Exhibit 10.3

 

TYCO INTERNATIONAL

 

CHANGE IN CONTROL SEVERANCE PLAN FOR CERTAIN

 

U.S. OFFICERS AND EXECUTIVES

 

Amended and Restated as of January 1, 2009

 

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ARTICLE I

BACKGROUND, PURPOSE AND TERM OF PLAN

1

 

 

 

Section 1.01

Purpose of the Plan

1

Section 1.02

Term of the Plan

1

Section 1.03

Compliance with Code Section 409A

1

 

 

 

ARTICLE II

DEFINITIONS

1

 

 

 

Section 2.01

“Annual Bonus”

1

Section 2.02

“Base Salary”

1

Section 2.03

“Board”

1

Section 2.04

“Cause”

1

Section 2.05

“Change in Control”

1

Section 2.06

“Change in Control Termination”

2

Section 2.07

“COBRA”

2

Section 2.08

“Code”

3

Section 2.09

“Committee”

3

Section 2.10

“Company”

3

Section 2.11

“Effective Date”

3

Section 2.12

“Eligible Employee”

3

Section 2.13

“Employee”

3

Section 2.14

“Employer”

3

Section 2.15

“ERISA”

3

Section 2.16

“Exchange Act”

3

Section 2.17

“Executive Severance Plan”

3

Section 2.18

“Good Reason Resignation”

3

Section 2.19

“Involuntary Termination”

4

Section 2.20

“Key Employee”

4

Section 2.21

“Notice Pay”

4

Section 2.22

“Officer”

4

Section 2.23

“Participant”

5

Section 2.24

“Permanent Disability”

5

Section 2.25

“Plan”

5

Section 2.26

“Plan Administrator”

5

Section 2.27

“Postponement Period”

5

Section 2.28

“Potential Change in Control”

5

Section 2.29

“Release”

6

Section 2.30

“Segment President”

6

Section 2.31

“Service”

6

Section 2.32

“Separation from Service”

6

Section 2.33

“Separation from Service Date”

6

Section 2.34

“Severance Benefits”

6

Section 2.35

“Severance Period”

7

Section 2.36

“Subsidiary”

7

Section 2.37

“Successor”

7

Section 2.38

“Voluntary Resignation”

7

 

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ARTICLE III

PARTICIPATION AND ELIGIBILITY FOR BENEFITS

7

 

 

 

Section 3.01

Participation

7

Section 3.02

Conditions

7

 

 

 

ARTICLE IV

DETERMINATION OF SEVERANCE BENEFITS

9

 

 

 

Section 4.01

Amount of Severance Benefits Upon Involuntary Termination and Good Reason
Resignation

9

Section 4.02

Voluntary Resignation; Termination Due to Death or Permanent Disability

11

Section 4.03

Termination for Cause

11

Section 4.04

Reduction of Severance Benefits

12

Section 4.05

Non-Duplication of Benefits

12

 

 

 

ARTICLE V

METHOD, DURATION AND LIMITATION OF SEVERANCE BENEFIT PAYMENTS

12

 

 

 

Section 5.01

Method of Payment

12

Section 5.02

Other Arrangements

13

Section 5.03

Code Section 409A

13

Section 5.04

Termination of Eligibility for Benefits

14

Section 5.05

Limitation on Benefits

14

 

 

 

ARTICLE VI

CONFIDENTIALITY AND NON-DISPARAGEMENT

15

 

 

 

Section 6.01

Confidential Information

15

Section 6.02

Non-Disparagement

16

Section 6.03

Reasonableness

16

Section 6.04

Equitable Relief

16

Section 6.05

Survival of Provisions

17

 

 

 

ARTICLE VII

THE PLAN ADMINISTRATOR

17

 

 

 

Section 7.01

Authority and Duties

17

Section 7.02

Compensation of the Plan Administrator

17

Section 7.03

Records, Reporting and Disclosure

17

 

 

 

ARTICLE VIII

AMENDMENT, TERMINATION AND DURATION

18

 

 

 

Section 8.01

Amendment, Suspension and Termination

18

Section 8.02

Duration

18

 

 

 

ARTICLE IX

DUTIES OF THE COMPANY AND THE COMMITTEE

18

 

 

 

Section 9.01

Records

18

Section 9.02

Payment

18

Section 9.03

Discretion

18

 

 

 

ARTICLE X

CLAIMS PROCEDURES

19

 

 

 

Section 10.01

Claim

19

Section 10.02

Initial Claim

19

Section 10.03

Appeals of Denied Administrative Claims

20

Section 10.04

Appointment of the Named Appeals Fiduciary

20

 

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Section 10.05

Arbitration; Expenses

20

 

 

 

ARTICLE XI

MISCELLANEOUS

21

 

 

 

Section 11.01

Nonalienation of Benefits

21

Section 11.02

Notices

21

Section 11.03

Successors

21

Section 11.04

Other Payments

21

Section 11.05

No Mitigation

21

Section 11.06

No Contract of Employment

22

Section 11.07

Severability of Provisions

22

Section 11.08

Heirs, Assigns, and Personal Representatives

22

Section 11.09

Headings and Captions

22

Section 11.10

Gender and Number

22

Section 11.11

Unfunded Plan

22

Section 11.12

Payments to Incompetent Persons

22

Section 11.13

Lost Payees

22

Section 11.14

Controlling Law

22

 

 

 

SCHEDULE A

SEVERANCE BENEFITS SALARY REPLACEMENT AND ANNUAL BONUS

A-1

 

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ARTICLE I

 

BACKGROUND, PURPOSE AND TERM OF PLAN

 

Section 1.01         Purpose of the Plan. The purpose of the Plan is to provide
Eligible Employees with certain compensation and benefits as set forth in the
Plan in the event the Eligible Employee’s employment with the Company or a
Subsidiary is terminated due to a Change in Control Termination. The Plan is not
intended to be an “employee pension benefit plan” or “pension plan” within the
meaning of Section 3(2) of ERISA. Rather, this Plan is intended to be a “welfare
benefit plan” within the meaning of Section 3(1) of ERISA and to meet the
descriptive requirements of a plan constituting a “severance pay plan” within
the meaning of regulations published by the Secretary of Labor at Title 29, Code
of Federal Regulations, section 2510.3-2(b). Accordingly, the benefits paid by
the Plan are not deferred compensation and no employee shall have a vested right
to such benefits.

 

Section 1.02         Term of the Plan. The Plan shall generally be effective as
of the Effective Date, but subject to amendment from time to time in accordance
with Section 8.01. The Plan shall continue until terminated pursuant to
Article VIII of the Plan.

 

Section 1.03         Compliance with Code Section 409A. The terms of this Plan
are intended to, and shall be interpreted so as to, comply in all respects with
the provisions of Code Section 409A and the regulations and rulings promulgated
thereunder.

 

ARTICLE II

 

DEFINITIONS

 

Section 2.01         “Annual Bonus” shall mean 100% of the Participant’s target
annual bonus.

 

Section 2.02         “Base Salary” shall mean the annual base salary in effect
as of the Participant’s Separation from Service Date.

 

Section 2.03         “Board” shall mean the Board of Directors of the Company,
or any successor thereto, or a committee thereof specifically designated for
purposes of making determinations hereunder.

 

Section 2.04         “Cause” shall mean (i) a material violation of any
fiduciary duty owed to the Company, (ii) conviction of, or entry of a plea of
nolo contendere with respect to, a felony or misdemeanor, (iii) dishonesty,
(iv) theft, or (v) other egregious conduct, that is likely to have a materially
detrimental impact on the Company and its employees. Whether an Eligible
Employee’s termination is as a result of Cause shall be determined in the
discretion of the Plan Administrator.

 

Section 2.05         “Change in Control” shall mean any of the following events:

 

(i)            any “person” (as defined in Section 13(d) and 14(d) of the
Exchange Act, excluding for this purpose, (i) the Company or any subsidiary
company (wherever incorporated) of the Company as defined by the law of the
Company’s place of incorporation or (ii) any

 

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employee benefit plan of the Company or any such subsidiary company (or any
person or entity organized, appointed or established by the Company for or
pursuant to the terms of any such plan that 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 30 percent 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;

 

(ii)           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 percent of the Incumbent Directors; but
provided further, that any such person whose initial assumption of office is in
connection with an actual or threatened proxy 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;

 

(iii)          consummation of a reorganization, merger or consolidation or sale
or other disposition of at least 80 percent 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 percent 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 Subsidiary companies (wherever
incorporated) of the Company as defined by the law of the Company’s place of
incorporation in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the outstanding voting
securities of the Company; or

 

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

 

Section 2.06         “Change in Control Termination” shall mean a Participant’s
Involuntary Termination or Good Reason Resignation that occurs during the period
beginning 60 days prior to the date of a Change in Control and ending two years
after the date of such Change in Control.

 

Section 2.07         “COBRA” shall mean the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, and the regulations promulgated
thereunder.

 

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Section 2.08         “Code” shall mean the Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder.

 

Section 2.09         “Committee” shall mean the Compensation and Human Resources
Committee of the Board or such other committee appointed by the Board to assist
the Company in making determinations required under the Plan in accordance with
its terms. The “Committee” may delegate its authority under the Plan to an
individual or another committee.

 

Section 2.10         “Company” shall mean Tyco International Ltd. Unless it is
otherwise clear from the context, Company shall generally include participating
Subsidiaries.

 

Section 2.11         “Effective Date” shall mean January 1, 2009.

 

Section 2.12         “Eligible Employee” shall mean an Employee employed in the
United States who is an Officer, a Segment President or a Corporate
Vice-President in Career Band 1 or 2. If there is any question as to whether an
Employee is deemed an Eligible Employee for purposes of the Plan, the Plan
Administrator shall make the determination.

 

Section 2.13         “Employee” shall mean an individual employed by an Employer
as a common law employee on the United States payroll of Tyco International Ltd.
or a Subsidiary, and shall not include any person working for the Company
through a temporary service or on a leased basis or who is hired by the Company
as an independent contractor, consultant, or otherwise as a person who is not an
employee for purposes of withholding federal employment taxes, as evidenced by
payroll records or a written agreement with the individual, regardless of any
contrary governmental or judicial determination or holding relating to such
status or tax withholding.

 

Section 2.14         “Employer” shall mean the Company or any Subsidiary with
respect to which this Plan has been adopted.

 

Section 2.15         “ERISA” shall mean the Employee Retirement Income Security
Act of 1974, as amended, and the regulations promulgated thereunder.

 

Section 2.16         “Exchange Act” shall mean the Securities Exchange Act of
1934, as amended, and the regulations promulgated thereunder.

 

Section 2.17         “Executive Severance Plan” shall mean the Tyco
International Severance Plan for U.S. Officers and Executives (f/k/a the Tyco
International (US) Inc. Severance Plan for U.S. Officers and Executives), which
plan is superseded by this Plan in the event of any Participant’s Change in
Control Termination.

 

Section 2.18         “Good Reason Resignation” shall mean any retirement or
termination of employment by a Participant that is not initiated by the Company
or any Subsidiary and that is caused by any one or more of the following events
which occurs during the period beginning 60 days prior to the date of a Change
in Control and ending two years after the date of such Change in Control:

 

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(i)            Without the Participant’s written consent, assignment to the
Participant of any duties inconsistent in any material respect with the
Participant’s authority, duties or responsibilities as in effect immediately
prior to the Change in Control, or any other action by the Company which results
in a material diminution in such authority, duties or responsibilities;

 

(ii)           Without the Participant’s written consent, a material change in
the geographic location at which the Participant must perform services to a
location which is more than 60 miles from the Participant’s principal place of
business immediately preceding the Change in Control;

 

(iii)          Without the Participant’s written consent, a material reduction
to the Participant’s base compensation and benefits, taken as a whole, as in
effect immediately prior to the Change in Control; or

 

(iv)          The Company’s failure to obtain a satisfactory agreement from any
Successor to assume and agree to perform the Company’s obligations to the
Participant under this Plan, as contemplated in Section 11.03 herein.

 

Notwithstanding the foregoing, the Participant shall be considered to have a
Good Reason Resignation only if the Participant provides written notice to the
Company specifying in reasonable detail the events or conditions upon which the
Participant is basing such Good Reason Resignation and the Participant provides
such notice within 90 days after the event that gives rise to the Good Reason
Resignation. Within 30 days after notice has been received, the Company shall
have the opportunity, but shall have no obligation, to cure such events or
conditions that give rise to the Good Reason Resignation. If the Company does
not cure such events or conditions within the 30-day period, the Participant may
terminate employment with the Company based on Good Reason Resignation within 30
days after the expiration of the cure period.

 

Section 2.19         “Involuntary Termination” shall mean the date that a
Participant involuntarily separates from service with the Company and its
Affiliates within the meaning of Code Section 409A and shall not include a
separation from service for Cause, Permanent Disability or death, as provided
under and subject to the conditions of Article III.

 

Section 2.20         “Key Employee” shall mean an Employee who, at any time
during the 12-month period ending on the identification date, is a “specified
employee” under Code Section 409A, as determined by the Committee or its
delegate. The determination of Key Employees, including the number and identity
of persons considered specified employees and the identification date, shall be
made by the Committee or its delegate in accordance with the provisions of Code
Section 409A and the regulations promulgated thereunder.

 

Section 2.21         “Notice Pay” shall mean the amounts that a Participant is
eligible to receive pursuant to Article IV of the Plan.

 

Section 2.22         “Officer” shall mean any individual who is an officer of an
Employer, and who is considered an officer for purposes of Rule 16a-1(f) as
promulgated under the Exchange Act immediately before the Change in Control.

 

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Section 2.23         “Participant” shall mean any Eligible Employee who meets
the requirements of Article III and thereby becomes eligible for salary
replacement and other benefits under the Plan.

 

Section 2.24         “Permanent Disability” shall mean that an Employee has a
permanent and total incapacity from engaging in any employment for the Employer
for physical or mental reasons. A “Permanent Disability” shall be deemed to
exist if the Employee meets the requirements for disability benefits under the
Employer’s long-term disability plan or under the requirements for disability
benefits under the Social Security law (or similar law outside the United
States, if the Employee is employed in that jurisdiction) then in effect, or if
the Employee is designated with an inactive employment status at the end of a
disability or medical leave.

 

Section 2.25         “Plan” means the Tyco International Change in Control
Severance Plan for Certain U.S. Officers and Executives (f/k/a the Tyco
International (US) Inc. Change in Control Severance Plan for Certain U.S.
Officers and Executives) as set forth herein, and as the same may from time to
time be amended.

 

Section 2.26         “Plan Administrator” shall mean, for the period prior to a
Potential Change in Control, the individual(s) appointed by the Committee to
administer the terms of the Plan as set forth herein and if no individual is
appointed by the Committee to serve as the Plan Administrator for the Plan, the
Plan Administrator shall be the Senior Vice President - Human Resources, Tyco
International Management Company (or the equivalent). In the event of the
occurrence of a Potential Change in Control, the Senior Vice-President, Human
Resources - Tyco International Management Company (or the equivalent) shall
appoint a person or entity independent of the Company and any person operating
under the Company’s control or on its behalf to serve as Plan Administrator (and
such person or entity shall be the Plan Administrator for all purposes after
such appointment), and such appointment shall take effect and become irrevocable
as of the date of said appointment (provided that such appointment shall be
revocable if a Change in Control does not occur and the Potential Change in
Control expires in accordance with Section 2.26(y)). For periods prior to a
Potential Change in Control, the Plan Administrator may delegate all or any
portion of its authority under the Plan to any other person(s).

 

Section 2.27         “Postponement Period” shall mean, for a Key Employee, the
period of six months after the Key Employee’s Separation from Service Date (or
such other period as may be required by Code Section 409A) during which deferred
compensation may not be paid to the Key Employee under Code Section 409A.

 

Section 2.28         “Potential Change in Control” shall mean the occurrence and
continuation of any of the following: (a) any “person” (as defined in
Section 13(d) and 14(d) of the Exchange Act), excluding for this purpose,
(i) the Company or any subsidiary company (wherever incorporated) of the Company
as defined by the law of the Company’s place of incorporation , as amended or
(ii) any employee benefit plan of the Company or any such subsidiary company (or
any person or entity organized, appointed or established by the Company for or
pursuant to the terms of any such plan that 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 5 percent of the combined
voting power of the Company’s then outstanding securities unless such Person has
reported or is

 

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required to report such ownership on Schedule 13G under the Exchange Act (or any
comparable or successor report) or on Schedule 13D under the Exchange Act (or
any comparable or successor report), which Schedule 13D does not state any
intention to or reserve the right to control or influence the management or
policies of the Company or engage in any of the actions specified in Item 4 of
such Schedule (other than the disposition of the common stock) so long as such
Person neither reports nor is required to report such ownership other than as
described in this paragraph; provided, however, that a Potential Change in
Control will not be deemed to have occurred as a result of a change in ownership
percentage resulting solely from an acquisition of securities by the Company,
(b) the Company enters into an agreement, the consummation of which would result
in the occurrence of a Change in Control, (c) any “person” (as defined in
subsection(a)) publicly announces an intention to take or to consider taking
actions which, if consummated, would constitute or result in a Change in
Control, (d) any person (as defined in subsection (a)) commences a solicitation
(as defined in Rule 14a-1 of the Exchange Act) of proxies or consents that has
the purpose of effecting or would (if successful) result in a Change in Control,
(e) a tender or exchange offer for at least 30% of the outstanding voting
securities of the Company, made by a “person” (as defined in subsection (a)), is
first published or sent or given (within the meaning of Rule 14d-2(a) of the
Exchange Act), or (f) the Board adopts a resolution to the effect that, for
purposes of the Plan, a Potential Change in Control has occurred. The Potential
Change in Control shall be deemed in effect until the earlier of (x) the
occurrence of a Change in Control, or (y) the adoption by the Board of a
resolution stating that, for purposes of the Plan, the Potential Change in
Control has expired.

 

Section 2.29         “Release” shall mean the Separation of Employment Agreement
and General Release, as provided by the Company.

 

Section 2.30         “Segment President” shall mean an Officer who is not
employed by the corporate office, but who is a president of one of the Company’s
business segments.

 

Section 2.31         “Service” shall mean the total number of years and
completed months the Participant was an Employee of the Company. Service with
any predecessor employer or with a Subsidiary prior to the Subsidiary’s becoming
part of the Company shall be recognized only to the extent specified in the
merger or acquisition documentation relating to the Subsidiary or other
applicable governing documents. Periods of authorized leave of absence, such as
military leave, will be included in Service only to the extent required by
applicable law. Any period of employment with the Company, a Subsidiary, or a
predecessor employer for which an Eligible Employee previously received
severance benefits, shall be excluded from Service.

 

Section 2.32         “Separation from Service” means “separation from service”
within the meaning of Code Section 409A(a)(2)(A)(i) and the applicable
regulations and ruling promulgated thereunder.

 

Section 2.33         “Separation from Service Date” shall mean, with respect to
a Participant, the date on which such Participant experiences a Separation from
Service.

 

Section 2.34         “Severance Benefits” shall mean the salary and bonus
replacement amounts and other benefits that a Participant is eligible to receive
pursuant to Article IV of the Plan.

 

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Section 2.35         “Severance Period” shall mean the period for which a
Participant is entitled to receive non-cash Severance Benefits under this Plan,
as follows:  Corporate Officers - 36 months; Segment Presidents - 24 months; and
Corporate Vice Presidents (in Career Band 1 or 2) - 18 months.

 

Section 2.36         “Subsidiary” shall mean (i) a subsidiary company (wherever
incorporated) as defined by the law of the Company’s place of incorporation,
(ii) any separately organized business unit, whether or not incorporated, of the
Company, (iii) any employer that is required to be aggregated with the Company
pursuant to section 414 of the Internal Revenue Code of 1986, as amended, and
regulations issued thereunder, and (iv) any service recipient or employer that
is within a controlled group of corporations with the Company as defined in Code
Sections 1563(a)(1), (2) and (3) where the phrase “at least 50%” is substituted
in each place “at least 80%” appears or is with the Company as part of a group
of trades or businesses under common control as defined in Code
Section 414(c) and Treas. Reg. Section 1.414(c)-2 where the phrase “at least
50%” is substituted in each place “at least 80%” appears, provided, however,
that when the relevant determination is to be based upon legitimate business
criteria (as described in Treas. Reg. Section 1.409A-1(b)(5)(iii)(E) and
Section 1.409A-1(h)(3)), the phrase “at least 20%” shall be substituted in each
place “at least 80%” appears as described above with respect to both a
controlled group of corporations and trades or business under common control.

 

Section 2.37         “Successor” shall mean any other corporation or
unincorporated entity or group of corporations or unincorporated entities which
acquires ownership, directly or indirectly, through merger, consolidation,
purchase or otherwise, of all or substantially all of the assets of the Company.

 

Section 2.38         “Voluntary Resignation” shall mean any Separation from
Service that is not initiated by the Company or any Subsidiary other than a Good
Reason Resignation.

 

ARTICLE III

 

PARTICIPATION AND ELIGIBILITY FOR BENEFITS

 

Section 3.01         Participation.  Each Eligible Employee in the Plan who
incurs a Change in Control Termination and who satisfies the conditions of
Section 3.02 shall be eligible to receive the Severance Benefits described in
the Plan, subject however, to the application of the non-duplication provisions
of Section 4.05.

 

Section 3.02         Conditions.

 

(a)           Eligibility for any Severance Benefits is expressly conditioned on
the occurrence of the following within 60 days after the Participant’s
Separation from Service Date: (i) execution by the Participant of a Release in
the form provided by the Company; (ii) compliance by the Participant with all
the terms and conditions of such Release; (iii) the Participant’s written
agreement to the confidentiality and non-disparagement provisions in Article VI
during and after the Participant’s employment with the Company; and (iv) to the
extent permitted in Section 4.04 of the Plan, execution of a written agreement
that authorizes the

 

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deduction of amounts owed to the Company prior to the payment of any Severance
Benefits (or in accordance with any other schedule as is agreed between the
Participant and the Company).  If the Plan Administrator determines that the
Participant has not fully complied with any of the terms of the Release, the
Plan Administrator may withhold Severance Benefits not yet in pay status or
discontinue the payment of the Participant’s Severance Benefits and may require
the Participant, by providing written notice of such repayment obligation to the
Participant, to repay any portion of the Severance Benefits already received
under the Plan.  If the Plan Administrator notifies a Participant that repayment
of all or any portion of the Severance Benefits received under the Plan is
required, such amounts shall be repaid within thirty (30) calendar days of the
date the written notice is sent, provided, however, that if the Participant
files an appeal of such determination under the claims procedures described in
Article X, then such repayment obligation shall be suspended pending the outcome
of the appeals procedure.  Any remedy under this subsection (a) shall be in
addition to, and not in place of, any other remedy, including injunctive relief,
that the Company may have.

 

(b)          An Eligible Employee will not be eligible to receive Severance
Benefits under any of the following circumstances:

 

(i)            The Eligible Employee’s Voluntary Resignation;

 

(ii)           The Eligible Employee resigns employment (other than a Good
Reason Resignation) before the job-end date mutually agreed to in writing
between the Participant and the Employer, including any extension thereto as is
mutually agreed to in writing between the parties;

 

(iii)          The Eligible Employee’s employment is terminated for Cause;

 

(iv)          The Eligible Employee’s employment is terminated due to the
Eligible Employee’s death or Permanent Disability;

 

(v)           The Eligible Employee does not return to work within the period
prescribed by law (or if there is no such period prescribed by law, then within
a reasonable period as is determined by the Plan Administrator) following an
approved leave of absence, unless such period is extended by mutual written
agreement of the parties; or

 

(vi)          The Eligible Employee does not satisfy the Conditions for
Severance in Section 3.02(a);

 

(vii)         The Eligible Employee’s employment with the Employer terminates as
a result of a Change in Control and the Eligible Employee accepts employment, or
has the opportunity to continue employment, with a Successor (other than under
terms and conditions which would permit a Good Reason Resignation).

 

(c)          The Plan Administrator has the discretion to make initial
determinations regarding an Eligible Employee’s eligibility to receive Severance
Benefits hereunder.

 

(d)          An Eligible Employee returning from approved military leave during
the period beginning 60 days before a Change in Control and ending two years
after a Change in

 

8

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Control will be eligible for Severance Benefits if: (i) he/she is eligible for
reemployment under the provisions of the Uniformed Services Employment and
Reemployment Rights Act (USERRA); (ii) his/her pre-military leave job is
eliminated; and (iii) the Employer’s circumstances are changed so as to make
reemployment in another position impossible or unreasonable, or re-employment
would create an undue hardship for the Employer.  If the Eligible Employee
returning from military leave qualifies for Severance Benefits, his/her
severance benefits will be calculated as if he/she had remained continuously
employed from the date he/she began his/her military leave.  The Eligible
Employee must also satisfy any other relevant conditions for payment, including
execution of a Release.

 

ARTICLE IV

 

DETERMINATION OF SEVERANCE BENEFITS

 

Section 4.01         Amount of Severance Benefits Upon Involuntary Termination
and Good Reason Resignation.  The Severance Benefits to be provided to an
Eligible Employee who incurs a Change in Control Termination and is determined
to be eligible for Severance Benefits shall be as follows:

 

(a)           Notice Pay.  Except for Officers, each Eligible Employee who meets
the eligibility requirements for Severance Benefits under Section 3.01 shall
receive 30 calendar days notice as a Notice Period.  In the event that the
Company determines that a Participant’s last day of work shall be prior to the
end of his or her Notice Period, such Employee shall be entitled to pay in lieu
of notice for the balance of such Notice Period.  Notice Pay paid to a
Participant shall be in addition to, and not offset against, the Severance
Benefits the Participant may be entitled to receive under this Article IV.  An
Eligible Employee who does not sign, or who revokes his or her signature on, a
Release shall only be eligible for Notice Pay.  Unless otherwise permitted by
the applicable plan documents or laws, an Eligible Employee will not be eligible
to apply for short-term disability, long-term disability and/or workers’
compensation anytime after the Eligible Employee’s last active day at work.

 

(b)           Salary Replacement Benefits.  Salary replacement benefits shall be
provided to the Participant in an amount as set forth in Schedule A appended to
the Plan.

 

(c)           Bonus.

 

(i)           The Participant shall receive a cash payment equal to his or her
pro rated Annual Bonus (based on the number of full months completed from the
beginning of the fiscal year through the Separation from Service) for the year
in which Participant’s Separation from Service occurs, pursuant to the terms set
forth in the applicable incentive plans; provided, however, that to the extent
that a bonus payment for such period is paid as a result of a Change in Control
under the terms of such other incentive plan, then the amount otherwise payable
under this Section 4(c) will be offset by the payment made under such other
incentive plan.

 

(ii)          The Participant shall also receive a cash payment equal to his or
her Annual Bonus in an amount as set forth in Schedule A appended to the Plan.

 

9

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(d)           Medical, Dental and Health Care Reimbursement Account Benefits. 
The Participant shall continue to be eligible to participate in the medical,
dental and Health Care Reimbursement Account coverage in effect at the date of
his or her termination (or generally comparable coverage) for himself or herself
and, where applicable, his or her spouse or domestic partner and dependents, as
the same may be changed from time to time for employees of the Company
generally, as if Participant had continued in employment during the lesser of
(i) the Severance Period or (ii) twelve (12) months.  The Participant shall be
responsible for the payment of the employee portion of the medical, dental and
Health Care Reimbursement Account contributions that are required during the
Severance Period and such contributions shall be made within the time period and
in the amounts that other employees are required to pay to the Company for
similar coverage.  The Participant’s failure to pay the applicable contributions
shall result in the cessation of the applicable medical and dental coverage for
the Participant and his or her spouse or domestic partner and dependents.  In
the event that the Severance Period exceeds twelve months, the Participant will
receive a cash lump-sum payment from the Company equal to the projected value of
the employer portion of the premiums for medical and dental benefits for the
time period between the end of the Coverage Period and the remainder of the
Severance Period.  Such payment shall be made within sixty (60) days following
the end of the Coverage Period.  Notwithstanding any other provision of this
Plan to the contrary, in the event that a Participant commences employment with
another company at any time during the Severance Period, the Participant may
cease receiving coverage under the Company’s medical and dental plans.  Within
thirty (30) days of Participant’s commencement of employment with another
company, Participant shall provide the Company written notice of such employment
and provide information to the Company regarding the medical and dental benefits
provided to Participant by his or her new employer.  The COBRA continuation
coverage period under section 4980B of the Code shall run concurrently with the
Severance Period.

 

(e)           Stock Options.  All stock options held by the Participant as of
his or her Separation from Service Date that were granted prior to the Change in
Control and that are not already vested and exercisable as of such date shall
become vested and exercisable upon a Change in Control Termination.  All
outstanding stock options held by Participant that were granted prior to the
Change in Control and that are vested and exercisable as of the Separation from
Service Date and all stock options held by the Participant that become vested
and exercisable under the preceding sentence shall be exercisable for the
greater of (i) the period set forth in Participant’s option agreement covering
such options, or (ii) twelve (12) months from the Separation from Service Date. 
In no event, however, shall an option be exercisable beyond its original
expiration date.

 

(f)            Restricted Stock, Restricted Units and Performance Units.  All
restricted stock, restricted stock units and performance units held by the
Participant as of his or her Separation from Service Date shall be treated as
provided under and in accordance with the Tyco International Ltd. 2004 Stock and
Incentive Plan, as amended, modified to the extent provided in the terms and
conditions of the applicable award certificate.

 

(g)           Outplacement Services.  The Company will pay the cost of
outplacement services for the Participant for a period of twelve (12) months
from Participant’s Separation from Service Date.  The Company shall pay the cost
of outplacement services at either (i) the outplacement agency that the Company
regularly uses for such purpose or (ii) the outplacement

 

10

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agency selected by the Participant; provided, however, that the Company will be
responsible to pay no more than the cost that would have been incurred had the
Participant used the outplacement agency that the Company regularly uses for
such purpose.

 

(h)          Application of Other Plan Provisions.  If any applicable equity
compensation or incentive plan or grant instrument, without regard to (c),
(e) or (f) above, provides the Participant the right to accelerated vesting or
payment of cash incentive awards, stock options, restricted stock, restricted
stock units or incentive awards, and/or an extension of the otherwise applicable
option exercise period, in the case of termination of employment following a
Change in Control, then the Participant’s right to accelerated payment, vesting
or extension of the option exercise period shall be determined by whichever of
the plan, grant instrument or the provisions of (c), (e) or (f) above provides
the most favorable vesting or exercise rights for the Participant in such event.

 

Section 4.02         Voluntary Resignation; Termination Due to Death or
Permanent Disability.  If the Eligible Employee’s employment terminates on
account of (i) the Eligible Employee’s Voluntary Resignation, (ii) death, or
(iii) Permanent Disability, then the Eligible Employee shall not be entitled to
receive Severance Benefits under this Plan and shall be entitled only to those
benefits (if any) as may be available under the Company’s then-existing benefit
plans and policies at the time of such termination.

 

Section 4.03         Termination for Cause.

 

(a)           If any Eligible Employee’s employment terminates on account of
termination by the Company for Cause, the Eligible Employee shall not be
entitled to receive Severance Benefits under this Plan and shall be entitled
only to those benefits that are legally required to be provided to the Eligible
Employee.  Notwithstanding any other provision of the Plan to the contrary, if
the Committee or the Plan Administrator determines that an Eligible Employee has
engaged in conduct that constitutes Cause at any time prior to the Eligible
Employee’s Separation from Service Date, any Severance Benefits payable to the
Eligible Employee under Section 4.01 of the Plan shall immediately cease, and
the Eligible Employee shall be required to return any Severance Benefits paid to
the Eligible Employee prior to such determination.  The Company may withhold
paying Severance Benefits under the Plan pending resolution of any good faith
inquiry that is likely to lead to a finding resulting in Cause.  If the Company
has offset other payments owed to the Eligible Employee under any other plan or
program, it may, in its sole discretion, waive its repayment right solely with
respect to the amount of the offset so credited.

 

(b)          Any dispute regarding a termination for Cause will be resolved by
the Plan Administrator.  Such determination will be based on all of the facts
and circumstances presented to the Plan Administrator by the Company.  If the
Plan Administrator determines that the Eligible Employee’s termination of
employment is for Cause, then the Plan Administrator will notify the Eligible
Employee in writing of such determination, describing in detail the reason for
such determination, including without limitation the specific conduct that
constituted the basis for the determination.  The Eligible Employee shall have
the right to contest the determination of the Plan Administrator in accordance
with the Appeals Procedure described in Section 10.03.

 

11

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Section 4.04         Reduction of Severance Benefits.  With respect to amounts
paid under the Plan that are not subject to Code Section 409A and the
regulations promulgated thereunder, the Plan Administrator reserves the right to
make deductions in accordance with applicable law for any monies owed to the
Company by the Participant or the value of Company property that the Participant
has retained in his/her possession.  With respect to amounts paid under the Plan
that are subject to Code Section 409A and the regulations promulgated
thereunder, the Plan Administrator reserves the right to make deductions in
accordance with applicable law for any monies owed to the Company by the
Participant or the value of the Company property that the Participant has
retained in his/her possession; provided, however, that such deduction cannot
exceed $5,000 in the aggregate.

 

Section 4.05         Non-Duplication of Benefits.  The Plan is intended to
supersede, and not to duplicate, the provisions of the Tyco International
Severance Plan for U.S. Officers and Executives (“Executive Severance Plan”) in
any case in which an Eligible Employee would otherwise be entitled to severance
or related benefits under both this Plan and the Executive Severance Plan
arising out of the Eligible Employee’s Change in Control Termination.  However,
the Plan is not intended to supersede any other plan, program, arrangement or
agreement providing an Eligible Employee with severance or related benefits in
the case of an Eligible Employee’s Change in Control Termination.  In the event
that an Eligible Employee becomes entitled to receive benefits under this Plan
and any such benefit duplicates a benefit that would otherwise be provided under
any other plan, program, arrangement or agreement as a result of the Eligible
Employee’s Change in Control Termination, then the Eligible Employee shall be
entitled to receive the greater of the benefit available under the Plan, on the
one hand, and the benefit available under such other plan, program, arrangement
or agreement, on the other.

 

ARTICLE V

 

METHOD, DURATION AND LIMITATION OF SEVERANCE BENEFIT PAYMENTS

 

Section 5.01         Method of Payment.  The cash Severance Benefits to which a
Participant is entitled, as determined pursuant to Section 4.01, shall be paid
in a single lump sum payment within sixty (60) days following the Participant’s
Severance from Service Date, subject to the fulfillment of all conditions for
payment set forth in Section 3.02 and subject to the expiration of the Release
revocation period specified in the Release; provided, however, that the annual
bonus amount payable pursuant to Section 4.01(c)(i) shall be paid at the same
time as bonuses would be payable under the applicable bonus or incentive plan or
program.  In no event will interest be credited on the unpaid balance for which
a Participant may become eligible.  Payment shall be made by mailing to the last
address provided by the Participant to the Company or such other reasonable
method as determined by the Plan Administrator.  Notwithstanding the foregoing,
if the Participant’s Separation from Service is either (i) prior to the date of
a Change in Control, or (ii) following a Change in Control that does not qualify
as a “change in control” under Code Section 409A and the regulations promulgated
thereunder, then any portion of the Severance Benefits payable under this Plan
that is (i) subject to Code Section 409A and the regulations promulgated
thereunder and (ii) equals the amount of benefit the Participant could be
eligible to receive under the Executive Severance Plan (if the Participant were
to satisfy the eligibility requirements in order to receive a benefit under that
plan), shall be paid at the same time and in

 

12

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the same form as under the Executive Severance Plan.  In no event will interest
be credited on the unpaid balance for which a Participant may become eligible. 
Payment shall be made by mailing to the last address provided by the Participant
to the Company or such other reasonable method as determined by the Plan
Administrator.  All payments of Severance Benefits are subject to applicable
federal, state and local taxes and withholdings.  In the event of the
Participant’s death prior to payment being made, the amount of such payment
shall be paid to the Participant’s estate in a single lump-sum payment within
thirty (30) days following the Participant’s death.

 

Section 5.02         Other Arrangements.  The provisions of this Plan may
provide for payments to the Eligible Employee under certain compensation or
bonus plans under circumstances where such plans would not otherwise provide for
payment thereof.  It is the specific intention of the Company that the
provisions of this Plan shall supersede any provisions to the contrary in such
plans, to the extent permitted by applicable law, and such plans shall be deemed
to be have been amended to correspond with this Plan without further action by
the Company or the Board.

 

Section 5.03         Code Section 409A.

 

(a)           Notwithstanding any provision of the Plan to the contrary, if
required by Code Section 409A and if a Participant is a Key Employee, no
Benefits shall be paid to the Participant during the Postponement Period.  If a
Participant is a Key Employee and payment of Benefits is required to be delayed
for the Postponement Period under Code Section 409A, the accumulated amounts
withheld on account of Code Section 409A shall be paid in a lump sum payment
within 30 days after the end of the Postponement Period and no interest or other
adjustment shall be made for the delayed payment.  If the Participant dies
during the Postponement Period prior to the payment of Benefits, the amounts
withheld on account of Code Section 409A shall be paid to the Participant’s
estate within thirty (30) days after the Participant’s death.

 

(b)           This Agreement is intended to meet the requirements of the
“short-term deferral” exception, the “separation pay” exception and other
exceptions under Code Section 409A and the regulations promulgated thereunder. 
Notwithstanding anything in this Plan to the contrary, if required by Code
Section 409A, payments may only be made under this Plan upon an event and in a
manner permitted by Code Section 409A, to the extent applicable.  For purposes
of Code Section 409A, the right to a series of payments under the Plan shall be
treated as a right to a series of separate payments.  All reimbursements and
in-kind benefits provided under the Plan shall be made or provided in accordance
with the requirements of section 409A of the Code, including, where applicable,
the requirement that (i) any reimbursement is for expenses incurred during the
period of time specified in the Plan, (ii) the amount of expenses eligible for
reimbursement, or in-kind benefits provided, during a calendar year may not
affect the expenses eligible for reimbursement, or in-kind benefits to be
provided, in any other calendar year, (iii) the reimbursement of an eligible
expense will be made no later than the last day of the calendar year following
the year in which the expense is incurred, and (iv) the right to reimbursement
or in-kind benefits is not subject to liquidation or exchange for another
benefit.  In no event may a Participant designate the year of payment for any
amounts payable under the Plan.

 

13

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Section 5.04         Termination of Eligibility for Benefits.

 

(a)           All Eligible Employees shall cease to be eligible to participate
in the Plan, and all Severance Benefits payments shall cease upon the occurrence
of the earlier of:

 

(i)            Subject to Article VIII, termination or modification of the Plan;
or

 

(ii)           Completion of any obligation of the Company or its Subsidiaries
to make any payment or distribution under Article IV for the benefit of the
Participant.

 

(b)           Notwithstanding anything herein to the contrary, the Company shall
have the right to cease all Severance Benefits payments and to recover payments
previously made to the Participant should the Participant at any time breach the
Participant’s undertakings under the terms of the Plan, the Release the
Participant executed to obtain the Severance Benefits under the Plan or the
confidentiality and non-disparagement provisions of Article VI.

 

Section 5.05         Limitation on Benefits.

 

(a)           Anything in the Plan to the contrary notwithstanding, in the event
it shall be determined that any payment or distribution by the Company or its
Subsidiaries to or for the benefit of a Participant (whether paid or provided
pursuant to the terms of this Plan or otherwise) (a “Payment”) would be
nondeductible by the Company for Federal income tax purposes because of
Section 280G of the Code, then the aggregate present value of the benefits
provided to the Participant pursuant to the rights granted under this Plan (such
benefits are hereinafter referred to as “Plan Payments”) shall be reduced to the
Reduced Amount.  The “Reduced Amount” shall be an amount expressed in present
value which maximizes the aggregate present value of Plan Payments without
causing any Payment to be nondeductible by the Company because of Section 280G
of the Code.  For purposes of this Section 5.05, present value shall be
determined in accordance with Section 280G(d)(4) of the Code.  To the extent
necessary to eliminate an excess parachute amount that would not be deductible
by the Company for Federal income tax purposes because of Section 280G of the
Code, the amounts payable or benefits to be provided to the Participant shall be
reduced such that the economic loss to the executive as a result of the excess
parachute amount elimination is minimized.  In applying this principle, the
reduction shall be made in a manner consistent with the requirements of section
409A and where two economically equivalent amounts are subject to reduction but
payable at different times, such amounts shall be reduced on a pro rata basis
but not below zero.

 

(b)           If the Firm (as defined in Section 5.05(c)) determines that the
payments to the Participant (before any reductions as described in
Section 5.05(a)) on an after-tax basis (i.e., after federal, state and local
income and excise taxes and federal employment taxes) would exceed the Reduced
Amount on an after-tax basis (i.e., after federal, state and local income and
federal employment taxes) then such payments will not be reduced as is described
in Section 5.05(a).

 

(c)           All determinations required to be made under this Section 5.05
shall be made by a nationally recognized accounting or consulting firm selected
by the Senior Vice-President, Human Resources Tyco International Management
Company (or the equivalent) upon the occurrence of a Potential Change in Control
(the “ Firm”), which shall provide detailed

 

14

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supporting calculations both to the Company and the Participant within fifteen
(15) business days of the Separation from Service Date or such earlier time as
is requested by the Company.  Any such determination by the Firm shall be
binding upon the Company, its successors and the Participant (subject to
(e) below).  Within five (5) business days of the determination by the Firm as
to the Reduced Amount, the Company shall provide to the Participant such
Payments as are then due to the Participant in accordance with the rights
afforded under this Plan or any other applicable plan.

 

(d)           The Company shall reimburse the Participant for any costs or
expenses of tax counsel incurred by the Participant in connection with any audit
or investigation by the Internal Revenue Service, or any state or local tax
authorities, concerning the application of Code Section 280G to any Payments
(provided, that the Participant retains tax counsel acceptable to the Company). 
In the event that as a result of any such audit or investigation, the reduction
in Plan Payments under (a) above is finally determined not to be sufficient in
amount to permit the deduction by the Company of all Payments under Code
Section 280G, then the Company shall pay the Participant an additional amount
which shall be sufficient to put the Participant, after payment of any
additional income, employment and excise taxes, interest and penalties, in
substantially the same economic position as if the reduction had been
sufficient.  Notwithstanding anything herein to the contrary, any reimbursement
or payment pursuant to this Section 5.05(d) shall be made in a manner, and in
such timeframe, that complies with the requirements of Treasury Regulations
Section 1.409A-3(i)(1)(v).

 

(e)           In the event that the Firm determines that a reduction effected
pursuant to (a) above was excessive in amount due to changes in relevant data or
information following its original determination under (c) above (including,
without limitation, any recalculation regarding the value of stock options as
contemplated under Rev. Proc. 2003-68, Section 3.04), and that additional Plan
Payments could have been made thereunder, the Company shall promptly make such
additional payments to the Participant.

 

ARTICLE VI

 

CONFIDENTIALITY AND NON-DISPARAGEMENT

 

Section 6.01         Confidential Information.  The Participant agrees that he
or she shall not, directly or indirectly, use, make available, sell, disclose or
otherwise communicate to any person, other than in the course of the
Participant’s assigned duties and for the benefit of the Company, either during
the period of the Participant’s employment or at any time thereafter, any
nonpublic, proprietary or confidential information, knowledge or data relating
to the Company, any of its Subsidiaries, affiliated companies or businesses,
which shall have been obtained by the Participant during the Participant’s
employment by the Company or a Subsidiary.  The foregoing shall not apply to
information that (i) was known to the public prior to its disclosure to the
Participant; (ii) becomes known to the public subsequent to disclosure to the
Participant through no wrongful act of the Participant or any representative of
the Participant; or (iii) the Participant is required to disclose by applicable
law, regulation or legal process (provided that the Participant 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

 

15

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appropriate protection of such information).  Notwithstanding clauses (i) and
(ii) of the preceding sentence, the Participant’s obligation to maintain such
disclosed information in confidence shall not terminate where only portions of
the information are in the public domain.

 

Section 6.02         Non-Disparagement.  Each of the Participant 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 statements
that disparage the other party, or in the case of the Company or its
Subsidiaries, their 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 6.02.

 

Section 6.03         Reasonableness.  In the event the provisions of this
Article VI shall ever be deemed to exceed the time, scope or geographic
limitations permitted by applicable laws, then such provisions shall be reformed
to the maximum time, scope or geographic limitations, as the case may be,
permitted by applicable laws.

 

Section 6.04         Equitable Relief.

 

(a)           By participating in the Plan, the Participant acknowledges that
the restrictions contained in this Article VI are reasonable and necessary to
protect the legitimate interests of the Company, its Subsidiaries and its
affiliates, that the Company would not have established this Plan in the absence
of such restrictions, and that any violation of any provision of this Article VI
will result in irreparable injury to the Company.  By agreeing to participate in
the Plan, the Participant represents that his or her experience and capabilities
are such that the restrictions contained in this Article VI will not prevent the
Participant from obtaining employment or otherwise earning a living at the same
general level of economic benefit as is currently the case.  The Participant
further represents and acknowledges that (i) he or she has been advised by the
Company to consult his or her own legal counsel in respect of this Plan, and
(ii) that he or she has had full opportunity, prior to agreeing to participate
in this Plan, to review thoroughly this Plan with his or her counsel.  The
Company likewise acknowledges that the restrictions contained in Section 6.02
are necessary to protect the legitimate interests of the Participant, and that
any violation of Section 6.02 by the Company will result in irreparable injury
to the Participant.

 

(b)           The Participant agrees that the Company shall be entitled to
preliminary and permanent injunctive relief, without the necessity of proving
actual damages, as well as an equitable accounting of all earnings, profits and
other benefits arising from any violation of this Article VI, which rights shall
be cumulative and in addition to any other rights or remedies to which the
Company may be entitled.  In the event that any of the provisions of this
Article VI should ever be adjudicated to exceed the time, geographic, service,
or other limitations permitted by applicable law in any jurisdiction, then such
provisions shall be deemed reformed in such jurisdiction to the maximum time,
geographic, service, or other limitations permitted by applicable law.

 

(c)           The Participant irrevocably and unconditionally (i) agrees that
any suit, action or other legal proceeding arising out of this Article VI,
including without limitation, any

 

16

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action commenced by the Company for preliminary and permanent injunctive relief
or other equitable relief, may be brought in the United States District Court
for the District of New York, or if such court does not have jurisdiction or
will not accept jurisdiction, in any court of general jurisdiction in New York,
(ii) consents to the non-exclusive jurisdiction of any such court in any such
suit, action or proceeding, and (iii) waives any objection which Participant may
have to the laying of venue of any such suit, action or proceeding in any such
court.  Participant also irrevocably and unconditionally consents to the service
of any process, pleadings, notices or other papers in a manner permitted by the
notice provisions of Section 11.02.

 

Section 6.05                            Survival of Provisions.  The obligations
contained in this Article VI shall survive the termination of Participant’s
employment with the Company or a Subsidiary and shall be fully enforceable
thereafter.

 

ARTICLE VII

THE PLAN ADMINISTRATOR

 

Section 7.01                            Authority and Duties.  It shall be the
duty of the Plan Administrator, on the basis of information supplied to it by
the Company and the Committee, to properly administer the Plan.  The Plan
Administrator shall have the full power, authority and discretion to construe,
interpret and administer the Plan, to make factual determinations, to correct
deficiencies therein, and to supply omissions.  All decisions, actions and
interpretations of the Plan Administrator shall be final, binding and conclusive
upon the parties with respect to denied claims for Severance Benefits, except in
those cases where such determination is subject to review by the Named Appeals
Fiduciary (as defined in Section 10.04).  The Plan Administrator may adopt such
rules and regulations and may make such decisions as it deems necessary or
desirable for the proper administration of the Plan.

 

Section 7.02                            Compensation of the Plan Administrator. 
The Plan Administrator appointed for periods prior to a Potential Change in
Control shall receive no compensation for services as such.  The Plan
Administrator appointed for periods on and after a Potential Change in Control
will be entitled to receive reasonable compensation as is mutually agreed upon
between the parties.  All reasonable expenses of the Plan Administrator shall be
paid or reimbursed by the Company upon proper documentation.  The Plan
Administrator shall be indemnified by the Company against personal liability for
actions taken in good faith in the discharge of the Plan Administrator’s duties.

 

Section 7.03                            Records, Reporting and Disclosure.  The
Plan Administrator shall keep a copy of all records relating to the payment of
Severance Benefits to Participants and former Participants and all other records
necessary for the proper operation of the Plan.  All Plan records shall be made
available to the Committee, the Company and to each Participant for examination
during business hours except that a Participant shall examine only such records
as pertain exclusively to the examining Participant and to the Plan.  The Plan
Administrator shall prepare and shall file as required by law or regulation all
reports, forms, documents and other items required by ERISA, the Code, and every
other relevant statute, each as amended, and all regulations thereunder (except
that the Company, as payor of the Severance Benefits, shall

 

17

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prepare and distribute to the proper recipients all forms relating to
withholding of income or wage taxes, Social Security taxes, and other amounts
that may be similarly reportable).

 

ARTICLE VIII

AMENDMENT, TERMINATION AND DURATION

 

Section 8.01                            Amendment, Suspension and Termination. 
Except as otherwise provided in this Section 8.01, the Board or its delegee
shall have the right, at any time and from time to time prior to the occurrence
of a Potential Change in Control (and after the Potential Change in Control has
expired in accordance with Section 2.26(y)), to amend, suspend or terminate the
Plan in whole or in part, for any reason or without reason, and without either
the consent of or the prior notification to any Participant, by a formal written
action.  After the occurrence of a Potential Change in Control, the Board or its
delegee shall have the right to amend the Plan, provided however, that (a) in no
event shall any amendment give the Company the right to recover any amount paid
to a Participant prior to the date of such amendment or to cause the cessation
of Severance Benefits already approved for a Participant who has executed a
Release as required under Section 3.02 and (b) the Plan may not be amended in
any manner that adversely affects any right of a Participant or Eligible
Employee without the written consent of such Participant or Eligible Employee. 
Any amendment or termination of the Plan must comply with all applicable legal
requirements including, without limitation, compliance with Code Section 409A
and the regulations and ruling promulgated thereunder, securities, tax, or other
laws, rules, regulations or regulatory interpretations thereof, applicable to
the Plan.

 

Section 8.02                            Duration.  The Plan shall continue in
full force and effect until termination of the Plan pursuant to Section 8.01;
provided, however, that after the termination of the Plan, if any Participants
terminated employment on account of an Involuntary Termination prior to the
termination of the Plan and are still receiving Severance Benefits under the
Plan, the Plan shall remain in effect until all of the obligations of the
Company are satisfied with respect to such Participants.

 

ARTICLE IX

DUTIES OF THE COMPANY AND THE COMMITTEE

 

Section 9.01                            Records.  The Company or a Subsidiary
thereof shall supply to the Committee all records and information necessary to
the performance of the Committee’s duties.

 

Section 9.02                            Payment.  Payments of Severance Benefits
to Participants shall be made in such amount as determined by the Committee
under Article IV, from the Company’s general assets or from a supplemental
unemployment benefits trust, in accordance with the terms of the Plan, as
directed by the Committee.

 

Section 9.03                            Discretion.  Any decisions, actions or
interpretations to be made under the Plan by the Board, the Committee and the
Plan Administrator, acting on behalf of either, shall be

 

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made in each of their respective sole discretion, not in any fiduciary capacity
and need not be uniformly applied to similarly situated individuals and such
decisions, actions or interpretations shall be final, binding and conclusive
upon all parties.  As a condition of participating in the Plan, the Participant
acknowledges that all decisions and determinations of the Board, the Committee
and the Plan Administrator taken in good faith shall be final and binding on the
Participant, his or her beneficiaries and any other person having or claiming an
interest under the Plan on his or her behalf.

 

ARTICLE X

CLAIMS PROCEDURES

 

Section 10.01                     Claim.  Each Participant under this Plan may
contest any action taken or determination made by the Company, the Board, the
Committee or the Plan Administrator that affects the rights of such Participant
hereunder by completing and filing with the Plan Administrator a written request
for review in the manner specified by the Plan Administrator.  No person may
bring an action for any alleged wrongful denial of Plan benefits in a court of
law unless the claims procedures described in this Article X are exhausted and a
final determination is made by the Plan Administrator and/or the Named Appeals
Fiduciary, except in circumstances where the Participant has a reasonable basis
to conclude that the pursuit of his/her claim through the claims procedure would
be futile.  If the terminated Participant or interested person challenges a
decision by the Plan Administrator and/or Named Appeals Fiduciary, a review by
the court of law will be limited to the facts, evidence and issues presented to
the Plan Administrator during the claims procedure set forth in this Article X. 
Facts and evidence that become known to the terminated Participant or other
interested person after having exhausted the claims procedure must be brought to
the attention of the Plan Administrator for reconsideration of the claims
administrator.  Issues not raised with the Plan Administrator and/or Named
Appeals Fiduciary will be deemed waived.

 

Section 10.02                     Initial Claim.  Before the date on which
payment of Severance Benefits commences, each application for benefits must be
supported by such information as the Plan Administrator deems relevant and
appropriate.  In the event that any claim relating to the administration of
Severance Benefits is denied in whole or in part, the terminated Participant or
his or her beneficiary (“claimant”) whose claim has been so denied shall be
notified of such denial in writing by the Plan Administrator within ninety (90)
days after the receipt of the claim for benefits.  This period may be extended
an additional ninety (90) days if the Plan Administrator determines such
extension is necessary and the Plan Administrator provides notice of extension
to the claimant prior to the end of the initial ninety (90) day period.  The
notice advising of the denial shall specify the following: (i) the reason or
reasons for denial, (ii) make specific reference to the Plan provisions on which
the determination was based, (iii) describe any additional material or
information necessary for the claimant to perfect the claim (explaining why such
material or information is needed), and (iv) describe the Plan’s review
procedures and the time limits applicable to such procedures, including a
statement of the claimant’s right to bring a civil action under section
502(a) of ERISA following an adverse benefit determination on review.

 

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Section 10.03                     Appeals of Denied Administrative Claims.  All
appeals shall be made by the following procedure:

 

(a)                                  A claimant whose claim has been denied
shall file with the Plan Administrator a notice of appeal of the denial.  Such
notice shall be filed within sixty (60) calendar days of notification by the
Plan Administrator of the denial of a claim, shall be made in writing, and shall
set forth all of the facts upon which the appeal is based.

 

(b)                                 The Named Appeals Fiduciary shall consider
the merits of the claimant’s written presentations, the merits of any facts or
evidence in support of the denial of benefits, and such other facts and
circumstances as the Named Appeals Fiduciary shall deem relevant.

 

(c)                                  The Named Appeals Fiduciary shall render a
determination upon the appealed claim which determination shall be accompanied
by a written statement as to the reasons therefor.  The determination shall be
made to the claimant within sixty (60) days of the claimant’s request for
review, unless the Names Appeals Fiduciary determines that special circumstances
requires an extension of time for processing the claim.  In such case, the Named
Appeals Fiduciary shall notify the claimant of the need for an extension of time
to render its decision prior to the end of the initial sixty (60) day period,
and the Named Appeals Fiduciary shall have an additional sixty (60) day period
to make its determination.  The determination so rendered shall be binding upon
all parties as long as it is made in good faith.  If the determination is
adverse to the claimant, the notice shall (i) provide the reason or reasons for
denial, (ii) make specific reference to the Plan provisions on which the
determination was based, (iii) include a statement that the claimant is entitled
to receive, upon request and free of charge, reasonable access to, and copies
of, all documents, records and other information relevant to a the claimant’s
claim for benefits, and (iv) state that the claimant has the right to bring an
action under section 502(a) of ERISA.

 

Section 10.04                     Appointment of the Named Appeals Fiduciary. 
The Named Appeals Fiduciary shall be the person or persons named as such by the
Board or Committee, or, if no such person or persons be named, then the person
or persons named by the Plan Administrator as the Named Appeals Fiduciary;
provided however, that effective on the date of a Change in Control, the Plan
Administrator shall also serve as the Named Appeals Fiduciary.  For periods
before the date of a Change in Control, Named Appeals Fiduciaries may at any
time be removed by the Board or Committee, and any Named Appeals Fiduciary named
by the Plan Administrator may be removed by the Plan Administrator.  All such
removals may be with or without cause and shall be effective on the date stated
in the notice of removal.  The Named Appeals Fiduciary shall be a “Named
Fiduciary” within the meaning of ERISA, and unless appointed to other fiduciary
responsibilities, shall have no authority, responsibility, or liability with
respect to any matter other than the proper discharge of the functions of the
Named Appeals Fiduciary as set forth herein.

 

Section 10.05                     Arbitration; Expenses.  In the event of any
dispute under the provisions of this Plan, other than a dispute in which the
primary relief sought is an equitable remedy such as an injunction, the parties
shall have the dispute, controversy or claim settled by arbitration in New York,
New York (or such other location as may be mutually agreed upon by the Employer
and the Participant) in accordance with the National Rules for the Resolution of
Employment

 

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Disputes then in effect of the American Arbitration Association, before a panel
of three arbitrators, two of whom shall be selected by the Company and the
Participant, respectively, and the third of whom shall be selected by the other
two arbitrators.  Any award entered by the arbitrators shall be final, binding
and nonappealable and judgment may be entered thereon by either party in
accordance with applicable law in any court of competent jurisdiction.  This
arbitration provision shall be specifically enforceable.  The arbitrators shall
have no authority to modify any provision of this Plan or to award a remedy for
a dispute involving this Plan other than a benefit specifically provided under
or by virtue of the Plan.  If the Participant substantially prevails on any
material issue, which is the subject of such arbitration or lawsuit, the Company
shall be responsible for all of the fees of the American Arbitration Association
and the arbitrators and any expenses relating to the conduct of the arbitration
(including the Company’s and Participant’s reasonable attorneys’ fees and
expenses).  Otherwise, each party shall be responsible for its own expenses
relating to the conduct of the arbitration (including reasonable attorneys’ fees
and expenses) and shall share the fees of the American Arbitration Association.

 

ARTICLE XI

MISCELLANEOUS

 

Section 11.01                     Nonalienation of Benefits.  None of the
payments, benefits or rights of any Participant shall be subject to any claim of
any creditor of any Participant, and, in particular, to the fullest extent
permitted by law, all such payments, benefits and rights shall be free from
attachment, garnishment (if permitted under applicable law), trustee’s process,
or any other legal or equitable process available to any creditor of such
Participant.  No Participant shall have the right to alienate, anticipate,
commute, plead, encumber or assign any of the benefits or payments that he may
expect to receive, continently or otherwise, under this Plan, except for the
designation of a beneficiary as set forth in Section 5.01.

 

Section 11.02                     Notices.  All notices and other communications
required hereunder shall be in writing and shall be delivered personally or
mailed by registered or certified mail, return receipt requested, or by
overnight express courier service.  In the case of the Participant, mailed
notices shall be addressed to him or her at the home address which he or she
most recently communicated to the Company in writing.  In the case of the
Company, mailed notices shall be addressed to the Plan Administrator.

 

Section 11.03                     Successors.  Any Successor shall assume the
obligations under this Plan and expressly agree to perform the obligations under
this Plan.

 

Section 11.04                     Other Payments.  Except as otherwise provided
in this Plan, no Participant shall be entitled to any cash payments or other
severance benefits under any of the Company’s then current severance pay
policies for a termination that is covered by this Plan for the Participant,
including, without limitation, the Executive Severance Plan.

 

Section 11.05                     No Mitigation.  Except as otherwise provided
in Section 4.01(d) and Section 4.04, Participants shall not be required to
mitigate the amount of any Severance Benefits provided for in this Plan by
seeking other employment or otherwise, nor shall the amount of any

 

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Severance Benefits provided for herein be reduced by any compensation earned by
other employment or otherwise, except if the Participant is re-employed by
Company, in which case Severance Benefits shall cease.

 

Section 11.06                     No Contract of Employment.  Neither the
establishment of the Plan, nor any modification thereof, nor the creation of any
fund, trust or account, nor the payment of any benefits shall be construed as
giving any Eligible Employee or any person whosoever, the right to be retained
in the service of the Company, and all Eligible Employees shall remain subject
to discharge to the same extent as if the Plan had never been adopted.

 

Section 11.07                     Severability of Provisions.  If any provision
of this Plan shall be held invalid or unenforceable by a court of competent
jurisdiction, such invalidity or unenforceability shall not affect any other
provisions hereof, and this Plan shall be construed and enforced as if such
provisions had not been included.

 

Section 11.08                     Heirs, Assigns, and Personal Representatives. 
This Plan shall be binding upon the heirs, executors, administrators, successors
and assigns of the parties, including each Participant, present and future.

 

Section 11.09                     Headings and Captions.  The headings and
captions herein are provided for reference and convenience only, shall not be
considered part of the Plan, and shall not be employed in the construction of
the Plan.

 

Section 11.10                     Gender and Number.  Where the context admits:
words in any gender shall include any other gender, and, except where otherwise
clearly indicated by context, the singular shall include the plural, and
vice-versa.

 

Section 11.11                     Unfunded Plan.  The Plan shall not be funded. 
No Participant shall have any right to, or interest in, any assets of the
Company that may be applied by the Company to the payment of Severance Benefits.

 

Section 11.12                     Payments to Incompetent Persons.  Any benefit
payable to or for the benefit of a minor, an incompetent person or other person
incapable of receipting therefor shall be deemed paid when paid to such person’s
guardian or to the party providing or reasonably appearing to provide for the
care of such person, and such payment shall fully discharge the Company, the
Committee and all other parties with respect thereto.

 

Section 11.13                     Lost Payees.  A benefit shall be deemed
forfeited if the Committee is unable to locate a Participant to whom Severance
Benefits are due.  Such Severance Benefits shall be reinstated if application is
made by the Participant for the forfeited Severance Benefits while this Plan is
in operation.

 

Section 11.14                     Controlling Law.  This Plan shall be construed
and enforced according to the laws of the State of New York to the extent not
superseded by Federal law.

 

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SCHEDULE A

 

SEVERANCE BENEFITS
SALARY REPLACEMENT AND ANNUAL BONUS

 

Officers

2.99 times annual Base Salary and Annual Bonus

 

 

Segment Presidents

2 times annual Base Salary and Annual Bonus

 

 

Corporate Vice Presidents (in Career Band 1 or 2)

1.5 times annual Base Salary and Annual Bonus

 

A-1

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