Gross-Up Payment.  Such notification shall be given as soon as
practicable but no later than ten business days after the Executive is informed
in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid.  The Executive
shall not pay such claim prior to the expiration of the 30-day period following
the date on which he gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is
due).  If the Company notifies the Executive in writing prior to the expiration
of such period that it desires to contest such claim, the Executive shall:

 

(i)            give the Company any information reasonably requested by the
Company relating to such claim,

 

(ii)           take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,

 

(iii)          cooperate with the Company in good faith in order effectively to
contest such claim, and

 

(iv)          permit the Company to participate in any proceedings relating to
such claim; provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses.  Without limitation on the
foregoing provisions of this paragraph (c), the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company directs the
Executive to pay such claim and sue for a refund, the Company shall advance the
amount of such payment to the Executive, on an interest-free basis, and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed income with
respect to such advance; and further provided the Executive shall not be
required by the Company to agree to any extension of the statute of limitations
relating to the payment of taxes for the taxable year of the Executive with
respect to which such contested amount is claimed to be due unless such
extension is limited solely to such contested amount.  Furthermore, the
Company’s control of the contest shall be

 

E-2

--------------------------------------------------------------------------------

 

limited to issues with respect to which a Gross-Up Payment would be payable
hereunder and the Executive shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.

 

(d)           If, after the receipt by the Executive of an amount advanced by
the Company pursuant to paragraph (c) hereof, the Executive becomes entitled to
receive any refund with respect to such claim, the Executive shall (subject to
paragraph (f) hereof and subject to the Company’s complying with the
requirements of paragraph (c) hereof) promptly pay to the Company the amount of
such refund (together with any interest paid or credited thereon after taxes
applicable thereto).  If, after the receipt by the Executive of an amount
advanced by the Company pursuant to paragraph (c) hereof, a determination is
made that the Executive shall not be entitled to any refund with respect to such
claim and the Company does not notify the Executive in writing of its intent to
contest such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.

 

(e)           If, pursuant to regulations issued under Section 280G or 4999 of
the Code, the Company and the Executive were required to make a preliminary
determination of the amount of an excess parachute payment and thereafter a
redetermination of the Excise Tax is required under the applicable regulations,
the parties shall request the Accounting Firm to make such redetermination.  If
as a result of such redetermination an additional Gross-Up Payment is required,
the amount thereof shall be paid by the Company to the Executive within five
days of the receipt of the Accounting Firm’s determination.  If the
redetermination of the Excise Tax results in a reduction of the Excise Tax, the
Executive shall take such steps as the Company may reasonably direct in order to
obtain a refund of the excess Excise Tax paid.  If the Company determines that
any suit or proceeding is necessary or advisable in order to obtain such refund,
the provisions of paragraph (c) hereof relating to the contesting of a claim
shall apply to the claim for such refund, including, without limitation, the
provisions concerning legal representation, cooperation by the Executive,
participation by the Company in the proceedings and indemnification by the
Company.  Upon receipt of any such refund, the Executive shall (subject to
paragraph (f) hereof) promptly pay the amount of such refund to the Company.  If
the amount of the income taxes otherwise payable by the Executive in respect of
the year in which the Executive makes such payment to the Company is reduced as
a result of such payment, the Executive shall, no later than the filing of his
income tax return in respect of such year, pay the amount of such tax benefit to
the Company (subject to paragraph (f) hereof).  In the event there is a
subsequent redetermination of the Executive’s income taxes resulting in a
reduction of such tax benefit, the Company shall, promptly after receipt of
notice of such reduction, pay to the Executive the amount of such reduction.  If
the Company objects to the calculation or recalculation of the tax benefit, as
described in the preceding two sentences, the Accounting Firm shall make the
final determination of the appropriate amount.  The Executive shall not be
obligated to pay to the Company the amount of any further tax benefits that may
be realized by him as a result of paying to the Company the amount of the
initial tax benefit.

 

(f)            Each provision of this Exhibit C shall be interpreted in a manner
consistent with the overall intent of this Exhibit C, which is to make the
Executive whole, on an after-tax basis, from any imposition of (or claim to
impose) the Excise Tax, it being acknowledged and

 

E-3

--------------------------------------------------------------------------------

 

understood that the reversal of any advance made by the Company pursuant to
paragraph (c) hereof, or the correction of any other type of overpayment of a
Gross-Up Payment to the Executive by the Company, may result in the Executive
paying to the Company an amount which is less than the related advance or other
overpayment by the Company.  In particular and not by way of limitation, any
other provision of this Exhibit C notwithstanding, the Executive shall not in
any event be obligated, in connection with repaying any refund as described in
paragraphs (d) and (e) hereof, to pay the Company an amount greater than the net
after-tax portion of any advance or other type of Gross-Up Payment that he has
retained or has recovered as a refund from the applicable taxing authorities;
but the Executive shall not be relieved of his obligation hereunder to recover
certain amounts as a refund or credit.

 

E-4

--------------------------------------------------------------------------------